Alternative Propulsion Technologies Still A Horse Race

A growing number of people around the world want to see an end to the technologies that revolutionized life in the 19th and 20th centuries. The internal combustion engine and the incandescent lightbulb are among the technologies in the cross-hairs.

The biggest problem with axing the internal combustion engine - and major automakers agree almost universally on this point - is that a suitable replacement has yet to be found. While environmentalists argue that all vehicles being produced today should be hybrids, automakers themselves aren't so sure.

From their perspective, hybrids haven't made the grade as far as the bottom line is concerned, and at less than 3 percent of total annual vehicle sales, they haven't proven to be a huge consumer hit. In part, consumers shy away from new technology as they wait for proof that the technology works. Consumers are also much more reluctant to shell out an extra few grand for "green" technology, if a relatively efficient, lower-cost model powered by an internal combustion engine is available.

For the majority of consumers, model choice is very much a bottom-line deal. Consumers willingly trade higher fuel economy for lower entry costs. The confusing mix of mild hybrid and dual mode hybrid technologies don't clarify consumer choices. Further, consumers don't distinguish between hybrid and highly efficient non-hybrid technologies, and misconceptions persist regarding existing technologies like clean diesel and biodiesel.

If you asked, most drivers could tell you what they most recently paid at the pump for gasoline; many could correctly estimate their fuel economy, and even tell you how many miles they normally get from a tank of gas. For consumers, the cost of fuel is a very real consideration. While many drivers will express concern about carbon emissions, few can tell you what their personal vehicle chugs out per mile (or per year), how carbon emissions are measured or whether their vehicle produced fewer or more tons of CO2 than most other cars on the road.

While automakers are building hybrid models, and introducing more hybrids each model year, the plunge into hybrid manufacturing has been half-hearted at best, and with good reason. The automakers - whether US or otherwise - know that there are more exciting, more practical and more efficient propulsion technologies being developed in their research and development labs right now than those that have already made it to market. These technologies may never prove themselves to be practical in a production environment, though.

For automakers to survive, the technologies they offer need to be mass-producible. The "economy-of-scale" is still king because automakers can't afford to sell vehicles at a loss. Honda's big gamble for 2009 will illustrate whether a lower price tag for the Insight will inspire the kind of demand that the company needs to have in order to make even a thin profit on the vehicle.

What's at risk if Honda's strategy doesn't pay off? Depending upon how long it takes for the Insight's market to take off, the company may have to raise prices on other vehicles to make up for losses in the Insight's programs. Alternately, the company could shift research and development dollars to operations to cover the cost of the car. Honda also risks cannibalizing its own market. Consumers who had been willing to pay a higher price for a new Accord will choose to pay less for the Insight - in effect, a double whammy.

Honda's not alone. The major automakers are all facing this dilemma when it comes to hybrid and alternative fuel technologies. Unfortunately, they're working hard to introduce this technology in one of the worst new vehicle markets since the Great Depression. Ultimately, one or more workable technologies - those that perform on par with the internal combustion engine at the same or lower cost and prove acceptable to consumers - will make it out of research and development, but none of the major automakers are willing to commit just yet to any particular technology. Until the mass production/economy-of-scale puzzle can be solved for hybrids and alternative propulsion vehicles, automakers will continue to introduce hybrids only at a deliberate pace.

Photo Credit: Carlos Zaragoza