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It’s not easy buying green Add to ...

Picture a giant bell curve depicting a range of “green” cars.

At one end, you can see pure battery electric cars, while at the opposite end is an array of gasoline- or diesel-electric hybrids. Lots of them, though none are sold in particularly big numbers. In the big, fat middle are highly efficient vehicles running on technologically advanced internal combustion engines.

This is your future if you are a car buyer. From now and for decades to come, no one single “green” technology will dominate efforts by auto makers to reduce vehicle emissions and hit government fuel-efficiency targets. Fleets of electric cars and hybrids will bookend a great mass of vehicles powered by dramatically fuel-efficient internal combustion engines.

“There is no silver bullet,” says General Motors of Canada president Kevin Williams. “While we are deploying game-changing technologies like the Volt [extended-range electric vehicle], we have also done extensive work to improve today’s propulsion systems, because the internal combustion engine will continue to be the mainstream technology for many years to come.”

GM is not alone. According to a new study from management consultants Boston Consulting Group, gasoline-powered engines will become more efficient as new and newly refined technologies are introduced.

Turbochargers, direct fuel injection, friction-reduction components, better transmissions, lightweight materials and technologies that stop and restart an engine when idling are all examples of developments capable of further squeezing out fuel economy gains. But at a price.

The Boston Consulting Group estimates these fuel-saving improvements that also reduce tailpipe emissions by 40 per cent – driven entirely by government regulations, not mass consumer demand – would by 2020 add about $2,000 (U.S.) to the price of a vehicle in today’s dollars.

A second study by the non-profit Center for Automotive Research says lifting the corporate average fuel economy standard to 62 mpg by 2025 (from the 35.5 mpg in the United States or 6.7 litres/100 km in Canada by 2016) would drive up the average price of a new vehicle by as much as $11,390 (U.S.).

Fuel savings, on the other hand, might be worth as much as $8,339 (U.S.), depending on vehicle type and the price of fuel – up to $6 (U.S.) a gallon adjusted for inflation. In other words, the cost of these technologies is not likely to be offset by the savings you’ll realize at the pump.

Confused?

There’s more. Boston Consulting suggests that as the internal combustion engine grows cleaner and more efficient, electric-vehicle purchases may suffer – at least in countries like Canada where government support for EVs is not great. BCG expects government incentives in China and Europe to put those regions at the forefront of EV sales by 2020. Boston Consulting expects EVs to become prominent in a mass way during the 2035-2050 time frame.

“China and Europe – not the United States, as many may have thought – will be the largest markets for EVs in 2020, driven by strong government support,” the study says, predicting that 7 per cent of new-vehicle sales in China will be EVs, with EVs at 8 per cent of new sales in Europe.

Then there are hybrids to consider. Sales of gasoline-electric vehicles make up less than 1 per cent of the new-car market in Canada and about 1.6 per cent in the U.S. – even as the price of gasoline has spiked this year to more than $4 (U.S.) a gallon in parts of the U.S. and more than $1.40 a litre in Canada.

The all-time high for hybrid sales in North America came in July 2009, when hybrids made up more than 3 per cent of sales in Canada and the U.S. combined. What pushed hybrids? The U.S. Government’s cash-for-clunkers campaign. It provided heavy subsidies for the purchase of fuel-efficient vehicles.

So what’s the takeaway? Government subsidies drive EV and hybrid sales, and government regulations are pushing auto makers to refine traditional gas and diesel engines in ways that make them cleaner and more efficient. In response, auto makers are pushing a suite of other technologies and refinements aimed at making new vehicles lighter, more aerodynamic, cleaner and less thirsty.

The early results are in showrooms right now and more are coming. Take Hyundai. Canadian president Steve Kelleher never misses a chance to tout the high percentage of Hyundai’s total sales that are of vehicles with fuel efficiency ratings better than 5.0 litres/100 km or 40 U.S. miles per gallon.

He says that in June, no less than 33.2 per cent of Hyundai Canada’s sales were of vehicles that consume less than 5.0 litres/100 km. Kelleher points out that the Sonata Hybrid intermediate sedan, Elantra compact sedan and Accent subcompact are rated at 4.6, 4.9 and 4.8 litres/100 km on the highway, respectively.

Meantime, at last spring’s New York Auto Show, Mazda and Kia unveiled new production models with similar fuel economy. Ford’s Fiesta subcompact already achieves something better than this level of fuel economy and the Chevrolet Cruze Eco gets 4.6 litres/100 km on the highway. Ford’s Focus compact is also sold with a Super Fuel Economy Package, which for $900, delivers highway fuel economy better than 5.0 litres/100 km. The future? We’ll see bigger cars using fuel at compact and subcompact levels. Chevrolet, for example, plans to introduce a 2013 Malibu Eco mid-size sedan capable of almost 5.0 litres/100 km on the highway.

At the New York Auto Show, Kelleher’s U.S. counterpart, Hyundai Motor America CEO John Krafcik told trade journal Automotive News that U.S. consumers, which drive all product decisions in North America, are already altering their purchases.

“Segment shifts are happening in a major way,” he told AN. “The most visible shift is from mid-sized car to compact car.” Compacts, he predicted, will displace mid-sized cars to become the largest retail-sales segment this year in the U.S. Small cars already dominate the Canadian marketplace, accounting for about 50 per cent of all passenger car sales.

For today’s buyer, expect car companies to headline their fuel-efficient vehicles and the technologies that make them so.

“We're going to lead with fuel technology that we know people will pay for in an environment of rising fuel prices,” GM North America president Mark Reuss told Automotive News.

GM Canada’s Williams points to GM’s new eAssist as an affordable technology that combines a lithium-ion battery, electric induction motor-generator and regenerative breaking to improve fuel consumption by up to 24 per cent. Both the Buick LaCrosse and Regal are being offered with eAssist for 2012 and in New York, Reuss suggested eAssist may be destined for hot-selling crossovers such as the made-in-Canada Chevy Equinox and GMC Terrain, and others.

But even without hybrid technology, buyers are finding a growing number of new gasoline models capable of 5.0 litres/100 km.

Follow on Twitter: @catocarguy

 

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