Automakers sold on alt-fuel vehicles

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DETROIT -- Electric and hybrid vehicles are increasingly important to automakers, but the driving force is not necessarily consumer demand but the need to meet ambitious fuel standards the U.S. government set for 2025, requiring carmakers to meet a vehicle fleet average of 54.5 miles per gallon.

Vehicles from manufacturers ranging from Toyota to Chevrolet, Nissan, Kia, Fiat, Buick and even Mercedes-Benz tooled quietly around a tiny, indoor track last week inside the Cobo Center in Detroit.

Rather than trying to offer a high-speed thrill, the 5-year-old "Drive Green Experience" at the North American International Auto Show aims just to get more people inside electric and hybrid cars.

Upstairs, carmakers from around the globe were introducing still more vehicles that use alternative power systems, including the new Cadillac ELR, a luxury coupe that borrows plug-in Chevrolet Volt technology from its sibling General Motors.

Sales of electric and hybrid vehicles are growing, rising from about 2 percent of the market in 2011 to 3.4 percent last year, said Jeff Schuster, senior vice president of forecasting at LMC Automotive, a market research firm out of Troy, Mich. He was a panelist during a Society of Automotive Analysts meeting in Detroit last Sunday.

His projections show alternative vehicle sales rising to account for about 8 percent of the total market by 2019 -- and then leveling off. "I think there's more buzz right now than volume," Mr. Schuster told the group.

Since many drivers may never truly buy into the alternative segment, the push to get fuel savings also is driving investment and innovation all through the manufacturing process.

From better tires to more efficient systems for using gas to lighter vehicles and more aerodynamic designs, the industry's efforts are providing business opportunities for suppliers like Pittsburgh-based coatings and silica provider PPG, aluminum maker Alcoa and Canonsburg-based simulation technology business Ansys.

"You've got to look at all the pieces," said Douglas E. Patton, senior vice president at Denso International America Inc., a Japanese company that supplies technology and components to the auto industry.

Denso's gasoline direct injection systems -- which the company says can produce up to 20 percent better fuel efficiency -- have been around for years, but now there's an incentive to make them work for more vehicles.

"This has nothing to do with market demand. It has everything to do with fuel requirements," Mr. Patton said.

In a press conference that PPG gave Tuesday at the auto show, company executives talked about how new fiber glass composites can help make vehicles lighter to improve fuel efficiency. PPG is also developing new generation silicas that can help tires last longer and produce better mileage.

Every component helps improve fuel efficiency but Denso, for one, is predicting that electrification will be the key to reaching the 2025 goal. That doesn't necessarily mean through all-electric vehicles.

For the moment, Mr. Patton admits that he -- like many Americans -- wouldn't be comfortable counting on an all-electric vehicle for his daily commute. He works in Southfield, Mich., and generally drives around 20 miles round trip but sometimes heads out to visit customers during the day, adding miles that might push a strictly electricity-powered vehicle to its limit.

"The range anxiety of the U.S. public is very difficult to overcome," he said, noting that it is likely a factor in helping hybrids gain traction.

It was difficult to find a display at the Detroit auto show, which continues through next Sunday, in which a hybrid vehicle was not featured. Even cars and pickup trucks powered more traditionally regularly carried claims of much improved fuel efficiency.

Ford's 60,000-square-foot display covered the gamut of the brand's offering but also devoted a considerable amount of space to its alternative vehicle cars. There were full hybrids, plug-in hybrids and all-electric cars to bolster the company's "The Power of Choice" tag line.

On Thursday, the company announced it had sold more hybrids in the fourth quarter than any other three-month period its history -- 19,554. Overall, Ford sold 2.2 million vehicles in the U.S. last year.

Ford officials have been encouraged with the response to the five-passenger C-Max Hybrid, which starts at $25,200. Launched in the fall, more than 8,000 sold in October and November.

Just as manufacturing processes are being adapted to help meet the fuel standards, so are existing cars.

The Fusion Energi, which the company said is its fifth electrified vehicle to launch in the past year and starts just below $40,000, illustrates that. The line wasn't originally meant to offer a plug-in version, Ford spokeswoman Wendy Clark said, but an engineer pointed out that a battery would fit into the Fusion trunk. To test that theory, she said, "They got literally a cardboard box and fit it in there."

businessnews - autonews

Teresa F. Lindeman: or at 412-263-2018. First Published January 20, 2013 5:00 AM


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