Thursday 7 August 2008

Carmakers race for green technology lead


By John Reed in London
Published: August 6 2008 20:19

Maria Recchia-O’Neill got more than she bargained for when she began driving an experimental hydrogen-powered, zero-emission car around Westchester county, New York.
The 50-year-old teacher liked the brisk acceleration and uncanny quietness of the car, which is powered by a hydrogen fuel-cell stack that runs an electric motor and emits only water vapour via four slots on its rear end.

“I bonded with it,” Ms Recchia-O’Neill said of General Motors’ Equinox sport utility vehicle. What surprised her, however, was what she calls the “spewing of feelings” by other motorists tired of exorbitant fuel prices or worried about emissions. “People would roll down their windows at intersections, or give me the high-five or thumbs-up sign,” she recalls. “Their biggest question was, ‘When can I buy one?’ ”
The car is not yet available to retail customers, and GM – like most other carmakers testing fuel-cell cars – says mass production is at least a decade away. GM last year began offering 100 Equinoxes on a pilot basis to drivers who live near hydrogen filling stations.
Some analysts doubt that fuel-cell cars, because of their costly infrastructure requirements, will ever come into widespread use.
However, fuel-cell technology – along with hybrid and plug-in electric vehicles – is getting a boost from soaring petrol prices. A century after Henry Ford’s Model T revolutionised the way cars were made and sold, carmakers are developing new hybrid, hydrogen and electric models that will over time reduce their reliance on the internal combustion engine.
Deutsche Bank, in a recent research report, forecast that motor vehicle technology would “change more significantly over the next five years than it has in the past 100”. Katsuaki Watanabe, president of Toyota, GM’s biggest global rival, speaks of a future car that “makes the air cleaner” as you drive.
Americans have embraced alternative fuel cars such as the Prius, Toyota’s best-selling hybrid, accounting for nearly two-thirds of the car’s 1m-plus sales to date. In a sign of hydrogen’s emergence as an automotive technology, GM last year moved fuel cells from its research and development division into its business unit that develops powertrains.
America’s largest carmaker, which has suffered ratings downgrades and lost $15.5bn in the second quarter as sales of SUVs and pick-up trucks plummeted, is also developing the Chevrolet Volt, a battery-powered saloon due to launch in 2010.
With petrol prices touching record levels, car technology has occupied centre stage in the US presidential campaign.
Barack Obama, the Democratic contender, this week promised $4bn for development of plug-in hybrids, with 1m of the cars to be ready for sale by 2015.
He also backed tax credits for buyers of future electric cars – something GM wants to bring the Volt within reach of ordinary Americans’ pockets.
John McCain, the Republican presidential candidate, in June proposed a $300m prize for the inventor of a next-generation battery powerful enough for long-range electric cars.
But much of the investment in alternative powertrains is now coming from non-US carmakers. Alongside GM and Ford, Germany’s Daimler and Japan’s Toyota and Honda also have advanced fuel-cell programmes.
“We’re seeing all the major manufacturers racing to be the first to market,” says Jonathan Butler, analyst with Fuel Cell Today, a UK-based consultant.
Honda recently launched the FCX Clarity, a hydrogen-powered sedan. The carmaker, which is adding three models to its own hybrid range, began delivering the cars to about 200 customers in southern California last month for three-year, $600-a-month leases.
As well as reducing fuel bills and emissions, hydrogen cars could also help carmakers by lowering material costs. A fuel-cell car has about 10 per cent of the moving parts of a conventional vehicle.
But some carmakers and environmentalists remain sceptical about fuel-cells’ potential.
“I don’t think we’ll ever have hydrogen passenger fuel-cell vehicles because the alternatives are more attainable and more affordable,” says Felix Kramer, founder of CalCars, a California-based advocacy group that favours plug-in hybrid cars.
Mr Kramer and others query the technology’s green credentials because of the carbon emissions generated when hydrogen is derived for fuel. Limited refuelling infrastructure also means that the few hundred hydrogen cars on the road worldwide are all custom-built, and prohibitively costly.
When testing the car, Ms Recchia-O’Neill was unable to visit her daughter in Boston because she would have been unable to refuel. However, she describes testing the car as a “great experience.” “I felt like this was making history,” she says.
Copyright The Financial Times Limited 2008