Operations

What Types Of Green Vehicles Will Survive?

Posted on July 8, 2009

FT. LAUDERDALE, FL - Auto companies going forward will produce more choices for American consumers.

We will continue to have many choices, ranging from trucks to small cars, SUVs to Crossovers. But what will dominate our roads in the future depends on the price of gasoline. Americans crave roomy, big, comfortable vehicles, and the industry will need to ensure that consumers enjoy these comforts, even as fuel-economy standards rise.

So, expect the U.S. landscape to continue being dominated by the internal combustion engine. But our roads will see more hybrids, plug-in hybrids and, yes, electric vehicles. Let's take these one at a time.

  • Hybrids: Examples are the Toyota Prius, Ford Fusion and Chevy Tahoe. Right now, hybrids sell about 2% of the new vehicles each year.
  • Plug-in Hybrids: The next generation of hybrids. Plug-in hybrids are even less dependent on fossil fuels than hybrids because they do not depend on the gasoline-powered engine to recharge the battery. The battery is recharged through an electric outlet.
  • Electric cars: You'll see more of these vehicles roll out in the next 24 months. One industry-leader will be the Chevrolet Volt. At first, they will be much more expensive. In the next five to 10 years, however, you'll see them reach mass market production status. Depending on where gasoline prices are, hybrid sales could become 10% of the market.
  • Ethanol is part of the solution, as up to a 10% blend into gasoline. Unfortunately, I see little hope for a true ethanol flex-fuel vehicle, as E85 is not available to consumers conveniently, or at an attractive price. Perversely, the government ethanol subsidies intended to help attract consumers to ethanol are paid to the "blender." Translation: Big Oil. Now that you just can't make up!
  • One technology that gets lots of speculative, almost sci-fi attention is still far off. That is hydrogen. Hydrogen engines have a lot of practical issues to overcome. It is in the perpetual future - it's been 10 years away for many years, and in 10 years, it will still be 10 years away.

Consumers will need to weigh the cost of the new technologies with the price of gasoline. These innovations will cost up to $4,000 more per vehicle, so consumers need to do the math and decide whether it's an investment they want and can afford to make.

Still, AutoNation's showrooms going forward will have choices that 20 years ago we could not have imagined.

The future will be different for these companies, no doubt. But they're making the painful changes that have been needed for years - and that could make the American auto industry shine again.

Today, we are all part of the reinvention of America's automobile industry.

Source: AutoNation Chairman and CEO Mike Jackson in the South Florida Sun-Sentinel, 6/21/2009

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