Green Cars - developing and marketing environmentally-friendly vehicles

American Demographics, Jan, 2001 by Dale Buss

After decades of botched starts, the promise of an eco-friendly, mainstream automobile is lurching ahead again.

Mark Schar might be described as the poster boy for Early Adopters. He bought his first home computer - an Apple II - 20 years ago. He and a colleague shared the first PC inside the offices of Procter & Gamble Co. And Schar was in the vanguard of buyers of the new Volkswagen Beetle. So his most recent cutting-edge purchase seemed a natural: a $13,000 Corbin Sparrow, a single-seat commuter car, powered by a non-polluting electric motor. "Spending a lot of time in Europe, you realize how connected those people are to their environment," says the 43-year-old Schar, who has trotted the globe as a brand manager for P&G, and now runs its business-to-consumer Internet initiative. "I saw this and said, `That's something worth investing in.'"

Schar represents a distinct group of American consumers who are eager to buy environmentally-friendly vehicles. Whether they're motivated by a passion to be green or a desire to be style setters, they are the group the auto industry is counting on to bring the latest wave of eco-friendly automobiles to a new level of legitimacy in the marketplace. Indeed, after decades of false starts, the promise of an ecologically innocuous but mainstream automobile is lurching ahead, again. Spurred on by higher gasoline prices, tougher new emissions laws in California, new leadership in Detroit and Japan, and above all, technological advancements, Japanese automakers Honda and Toyota have both recently introduced environmentally-friendly models. Other manufacturers are expected to follow suit. "The technology is now getting good enough," says Ken Stewart, brand manager of advanced-technology vehicles for General Motors Corp., "where the concern once was overcoming the laws of physics, now it's overcoming market conditions."

Until recently, consumers like Schar have been able to choose from only a handful of quirky, all-electric cars to satisfy their desires. But last year, two brand-new cars with super fuel-efficient, "hybrid," gasoline-electric powertrains - Honda Insight and Toyota Prius - surged into the marketplace, garnering as many as 10,000 orders in total. The Big Three automakers will begin introducing their own hybrids in a few years, including entries in the popular truck and sport-utility vehicle segments. Ford's first hybrid will be the 2003 version of the Escape, its new, small SUV; Chrysler Group will bow in with a hybrid of the Dodge Durango SUV in the same year; and GM will arrive with hybrid Chevrolet and GMC trucks in 2004. And within another decade or so, hydrogen-powered "fuel cells" could begin ushering in an entirely new era of virtually pollution-free driving.

Today, research shows that consumers' receptivity to eco-friendly cars may be on the rise. In a survey of 500 motorists conducted for American Demographics by QuickTake, a division of Greenfield Online, a Wilton, Connecticut-based market research firm, 68 percent of respondents said they would be interested in buying an electric or hybrid car within the next three to five years. And about one out of four said they would be extremely interested in purchasing an eco-friendly car in three to five years. Christopher W. Cedergren, an analyst with the Nextrend automotive consulting service, projects that hybrids could make up 20 percent of total automotive sales in this country by the end of the decade.

It was only a few years ago that the green-car movement seemed stalled at the entry ramp. The majority of entrants into the market had a range of less than 200 miles and had to be tethered to an outside power source to be charged overnight. When General Motors debuted its all-electric EV-1 in 1996, the car was supposed to help legitimize green cars in the marketplace. But it took GM more than two years to sell or lease the first lot of just 500 of the $35,000 EV-1s, and by last year the company stopped producing them altogether.

Even the end of the mass market electric-vehicle dream couldn't snuff out embers of demand, however. Several years ago, rising consumer consciousness about global warming began to draw attention, once again, to automotive pollution. And nowadays, according to our QuickTake survey, 83 percent of motorists say they are concerned about global warming; 77 percent say it is "extremely" or "very" important that car manufacturers make cars that produce less carbon dioxide. Also, regulators have been goosing the equation, over car makers' objections, by continuing to ratchet up their emissions requirements: By 2003 more than 6 percent of all vehicles sold in California will emit practically no particulates.

No surprise then, that automakers have launched a renewed effort to produce an environmentally-friendly vehicle that would sell to consumers. So far, in Japan at least, Toyota and Honda have proved that Prius and Insight can deliver acceptable punch with super fuel efficiency. The cars rely on an internal-combustion engine that switches off in favor of an electric motor during idling - and then continually recharges the motor battery while the car is moving. Neither has to be plugged into a charger - ever.