Revenge of the internal combustion engine

ANN ARBOR, Mich Tue Nov 15, 2011 12:19pm EST

Suburban Chevrolet dealership sales person Scott Northway shows two potential customers a Chevrolet Cruze on display at the dealership in Ann Arbor, Michigan, October 22, 2011. REUTERS/Rebecca Cook

Suburban Chevrolet dealership sales person Scott Northway shows two potential customers a Chevrolet Cruze on display at the dealership in Ann Arbor, Michigan, October 22, 2011.

Credit: Reuters/Rebecca Cook

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ANN ARBOR, Mich (Reuters) - At the Chevrolet dealership here, customers want to see and touch the Volt, the gasoline-electric hybrid hailed by enthusiasts as the kind of innovation that could secure the future of General Motors.

But they usually kick the Volt's tires and move on, often to a Cruze. The compact Chevy gets up to 42 miles per gallon, and you can buy two of them for the cost of one $40,000 Volt.

Call it the revenge of the internal combustion engine.

Major automakers and the Obama administration have bet heavily on hybrids and pure electric vehicles. But new and more efficient gas engines are winning on the showroom floor, an inconvenient truth that could slow the acceptance of electric cars.

"They come in to look at a Cruze. They drive a Volt. They go back to the Cruze. It really helps us with sales of the Cruze," said Michael Mosser, general manager of Suburban Chevrolet of Ann Arbor.

The plug-in Volt has become General Motors Co's high-mileage halo car. But the hybrid has also been outsold by its simpler sibling by 200 to 1. Globally, GM has sold about 5,000 Volts versus 1 million Cruzes.

"It's naive to think that the world is going to switch tomorrow to EVs," said Larry Nitz, GM's executive director for vehicle electrification.

Meanwhile, new cars with traditional engines are showing striking fuel efficiency gains thanks to technologies such as turbochargers, direct injection, and engines that shut down when the vehicle stops, then spring back to life when the driver presses the accelerator.

Turbochargers compress the air flowing into engines, allowing more fuel into the cylinders, while direct injection provides improved delivery of the fuel needed in each engine cylinder so it burns cleaner and more efficiently.

The average fuel economy for new vehicles is now 2.5 more miles per gallon than four years ago. And emissions of greenhouse gases per new car are down 14 percent since late 2007, according to the University of Michigan Transportation Research Institute.

(For a graphic on improving fuel efficiency, see link.reuters.com/wer84s.)

At the same time, the number of gas-powered models in U.S. dealer showrooms boasting 40 miles per gallon or better in highway driving has tripled in the last five years.

That has made winners of cars like the Cruze, Ford Motor Co's Focus and Hyundai Motor Co's Elantra.

Every automaker is focused on improving fuel efficiency, including BMW, which just reintroduced a four-cylinder engine in the U.S. market for the first time in a dozen years, and Honda Motor Co Ltd, which offers a 41-mpg automatic version of its 2012 Civic.

Increased fuel efficiency also has put pressure on battery makers and possibly the U.S. Department of Energy, which has used $2.5 billion of taxpayer money to help pay for the development of electric car technology.

Having watched rival Toyota Motor Corp seize the mantle as the world's greenest automaker with its Prius hybrid, GM says it plans to push its advantage with the rechargeable Volt and hopes consumer preferences catch up.

Estimates vary on how fast consumers will accept electric vehicles. At the bullish extreme, Nissan Motor Co Ltd, which sells the all-electric Leaf car, is forecasting that EVs will make up 10 percent of global sales by 2020, compared with virtually nothing now.

But GM and other automakers are also looking to boost the performance of the gas engine.

"You've reached the maximum return in the internal combustion engine," said Mark Perry, director of product planning for Nissan Americas. "Just the pure physics, there's a limit."

Even so, most automakers believe no single approach will solve the fuel economy problem. "There is no silver bullet answer," Perry said. "It's more like silver buckshot."

'JUST THE LITTLE TOE' IN THE WATER

One major incentive driving fuel-economy gains is the new federal requirement that an automaker's fleet average 54.5 miles per gallon by 2025.

Ford offers its Ecoboost technology -- a combination of fuel injection and turbocharging aimed at giving smaller gas engines more power and greater efficiency. The No. 2 U.S. automaker also is rolling out a Focus EV.

"Until electric does have the ubiquity of plugging, it's not going to have an appeal to 100 percent of the customers," Ford Chairman Bill Ford said last month. "While that's happening, we want to make our other technologies as fuel-efficient as we possibly can."

Toyota, which will roll out a plug-in version of the Prius next year, remains skeptical of the pure EV push.

"Pure battery electric cars will most likely remain a niche for some time to come," said Bill Reinert, Toyota's U.S. national manager for advanced technology. "The market for these products is nearly all regulatory push, not market pull."

Jack Hollis, head of Toyota's Scion brand, added, "Everyone is really just putting a toe in the water when it comes to EVs. And for most companies it's just the little toe in the water."

Surveys support the view that most consumers do not want to pay extra for electric vehicles. The better fuel economy gets, the less interested in EVs they are.

"At 50 miles per gallon, the majority of consumers around the world lose interest in electric vehicles," said Joe Vitale, head of Deloitte Touche Tohmatsu Ltd's automotive practice

Deloitte found in a survey that global expectations for driving range and charging time for electric vehicles far outpace reality. More than half of respondents were unwilling to pay any price premium for an EV.

Toyota's Reinert said the industry will likely reach the theoretical maximum efficiency on gas engines over the next decade. But with hybrid technology and next-generation biofuels, gasoline engines could get to 95 percent of the benefits offered by EVs, he said.

In the meantime, improvements will come from dozens of small tweaks, like reduced friction and heat loss, and electrification of parts like the oil, water and power steering pumps. Enhanced transmissions, lighter materials -- like stronger steel and alloys -- and more aerodynamic designs also will be key.

"As long as the person driving doesn't feel like the car is struggling, he doesn't care what's under the hood," said David Champion, senior director of Consumer Reports.

Even proponents say consumers will need time to get used to electric cars.

"When people switched from the horse, the gas car solved so many problems," said Chris Paine, whose documentary "Revenge of the Electric Car" looking at EV development at GM, Nissan and Tesla Motors Inc debuted last month.

"What it really was was a new paradigm," added the filmmaker, who five years ago criticized GM in another documentary, "Who Killed the Electric Car?"

"It sometimes takes people a little while to figure out things are changing for the better."

(Additional reporting by Kevin Krolicki in Detroit and Jonathan Weber in San Francisco; editing by John Wallace)

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