The greening of the auto industry and what it means to you

The introduction of the Toyota Prius in 1997 proved a pivotal turning point in the evolution of the automobile.

The introduction of the Toyota Prius in 1997 proved a pivotal turning point in the evolution of the automobile.

It demonstrated, for the first time, that alternative fuel technology – in this case a full hybrid electric vehicle – could appeal to a large segment of today’s automotive market.

To date, more than 1.6 million Priuses have been sold worldwide.

Lexus, Mercedes-Benz, Chevrolet, Toyota, Honda and Ford are among the major nameplates that have introduced hybrid vehicles to the market so far. Ford has predicted that by 2020, hybrid vehicles will account for 25 per cent of their global sales.

(It’s interesting to note that the first U.S. patent for a gas-electric hybrid vehicle was granted in 1905, to a Belgian inventor.)

Later this year, Nissan will unveil its hotly-anticipated LEAF, the first mass-produced, all-electric vehicle (expected to arrive in Canada in the second half of 2011). GM plans to introduce the all-electric Chevrolet Volt later this year, as well.

Nissan already has close to 20,000 pre-orders for the LEAF. Clearly, there is a growing demand in the marketplace for environmentally friendly, fuel-efficient vehicles.

The commercial and critical success of hybrid vehicles has not been lost on automobile manufacturers. Today, most major automakers and several independents are developing vehicles that consume less (or no) fossil fuel and emit fewer pollutants.

Personally, I’m excited about these developments and where our industry is headed. The auto sector is in the midst of a major paradigm shift away from the internal combustion engine as the sole source of vehicle propulsion.

But what do new technologies mean for average car buyers? What are the issues that consumers grapple with, before they decide to purchase a green vehicle?

At this stage in the green vehicle revolution, there is still much confusion among consumers about the various technologies, and the pros and cons of each.

Hybrid, hybrid-electric, plug-in, air engine, ethanol, solar-powered, hydrogen and biodiesel – these are just some of the alternative fuel/power systems that automakers have started producing or are experimenting with.

But for all the advancements in automotive technology, price is (and will always be) a major factor among consumers. Today, the cost of a hybrid is at least $2,500 more than an equivalent vehicle that relies on an internal combustion engine.

Plus, do hybrid vehicles hold their value comparative to non-hybrid models? Overall, hybrids do command slightly higher prices than their counterparts, but many variables come into play, such as gas prices, supply and demand and the current popularity of specific models.

Some hybrid buyers will realize a cumulative savings in gas over the lifetime ownership of their vehicles, which offsets the higher price tag up front. Yet other owners will continue to enjoy the thrill of being an “early adopter” of green technologies and like the fact that they are doing their part for the environment.

The price “premium” has been a significant deterrent for many would-be purchasers of hybrids and other green technology vehicles. But, as consumer demand and production runs for green vehicles increase, prices will inevitably fall.

The Ontario government currently offers subsidies of up to $10,000 on the sale of plug-in and electric vehicles. At present, there is a limit as to the total amount of money available in this fund.

Another big question concerns the longevity of green vehicles. This pertains mostly to electric cars, which have to be recharged at regular intervals. No large-scale, plug-in infrastructure has been established to accommodate a mass number of all-electric vehicles.

In a future column, I’ll examine some of the new technologies under the hood so that readers have a better appreciation of what’s available now and down the road.

This column represents the views of TADA. Email or visit

Joel Cohen, president of the Toronto Automobile Dealers Association, is a new-car dealer in the GTA.

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