Fuel cell and clean diesels gaining ground on plug-in EVs

Article by Anita Panait, on November 19, 2013

With carmakers and customers starting to shift to vehicles powered by environment-friendly power sources, regulators in the United States are mulling a modification of their rules that favor plug-in electric vehicles. President Barack Obama touted electric cars in his first State of the Union address and even provided $5 billion in US loans, grants and tax breaks just to boost their development.

His administration has even stopped loans for their development and has reversed moves to de-emphasize fuel cells. This comes as sales of plug-in EVs are on track to achieve half of Obama's goal. California -- one of around 10 states requiring carmakers to sell zero-emission vehicles -- mulls modifying its system of tradable credits to stop favoring plug-ins over hydrogen-powered cars.  That would help Honda Motor Co, but at the same time it could hurt Tesla Motors Inc.

Audi of America President Scott Keogh remarked that the government should not "pick technologies that they say or feel may be better." Keogh is seeking more favorable regulatory treatment for clean diesel. Under the current rules, carmakers selling vehicles in the US must double their vehicles' average fuel economy by 2025 -- a target considered impossible to achieve just by making improvements on the gasoline engine but is achievable through other power sources. 

Auto industry executives surveyed by Booz & Co. and Bloomberg LP expect vehicles powered by electricity and other alternative powertrains would account for 20 percent of sales by 2020 if the government continues its support. In the event the government stops its support for such vehicles, they would account for only 12 percent. In 2009, Obama set a target of 1 million electric vehicles plying US roads by 2015. So far, around 95,000 plug-in vehicles have been sold, according to Alan Baum, an analyst at Baum & Associates, adding that sales would hit 500,000 units in 2015.

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