Who Needs Gas Engines?

On the long list of troublemakers plaguing the world today, gasoline ranks high. It pollutes the air, warms the globe and makes us beholden to regimes on three continents. If nothing else about gasoline bothers you, the spiraling cost pinches budgets and fuels inflation.

Auto manufacturers have spent fortunes developing hydrogen vehicles, probably the most promising technology to wean us from oil. I recently drove Honda's million-dollar hydrogen fuel-cell vehicle, the FCX, and GM has its own fleet of hydrogen minivans. But without a network to create and convey the fuel, the hydrogen highway remains a dirt track.

Now automakers are revving up production of low-gas and no-gas vehicles that go beyond gas-electric hybrids. The ones most likely to gain market share don't involve tricky new technologies, says John DeCicco, who studies automotive strategies for Environmental Defense. He thinks the internal-combustion engine is here to stay but will increasingly run on biofuels -- from prairie grasses, corn and other plants -- a niche that has "serious backing" now, he says.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

Below, we give you the lowdown on four alternative energies. You can also view our slide show of seven vehicles that don't need much -- or any -- gasoline.

Diesel

True, diesel is made from oil. But diesel engines produce more power and deliver up to 30% better fuel economy than gasoline engines, and they generate less carbon dioxide, one of the greenhouse gases responsible for global warming. Unfortunately, high levels of sulfur allowed in the U.S. fuel supply have tended to clog exhaust-control devices and have confounded efforts to filter soot and smog-forming nitrogen oxides from diesel-engine emissions.

New U.S. clean-air standards that take effect on January 1 are changing all that. Refiners are removing almost all sulfur from the fuel, and automakers are adding filters to trap soot and installing devices that convert many smog-forming emissions into harmless substances.

For now, carmakers are limiting the number of diesel models sold in the U.S. because retooling the vehicles to meet the new clean-air standards is costly. Even Volkswagen, which has sold more diesel models in the U.S. than any other carmaker, is cutting back and plans to sell only Jetta and Touareg diesels in 2007. Mercedes-Benz will continue to sell its E320 diesel here. Jeep will add the 2007 Grand Cherokee to its diesel SUV lineup.

You'll pay a premium for a diesel vehicle -- typically $1,000 -- which is likely to rise by a few hundred dollars as a result of the new standards. You can also fill any diesel engine with biodiesel, made from soybean, corn or other vegetable oils. Biodiesel causes less pollution than petrodiesel does, and the crops used to produce it absorb carbon dioxide. But only about 600 stations, mostly in the Midwest, have biodiesel pumps.

E85

The 85 in E85 is the percentage of ethanol; the other 15% is gasoline. Ethanol is made from corn, so it's renewable, homegrown and spews fewer greenhouse gases than petroleum does. Also, some five million "flex fuel" vehicles, which can fill up with either E85 or gasoline, are already on the road -- mostly in fleets, but dealers sell them to individuals, too. And although these vehicles cost a few hundred dollars more to make, so far carmakers aren't passing on the extra cost to consumers. Among the flex-fuel models for sale are the Chevy Impala and Chevy Tahoe, the Ford Crown Victoria and the Dodge Caravan minivan.

Unfortunately, ethanol won't cure our oil addiction -- at least, not for years. The big sticking point now is that E85 is available at fewer than 800 filling stations, mostly in the Midwest. And the price varies widely, from about $2 a gallon to more than $4. When E85 is cheaper than gasoline, the retailer is passing along savings from credits available to the producer. Also, ethanol delivers lower fuel economy than gasoline because it contains less energy.

One study points out that even if every acre of corn grown in the U.S. were used for ethanol, it would meet only 12% of U.S. fuel needs. E85 will become a serious player when technology makes it cost-effective to turn wood chips, cornstalks and even prairie grass into ethanol.

[page break]

Natural gas

The Honda Civic GX, which runs on natural gas, costs about $680 a year to fuel up -- about half the cost of fueling a regular Civic. Plus, the GX is the cleanest internal-combustion vehicle on the road.

But there are some catches: The Civic GX is available only in New York State and California (check www.honda.com to locate dealers). It costs $25,035 -- about $6,900 more than the gasoline-powered Civic LX and $2,400 more than the Civic Hybrid. And you'll have to buy or lease a natural-gas dispenser for your garage and tap into your local utility line (kind of like installing a gas-fired clothes dryer). The dispenser, called Phill, costs $3,200 (or $40 to $70 a month to lease, depending on local clean-energy incentives). But the feds lend a hand: Most buyers are eligible for a federal tax credit of $4,000 for the car and up to $1,000 for purchasing the dispenser.

Refueling takes up to 12 hours and driving range is limited to about 200 miles, so the Civic GX is more suited for use as a commuter car or a grocery-getter than as a road car.

Electric vehicles

A documentary making the art-house rounds, Who Killed the Electric Car? finds conspiracy in the demise of GM's Saturn EV1. GM leased EV1s to California residents starting in the late 1990s, in response to the state's zero-emission-vehicle law. However, the carmaker pulled the plug after a lawsuit forced California to retreat from its strict mandate.

But the electric car isn't dead. One category generating some buzz is the NEV, or neighborhood electric vehicle, which is essentially a souped-up golf cart. The $8,995 four-seater GEM e4, from Global Electric Motorcars (www.gemcar.com), tops out at about 25 miles per hour. It can travel only roads with posted speeds of 35 mph or less -- making it popular in retirement communities. By some estimates it costs just 1 cent a mile to operate, about a tenth of the cost of a typical gas-engine compact. It has to be recharged every 30 miles or so, but all you have to do is plug it in to a 120-volt outlet for six to eight hours.

Zap's Xebra electric car ($8,900; www.zapworld.com) is a four-door three-wheeler imported from China that can rev up to 40 mph and runs 40 miles on a charge. Classified as a motorcycle, it's available at a handful of dealers on the West Coast and in Florida. But because it doesn't have four wheels, the Xebra isn't eligible for the federal tax credit, worth up to $1,000 for qualified electric vehicles.

A few highway-worthy electric vehicles are becoming available as well. Tesla Motors recently started taking orders at its Web site (www.teslamotors.com) for its $100,000 roadster, which will be built by Lotus in Great Britain. The company says the car can hit 135 mph and go 250 miles before it needs recharging. And it goes from zero to 60 in four seconds.

The Tesla Roadster and other longer-range EVs use lithium-ion batteries, which are lighter and can store more energy than traditional batteries. Expect the new batteries to be used in hybrids eventually. Toyota is developing a plug-in hybrid that runs on an electric motor for longer stretches of time.

Go to our slide show >>