Not So Dirty

Decades from now, electric cars may come to dominate the auto industry. But when the first mass-market all-electric vehicles hit showrooms in the coming months, high prices coupled with limited range and little to no ability for quick and convenient recharging means that the next generation of green cars will likely be a mishmash of old and new technologies. Many will be powered in part by a fuel with a dirty reputation: diesel.

Often derided as loud and foul--smelling in the United States, in Europe diesels have long been popular. Over the past five years, a new generation of clean cars has emerged, and the newest iterations are only getting better. Next year, Peugeot and Mercedes will introduce the first diesel-hybrid vehicles to the mass market. Volvo and Peugeot will follow suit with plug-in versions in 2012 and 2014. These new vehicles will be as clean and fuel-efficient as gasoline hybrids, but with much more power. With emissions standards expected to rise and battery costs unlikely to fall significantly in the near future, analysts say the prospects for clean diesel in Europe are strong, despite the higher price tags compared with traditional cars. Diesel has always been more fuel-efficient than gasoline, but for a long time it also emitted heavy amounts of sulfur and nitrous oxide. In recent years, however, thanks to stringent emissions requirements in both the United States and Europe, automakers have found a way to reduce almost all of these noxious gases and retrofit older vehicles to meet current standards. Today’s best clean-diesel automobiles such as the Audi A3 TDI and the Volkswagen Jetta TDI are quiet, low--emitting cars with lots of pep. Their combined miles-per-gallon average is only slightly less than hybrids like Toyota’s Prius and far better than their gasoline-engine counterparts. In fact, Green Car Journal, a magazine devoted to energy-efficient automobiles, rated the Jetta TDI and A3 TDI as its Green Car of the Year in 2009 and 2010, respectively. “Clean diesel is gathering momentum,” says Ron Cogan, the magazine’s publisher.

The next generation of diesel vehicles will be even cleaner. Next spring Peugeot plans to release its 3008 Hybrid4, a crossover vehicle that will be the first diesel hybrid on the market. The car consumes 35 percent less fuel than its ordinary diesel sibling. It emits just 99 grams of carbon dioxide per kilometer, 10 grams more than the smaller Prius. Yet the Peugeot gets slightly better gas mileage and is far more powerful. Controlling the front wheels is a 163-horsepower, 2-liter turbo diesel engine, while a 37-horsepower electric motor that runs on a nickel-metal-hydride battery, controls the back.

The vehicle generated considerable buzz at the 2010 Paris Motor Show and is expected to do quite well in European markets, especially France and Germany. This is due in part to the fact that European regulators, unlike their American counterparts, have taxed gasoline at far higher rates than diesel for roughly a decade; thus, 50 percent of all cars sold in Western Europe run on diesel. In France, that percentage is more than 70. The availability of cheap, powerful, and clean diesel cars is why gasoline hybrids account for less than 1 percent of auto sales in Europe, says Julie Boote, an auto analyst for Pelham Smithers Associates in London.

Diesel hybrids do, however, have a major limiting factor: price. Diesel engines add as much as $2,000 to the cost of making an automobile, and hybrid technology can tack on an additional $5,000. This added price tag is why automakers such as Toyota and Volkswagen have balked thus far at introducing their own diesel-hybrid vehicles, according to analysts. “People like to be environmentally friendly but not if it costs them too much,” says Jay Baron, the president of the Center for Automotive Research in Michigan.

That’s why, with the exception of the Prius, most Americans continue to buy cars that use conventional gasoline engines. Yet Peugeot and others are hoping their diesel hybrids will become exceptions to the trend. They’re also hoping that tax rebates for hybrids in Europe (France offers close to $3,000 for instance) will spur consumers to choose a more powerful and fuel-efficient vehicle. For those who don’t want to buy, Peugeot plans to lease its diesel-hybrid crossover at a lower monthly rate than its nonhybrid sibling. And eventually, says the company, costs will come down due to economies of scale, and sales of its diesel hybrids and plug-in hybrids for the 3008 will reach 100,000 in 2015.

It took about five years for Toyota to reach that sales mark with the Prius, so if Peugeot does the same, that would certainly be a success. With European emissions regulations expected to increase considerably by 2014, the success of Peugeot and other diesel hybrids will likely be determined by how fast auto companies can make an affordable electric car without all the expected hassles. As Baron puts it, if battery costs do not come down quickly, “the ultimate way to get high fuel economy would be a diesel hybrid.”

With Azriel James Relph and Tania Barnes in New York