L.A. Auto Show Thinks Green

Looking beyond the luxury models on display, energy diversity is the theme this year in Los Angeles

by Christopher Palmeri

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General Motors (GM) Chairman and Chief Executive G. Richard Wagoner Jr. had just finished a half-hour speech explaining his company's environmentally friendly initiatives when two activists jumped on stage.

From the podium, Matthew Leonard, a campaigner with the Rainforest Action Network, urged the Detroit honcho to sign a pledge agreeing to make GM "the most fuel-efficient company in the auto industry by 2010." Wagoner, who stands an impressive 6 feet 5 inches, quickly shoved Leonard aside. "I think my speech spoke for itself," he said. "I'm sorry, you have to go now."

That's how it went at the Los Angeles Auto Show, which opened to the public Dec. 1. Automakers unveiled a string of new green initiatives, so much so that a feeling of confusion hung in the air, as attendees were left to ponder a slew of new technologies and fuel sources, and whether it was even enough. "We've seen too many concept cars and prototypes," Leonard told BusinessWeek.com shortly after storming the stage. "We want commitments."

Still, all the green announcements from the automakers impressed some. "Everybody decided to move into fuel-efficient vehicles as quickly as they could," says Thomas Libby, senior director of industry analysis at the automotive research firm J.D. Power & Associates. "Now we're seeing the fruits of that."

Like BusinessWeek.com, J.D. Power is a division of The McGraw-Hill Cos. (MHP).

Slew of Green Debuts

Wagoner put the era in historical context during his speech. When the first L.A. Auto Show debuted 100 years ago, he noted, there were three competing engine technologies—electricity, steam, and gasoline. "Going forward, it is highly unlikely that oil alone is going to supply all of the world's rapidly growing automotive energy requirements," he said. "The key is energy diversity."

For GM, that meant talk of flexible-fuel vehicles, ones that run on gasoline or an ethanol blend called E85. It also meant unveiling a new hybrid gas/electric GMC Yukon sport-utility vehicle and plans for a "plug-in" version of the popular Saturn Vue Green Line SUV. Unlike the first generation of hybrid vehicles that use a gasoline engine to recharge electric batteries, plug-ins charge themselves through a home electrical socket, something that can reduce fuel consumption even further. It's still an experimental technology, however. Wagoner said in his speech that he cannot predict when such a car might go into production. "I can tell you it's a top-priority program at GM," he said.

Other manufacturers chose environmentally conscious California as the place to unveil their new green vehicles. Nissan Motors (NSANY) showed off its newly designed Altima sedan with a hybrid engine borrowed from Toyota Motor (TM). Funny that, because Nissan chief Carlos Ghosn famously said he didn't think hybrid cars were a profitable business. DaimlerChrysler's (DCX) Mercedes-Benz division touted its new Bluetec diesel engine technology, billed as the cleanest diesel engine in the world. BMW unveiled its experimental Hydrogen 7 car (see BusinessWeek.com, 9/12/06, "BMW's H-Bomb"), a version of its 7 Series sedan that will run on liquid hydrogen. The company, which also plans a big rollout of cleaner diesel cars, is only making 100 of the hydrogen models.