General Motors (NYSE: GM) plans to have 50% of its cars in the US running on ethanol by 2012. Reuters says that "GM will have 11 ethanol-capable vehicles on the market this year and 15 in 2009."
The move may help keep oil and gas prices down and it may cut dangerous emissions, but it also may not save the consumer a dime. CNN Money reports that "corn and soybean prices soared in 2007 due largely to demand for the alternative fuel ethanol." That means the fuel is likely to get much more expensive.
At this point, the cost of an alternative energy car is several thousand dollars higher than the price of a gas-powered car. Increased production volume may solve that over time, but those savings may not hit the consumer for several years.
Being "green" may come with a high cost. If the economy stays weak, that may not sell.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
2-07-2008 @ 10:46AM
Tom at GM said...
Two comments:
First, ethanol will become much more viable when non-grain sources become widely available, which is why GM has made two announcements in the past month regarding its partnership with Coskata.
Also, the cost to make a vehicle E85 compatible is much less than "several thousand dollars," which is one reason E85 is so promising as a near-term strategy.
2-07-2008 @ 12:41PM
jpdr1100 said...
Don't forget the real reason driving GM to do this: they get CAFE credits for those flex-fuel vehicles regardless of the fact that the owners use nothing but gasoline.