Image: Honda hybrid
Stan Honda  /  AFP - Getty Images
Toyota ranked high on the list of green automakers in part due to its commitment to hybrid vehicles such as the Fuel Cell concept displayed at last months New York auto show.
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updated 4/10/2008 9:04:23 PM ET 2008-04-11T01:04:23

It may not be easy being green, but U.S. automakers no longer have a choice. Hobbled by declining sales, too reliant on gas-guzzling trucks and SUVs for profits, they face a new law mandating a 40 percent increase in U.S. vehicle fuel economy standards by 2020.

They've got their work cut out for them if they want to keep up with foreign competition. By our measures, Honda was the greenest major automaker in 2007, followed by Toyota, Hyundai Kia, Volkswagen, and Nissan. Appearing at the bottom of the list: Ford Motor, General Motors, and DaimlerChrysler, in that order.

To find the greenest automakers, we examined the eight companies accounting for 95 percent of all new vehicles sold in the United States in 2007. Our rankings, based on data from the Environmental Protection Agency, took into account fleet-wide "real world" fuel economy performance for each manufacturer for model year 2007 vehicles and the percentage of each automaker's vehicles that meets the EPA's "SmartWay" standard for low carbon and tailpipe emissions.

The best performers have highly efficient fleets, regardless of the technology behind their green autos. More than half of Honda's vehicles sold in the U.S. received the EPA's "SmartWay" stamp of approval. Honda, Toyota and Hyundai Kia all post real world fuel economy averages of nearly 23 miles per gallon. Even Volkswagen, which didn't offer a single new hybrid-electric or alternative fuel vehicle in the U.S. in 2007, beat the U.S. Big Three because of the overall efficiency of its fleet.

Our rankings reflect Detroit's heavy investment in flex-fuel autos, which run on a blend of gasoline and ethanol or other biofuel. Last year, GM sold 589,000 flex-fuel vehicles in the U.S., not counting heavy trucks. That was about 15 percent of its total sales for 2007, according to sales figures from Ward's Auto. Ford's 277,000 flex-fuel vehicles accounted for 11 percent of its 2007 sales. Chrysler — which officially split from Germany's Daimler AG in August — sold nearly 149,000 flex-fuel vehicles in 2007.

Trouble is, that's not enough. Flex-fuel autos are only green when filled with alternative fuels, and only about 1,200 gas stations across the country serve up the gasoline/ethanol mixture known as E85. By contrast, the greenest automakers are unloading their hybrid-electric vehicles in the U.S. Last year, Toyota sold 181,221 Prius hybrids in the United States. American consumers bought nearly 36,000 Honda hybrids in 2007. That doesn't mean domestic automakers aren't in on the game — Ford sold more than 25,000 hybrids in the U.S. last year — they're just not as focused on this sector as their foreign counterparts.

They're getting greener, albeit slowly. GM plans to offer eight hybrid models by the end of 2008, up from five hybrids in 2007. Both GM and Chrysler are introducing hybrid sport-utility vehicles. A Ford spokeswoman says the company is trying to commercialize plug-in hybrids through a partnership with a utility, Southern California Edison.

The Big Three are also lobbying for a bill that will establish a market-based system to limit carbon dioxide pollution. All three have signed on to the U.S. Climate Action Partnership, an unlikely alliance of industry and environmental groups that want to see such a "cap-and-trade" system imposed.

Sound strange? It shouldn't. The most popular cap-and-trade bill now under consideration, proposed by Sens. Joe Lieberman, I-Conn., and John Warner, R-Va., would give the auto industry as much as $250 billion in incentives for "advanced technology" vehicles by 2050.

Undoubtedly, all of the major automakers will be paying attention to a new "X-Prize" announced last month that offers a $10 million purse to whomever can design and bring to market a 100 mile-per-gallon vehicle. So far, 60 teams, such as Tesla Motors and Motive Industries, are participating in the race. None of the major manufacturers, foreign or domestic, have yet signed on.

Perhaps they should. "I think the car companies that decide to do the minimum to comply with the CAFÉ (fuel economy standards) won't be in business by the time that the CAFÉ schedule is over," says Environmental Defense Fund President Fred Krupp.

© 2012 Forbes.com

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