DaimlerChrysler AG pledged to build 500,000 ethanol-fuel vehicles annually, or a quarter of its U.S. production, by 2008, as automakers try to address concerns over heavy foreign oil consumption and high gas prices.
Thomas W. LaSorda, chief executive of Chrysler, made the pledge yesterday at a meeting of the Renewable Fuels Association in Washington, where President Bush announced measures aimed at reducing the country's dependence on foreign oil. He encouraged production of ethanol-powered cars and gasoline-electric hybrid vehicles.
Bush and some lawmakers have promoted ethanol as a way to trim imports of oil and help farmers. Ford Motor Co., General Motors Corp. and LaSorda's Chrysler division have 4.5 million vehicles on the road capable of using the fuel E85, a mixture of 85 percent ethanol and 15 percent gasoline. The fuel is meant for use only in some "flex-fuel" vehicles built to accommodate either regular unleaded gasoline or other blends.
Ethanol is an alcohol-based gas additive. In the United States, it's derived largely from corn. To equip vehicles to use the additive, automakers have to harden components in the fuel system with stronger materials to protect against the fuel's corrosive effects. The upgrade during the manufacturing process can cost automakers less than $500.
Automakers are pushing hard to expand production of vehicles that use the fuel. Ford is expected this year to build 250,000 vehicles capable of operating on E85, and GM is to turn out 400,000 E85 vehicles in 2006 and 500,000 next year.
But the automakers said they need more stations that offer the ethanol-gas blend. Of the 180,000 gasoline stations nationwide, an estimated 600 sell E85. LaSorda yesterday called on the automakers, oil companies and government officials to team up to expand the number of ethanol stations. Michigan, for example, has six ethanol fueling stations, he said. And many locations charge more for E85 than for gasoline, even though the fuel carries cars fewer miles.
In January, Ford announced a partnership with VeraSun Energy Corp. of Brookings, S.D., to increase the number of ethanol fueling stations in the Midwest. Ford, through the partnership, is helping to underwrite the addition of 20 fueling stations in Illinois, 30 in Missouri and six in Iowa. A company spokesman said the automaker plans to have more than 60 stations in the United States over the next few years.
Chris Preuss, a GM spokesman, said the automaker is having "many active discussions" with the Bush administration and with members of Congress to develop a strategy for ethanol. "We're looking at what it would take to move beyond" the production levels already in place. "As the trend continues, we become more confident," he said.
As part of yesterday's announcement, LaSorda said the Chrysler would add the Jeep Grand Cherokee and the Jeep Commander to the list of vehicles that would be powered by ethanol.
The ethanol business is booming. There are 34 plants under construction, according to the Renewable Fuels Association, a District-based industry trade group. Eight of the 95 existing plants are expanding. And 150 more new plants or expansions are in the planning stages. The activity is concentrated in the Midwest, where much of the nation's corn is produced. The United States last year consumed an estimated 4 billion gallons of ethanol, compared with 140 billion gallons of gasoline.
The ethanol industry also has gotten a boost from requirements in federal energy legislation approved last year that requires an increasing amount of the additive to be used. Some studies peg the federal ethanol subsidy at $3 billion per year.
LaSorda said Brazil has pursued a flex fuel policy since the Middle East oil embargo of the late 1970s, using excess sugarcane instead of corn. He added that a big investment in a flex-fuel infrastructure could pay off in the United States.
"Brazil expects to be energy independent by the end of this year," LaSorda said. "If Brazil can do it, why can't the richest, most technologically advanced country in the world do it?"