More automakers are moving toward using lithium batteries in their standard hybrids. This week, GM said it will use lithium batteries from Hitachi in its hybrids and Mercedes said it will use electronics from Continental AG and lithium batteries from Johnson Controls-Saft in an S-Class luxury sedan hybrid. (Standard hybrids need "power batteries" that stay in the mid-range of charge. PHEVs need "energy batteries" that discharge more deeply. Both optimizations are possible with lithium and with nickel-metal hydride.)

These developments come at a time when carmakers are recognizing that battery progress further undercuts the case for fuel cells as energy storage systems, as seen by comments reported below by the Wall Street Journal at the Geneva Auto Show from Toyota and GM. At the same time as both companies continue to acknowledge the near-term potential for PHEVs, they continue for strategic reasons to promote a hydrogen future, but the case continues to weaken.

We haven't commented on the Lutz statements on global warming, but his comments and the defenses made at the GM Fastlane blog don't address the entire issue. If climate change is a key driving factor for strategic planning by automakers, then the well-to-wheel CO2 emissions of different energy solutions moves to the center of future decisionmaking.

March 5, 2008
GM, Toyota Doubtful on Fuel Cells' Mass Use
By EDWARD TAYLOR and MIKE SPECTOR
March 5, 2008; Page B2
http://online.wsj.com/­article/­SB120468405514712501.html

GENEVA -- Top executives from General Motors Corp. and Toyota Motor Corp. Tuesday expressed doubts about the viability of hydrogen fuel cells for mass-market production in the near term and suggested their companies are now betting that electric cars will prove to be a better way to reduce fuel consumption and cut tailpipe emissions on a large scale.

Speaking at the Geneva auto show, GM Vice Chairman Bob Lutz told reporters that recent advances in lithium-ion batteries indicate that future electric cars might be able to travel 300 miles, or nearly 500 kilometers, before they need to recharge, making them much more practical as a mass-market product.

"If we get lithium-ion to 300 miles, then you need to ask yourself, Why do you need fuel cells?" Mr. Lutz told reporters. He added that fuel-cell vehicles are still far too expensive to be considered for the mass market. "We are nowhere [near] where we need to be on the costs curve," he said.

At a separate event at the show, Toyota President Katsuaki Watanabe echoed the concern about the high costs of fuel cells and noted the lack of an infrastructure to produce and distribute hydrogen fuel to a wide swath of consumers. These factors leave him with the impression that "it will be difficult to see the spread of fuel cells in 10 years' time," Mr. Watanabe said.

The comments indicate a shift in the auto industry's tone regarding fuel cells, especially at GM, which has spent the past two years highlighting its fuel-cell technologies as one of many initiatives it is pursuing to reduce petroleum consumption.

Fuel cells use hydrogen to create electricity, and have been hailed for years as the technology that will power no-emission cars of the future. Several years ago, GM essentially dropped its work on battery-powered cars to focus on fuel cells. Since then, Toyota has taken the lead on gas-electric hybrids, although it is working on fuel cells, too.

In the past two years, GM has been trying to improve its image with increasingly green-minded consumers by playing up its work on green vehicles, often with Mr. Lutz -- sometimes referred to in Detroit as Mr. Horsepower for his love of big, powerful cars -- as its chief spokesman.

The centerpiece of the effort is an electric car called the Volt, which includes a small gasoline engine to charge its battery on the go. GM hopes to launch the first Volt by 2010. Future versions may use fuel cells to charge the battery. The campaign has won fans among environmentalists for GM, a company previously scorned by many in the green crowd.

Mr. Lutz's comments in Geneva come at an awkward time for him. A few weeks ago, he told a reporter that he thinks global warming is a "crock of s -- ," raising questions about his commitment to GM's new green path. After news of his global-warming position spread on the Internet, he posted a response on GM's blog saying his personal views don't affect the company's direction.

Not all auto makers are backing away from fuel cells. Daimler AG expects to begin producing fuel-cell cars in limited quantities in 2010, Chief Executive Dieter Zetsche told reporters in Geneva. If demand takes off, Daimler could get the technology "into the cost range of conventional power trains," Mr. Zetsche said.

--John D. Stoll contributed to this article. Write to Edward Taylor at edward.taylor@... and Mike Spector at mike.spector@...