As hybrids begin attracting a second wave of first-time buyers, questions loom over the direction the technology will take. In February, Toyota Chief Executive Katsuaki Watanabe confirmed to BusinessWeek that the company would put high-capacity lithium-ion batteries in the third-generation Prius, due toward the end of 2008 or early 2009.

Still, many analysts are skeptical of how quickly manufacturers can make the advances in battery technology that would enable dramatic leaps in fuel economy. “I don’t think we’ll see a real turnaround in batteries before at least five years,” says Lonnie Miller, director of industry analysis for R.L. Polk.

Both GM and Toyota are considering producing plug-in hybrids that can be partially charged at home and often double fuel efficiency. A small group of enthusiasts have paid as much as $10,000 to have their hybrids upgraded with plug-in systems. But the technology may not yet be ready for prime time. “Realistically, I don’t think we’ll see anything like that on the market until 2010,” says Toprak.

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Diesel developments
Hybrids aside, alternative fuels have received a lot of air time in Congress and on the early Presidential campaign trail, but have yet to grab hold of consumers. Both foreign and domestic manufacturers are trying to educate consumers on diesel and ethanol E85 fuels, which can increase economy and reduce carbon emissions.

Diesel-sipping vehicles — some of which achieve fuel economy similar to certain hybrids — are popular in Europe, where fuel and environmental standards are more stringent. But diesels have yet to make an impact in the U.S. market. Whereas 50% of all vehicles sold in Europe are diesel-powered, in the U.S. a comparably paltry 1.5% of all vehicles sold annually are diesels.

The next big test for diesel in the U.S. will come in 2008 when a raft of new, clean-burning models is expected to be eligible for sale in all 50 states. Volkswagen, Mercedes-Benz, Ford Motor, and DaimlerChrysler’s Chrysler Group all have plans to sell clean diesels by then. “As an alternative fuel, diesel has real possibilities,” says Toprak. “But there are really no cars at this point.”

Where’s my ethanol?
Ethanol, or E85, fuel also grabbed headlines last year as Brazil achieved complete energy independence largely on the success of its ethanol fuel programs. But most consumers here don’t know much about the fuel. In fact, many may be driving ethanol-capable vehicles and not even know it. There are about 3.5 million flex-fuel vehicles capable of running on E85 already on U.S. roads.

Lack of consumer awareness and filling stations stands in the way of popular acceptance. “With E85, you’ve got a basic infrastructure problem,” says Miller. “The filling stations have to come first, and that’s a hard fact of planning.” Toprak adds, “Manufacturers need to do a better job of educating consumers.”

Still, with competing technologies and a variety of alternative fuels waiting in the wings, “green” seems to be destined for ongoing redefinition. “It’s true there’s no clear-cut winner yet,” says Toprak. Miller agrees: “As far as green is concerned, the jury is still out but the trial is not over.”

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