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Alternative Fuel Vehicles Will Be Tough Sell

May 31, 2007

A vehicle that runs on hydrogen or biofuels and offers the same features, performance and price as today's gasoline vehicle, will likely not capture half of the market, a new MIT analysis of the challenges behind introducing alternative-fuel vehicles to the marketplace concludes.Not even if it's three times more fuel-efficient. Among the barriers, until many alternative fuel (AF) vehicles are on the road, people won't consider buying one, so there won't be many on the road. Yet, if policy incentives are kept in place long enough, adoption will reach a level at which the market will begin to grow on its own. But "long enough" may be a surprisingly long time. Dethroning the gasoline-consuming internal combustion engine (ICE) has proved difficult. Thus, consumer exposure to AF vehicles is just one feedback loop that can slow adoption. Similarly, fuel suppliers won't build AF stations until they're certain of future demand, but until the fuel is widely available, consumers won't buy the vehicles. And manufacturers won't be able to make AF vehicles cheaper and better until their production volume is high; but high-volume production won't happen until such improvements are in place to attract buyers.
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