With domestic gasoline prices skyrocketing and Toyota Motor's (NYSE:TM) Prius hybrid selling like hotcakes, every major car company seems to be jumping on the fuel-efficiency bandwagon. One auto maker, however, appears to be taking a road less traveled, and that may make all the difference (apologies to Robert Frost).
Most companies, including Ford Motor (NYSE:F) and General Motors (NYSE:GM), are embracing hybrid technology as the fuel-efficiency platform of choice, at least in the near term. Ford has been particularly vocal in touting the range of its new Ford Escape hybrid, which will be on sale later this year. GM, meanwhile, has been somewhat more circumspect about its hybrid offerings, which will be available soon on full-sized pickups.
Meanwhile, DaimlerChrysler (NYSE:DCX) is opting for a somewhat different approach. While the company does plan to offer a hybrid on its Dodge Ram Quad Cab truck, that model will pair a diesel engine, rather than a gasoline motor, with an electric power plant.
In fact, non-hybrid diesel engines appear to be a big part of DaimlerChrysler's fuel-efficiency strategy. As a recent Wall Street Journal article points out, the firm is now marketing the Mercedes E320 CDI, the first fully diesel car the German automaker has offered in the U.S. since 1999. The company also plans to introduce a diesel version of its Jeep Liberty later this year.
For a variety of reasons, DaimlerChrysler's diesel push makes a whole lot of sense. Diesel fuel is cheaper than gasoline, and diesel engines are much more efficient than gasoline motors. Technological improvements have made current diesels quieter and cleaner than earlier models. And best of all, unlike hybrid vehicles, diesels provide the kind of performance American consumers crave.
The one significant knock on diesel-run vehicles is that they remain somewhat dirtier than their gasoline counterparts. But that may change in the near future. New federal standards will go into effect in 2007 that will likely drive a reduction in the sulfur content of diesel fuel. Further, DaimlerChrysler is developing filters and other technologies that will further reduce pollutants. Even if new standards result in a hike in diesel fuel prices, diesels' efficiency and performance will still likely make them an attractive alternative to hybrids.
DaimlerChrysler's most significant obstacle may be Americans' perception that today's diesels are as dirty and smelly as the diesels of yore. If the firm can overcome this myth, it may have a winning formula on its hands.
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Fool contributor Brian Gorman is a freelance writer living in Chicago, Ill. He does not own shares of any companies mentioned here.
