The automobile is poised for its most profound change since Karl Benz built the first horseless carriage in 1885.
General Motors Corp. offered a peek into the industry's future last week at the Detroit Auto Show when it took the wraps off its prototype hydrogen-fed fuel cell vehicle featuring "drive-by-wire" technology.
Analysts said it amounts to the reinvention of the automobile.
"Awesome," said David E. Cole, director of the Center for Automotive Research in Ann Arbor, Mich. "This is a giant leap forward in automotive conceptual thinking."
He added: "This may be one of those pivotal announcements where you look back and remember where we were when it was announced. It could define the way we live in the future."
Called AUTOnomy, GM's concept not only has Detroit buzzing, but it also has Washington rethinking its approach to the development of more fuel-efficient cars and trucks.
AUTOnomy is the first vehicle designed from the ground up around a fuel cell propulsion system. It features what GM calls a "skateboard" chassis that can be adapted to dozens of different bodies to accommodate changes in lifestyles and differing transportation needs around the world.
The fuel cell vehicle - which would emit only water from its tailpipe - is being hailed as a technology godsend designed to end auto pollution and free the U.S. of dependence on imported oil.
Two days after GM unveiled its concept vehicle, U.S. Energy Secretary Spencer Abraham took the platform at the Detroit show to announce that the Bush administration had formed a new partnership with domestic automakers to stimulate the development of fuel-cell cars.
He said the plan was designed "to promote the development of hydrogen as a primary fuel for cars and trucks, as part of our effort to reduce American dependence on foreign oil."
Spencer said the long-term results of the cooperative effort with GM, Ford Motor Co. and DaimlerChrysler AG will be the development of cars and trucks "that are more efficient, cheaper to operate, pollution-free and competitive in showrooms."
He noted that the United States imports 55 percent of its oil, and transportation accounts for 67 percent of the petroleum used in the country.
Spencer's comments marked a shift in federal policy away from its longtime support for a government/industry partnership to develop an 80-mile-per-gallon sedan by 2004 - mostly centered on small, hybrid cars that run on gasoline and electricity.
The government's decision, however, raised some eyebrows among environmental groups.
"Fuel cells have promise, but we don't think the government should put all its eggs in one basket," said Steven Nadel, executive director of the American Council for an Energy Efficient Economy, a Washington-based energy policy research organization.
"Fuel cells are a high-risk area. What if we work on them for 10 years and find out they don't work?" he asked rhetorically.
Nadel said the government should move ahead on fuel cell development while taking more actions to boost the fuel efficiency of cars in the near future. The group advocates a tax incentive for buyers of super-efficient cars and an increase in the federal corporate average economy (CAFE) standards, which have not been increased since 1987.
"We think AUTOnomy is a better approach," said Mohsen Shabana, chief engineer of GM's fuel cell program. He cautioned, however, that it may be another decade before a competitively priced fuel cell car makes it to the showroom.
Shabana said that even in volume production, a fuel cell propulsion system would cost $25,000 to $35,000 today - a fraction of the $300,000 it would have cost five years ago but still roughly 10 times as much as a V-6 engine currently used in many cars and trucks.
"We have got to get the fuel cell price down," he said.
Reducing the cost further is going to be a major challenge, Cole said. "It is possible that this whole thing will blow up in GM's face. There may be barriers too great to overcome, but I wouldn't bet against it."
Investors initially jumped on the fuel cell bandwagon, sending the shares of three companies best known for their involvement in fuel cells development to hefty gains early in the week. Shares of Ballard Power Systems Inc. jumped 15 percent to close at $34.96 on Monday. On the same day FuelCell Energy Inc. shares closed at $21.85, up 22 percent, and Plug Power Inc. posted a 39 percent gain to close at $12.04.
Ballard closed Friday at $33.91.FuelCell was back down to $19.12 and Plug closed at $10.58.
Cole said that, while development of fuel cell cars will be expensive, the winning companies will be in position to control the industry.
"It will separate the men from the boys," he said, and would force many of the world's automakers to either merge with other companies or go out of business.
GM is not alone in the development of fuel cell cars.
Sara Tatchio, a spokeswoman for Ford, said the No. 2 automaker currently has a hydrogen-fed fuel cell Focus demonstration car on the road.
"We will have five more coming this year and there are plans for very low production fleet vehicles by 2004," she said.
Last month, DaimlerChrysler AG's Chrysler unit demonstrated a fuel cell minivan powered by borax, the active ingredient in some laundry soaps.
Fuel cells create electricity through a chemical reaction between hydrogen and oxygen. The electricity is used to power the vehicle. Cole said cars might have "a little chemical factory called a reformer" that could extract hydrogen from a variety of fuels, including water, natural gas coming from a municipal dump or bio-fuels made from cornstalks, wheat or sugar cane.
GM's concept could revolutionize the auto industry. The drive-by-wire concept would replace most mechanical and hydraulic systems, such as steering and braking, with electronic wires.
Shabana, the GM engineer, said the company's plan is to produce millions of chassis designed to last for 20 years. It envisions small satellite assembly plants around the world producing bodies for the vehicles designed to meet particular needs.
A customer who needed a pickup truck for work, for instance, would be able rent a minivan body for a week to take the family on vacation. The van body would fit on the same chassis.
A bachelor could replace his sports car body with that of a full-size sedan after marrying and starting a family.
"Most of the investment would be in the chassis," Shabana said. "That's where the hardware is. It would be like ordering a home computer, but instead of it saying 'Intel inside,' it would say 'GM inside.'"
Shabana said GM would need help from the government in creating the infrastructure necessary for fuel cell cars, including a national network of hydrogen fueling stations.
And there could be an added bonus for consumers, he said.
"The fuel cell is like an electric generator. When you come home, you can plug the car into your house to supply the electricity for your home."
GM is seeking 24 patents covering technologies and manufacturing processes related to its concept.