If we build it, will they come?

That is the central question carmakers, utilities and policy makers are asking at the first-ever Plug-In 2008 conference in San Jose, Calif. this week.

And the question is not rhetorical, given the billions of dollars the auto industry - and utilities and municipalities - would need to spend to bring plug-in hybrid electric cars to the masses. The question also is a pressing one because major carmakers, including General Motors, Toyota and Volkswagen, plan to start selling plug-in hybrids by 2010.

At a Tuesday panel about how to make plug-in hybrids mainstream, Nancy Gioia, director of Ford Motor's hybrid vehicle program, outlined key issues the carmaker must tackle to make a profit with plug-in hybrids.

The industry first needs to develop better and cheaper car batteries so consumers don't have to recharge their cars frequently, she said. Engineering new types of cars and ensuring they are safe to drive aren't easy. The rising cost of steel and other raw materials for making batteries and cars is another issue.

Creating a network of charging stations and figuring out payment methods are other obstacles to making plug-in hybrids attractive to consumers, Gioia said. Ford has built a prototype plug-in hybrid Escape, which it is being tested by the utility Southern California Edison.

The automaker also has created a research program with the Electric Power Research Institute, which represents utilities in North America, to identify problems and solutions for the emerging plug-in hybrid market.

"We started the research project with EPRI on developing open architectures and standards. We want to lead and pull the industry together," she said.

GM has the same idea. The carmaker also is working with the institute and 34 utilities to figure out how to build the plug-in hybrids market (see Utilities Join GM to Promote Plug-In Hybrids and Prepping for Plug-Ins to Hit the Grid).

Ed Kjaer, director of electric transportation at Southern California Edison, said the utility will install smart-grid and metering devices by 2010 that will tell consumers how much energy they use throughout the day and how much they are paying for it.

In the future, each home will have a wireless network over which appliances, cars and other electronic devices could talk to each other and adjust electricity use in real time, Kjaer and many others believe.

The utility also is working with the ZigBee Alliance on setting a wireless standard, which makers of appliances, portable gadgets and carmakers could use to make sure the products they sell can communicate with one another regardless of the brands or manufacturers. Kjaer, who also spoke on the panel, said the company also is carrying out projects to test energystoragetechnologies.

The greatest challenge for the plug-in hybrid sector, however, will be convincing consumers that they should buy plug-in hybrids, according to Dan Sperling, director of the Institute of Transportation Studies at UC Davis and a member of the California Air Resources Board.

To demonstrate that car buyers want the vehicles, several groups, including the Plug-In Partners campaign, have collected thousands of "soft orders" for plug-in hybrids, which are agreements to "strongly consider" buying plug-in hybrids once they become commercially available. 

But Sperling said studies have arrived at conflicting conclusions on whether consumers value fuel economy more than the idea of owning zero-emissions cars.

"The challenges are not on the technical side but on the market side and the consumer side," Sperling said. "We don't know what consumers want or are willing to pay for."

Plug-in hybrid advocates have contended that consumers would prefer to charge their cars at night, when electricity demand on the grid and the rates are lower. But automakers and utilities shouldn't discount the possibility that consumers would charge whenever they want or need, Sperling added.

Aside from making the right marketing pitch, Sperling said California has passed key legislation over the last two years to reduce greenhouse gas emissions and increase fuel efficiency in cars. Next year, the Air Resources Board plans to overhaul the state's zero-emission program, which sets tailpipe-emission standards and mandates the production of cleaner cars.

Sperling also urged more public and private investments in battery technology, which he said was necessary to develop and market all-electric cars in the future.

Many car and battery makers are focused on improving lithium-ion batteries, which are commonly found in laptops and cell phones. The batteries' potential for storing a large amount of electricity in a compact shell has made them attractive candidates for charging plug-in hybrid and all-electric cars.

Toyota said last month that its joint venture with Matsushita, called Panasonic EV Energy, would start full-scale production of lithium-ion batteries in 2010 (see Toyota Drives Toward Greener Fleet). The Prius uses nickel-metal hydride batteries.

Sperling said more investments are needed to study other alternatives.

"We need to move beyond lithium-ion," he said. "I am not excited about the near-term investments in applied research in batteries. There is a lot of evidence showing that there could be other types of batteries that are less expensive and offer a higher performance."