CBS News | September 16, 2007

(CBS) Let's face it: Gasoline-powered cars are a gigantic problem. They pollute, they keep us dependent on foreign oil, and when gas prices go up, they cost a fortune to drive. But what's the alternative?

The problem is, oil is found only where on earth God put it, and He happened to put a lot of it in the Middle East.

Vijay Vaitheeswaran is a correspondent for The Economist and coauthor of "Zoom: The Global Race to Fuel the Car of the Future." He’s heard the sales pitches for every solution under the sun - like ethanol derived from corn.

"I like the idea that farmers are growing energy that powers our cars," President George W. Bush said in a speech last March.

But Vaitheeswaran says that it actually requires more fossil fuels to create enough ethanol to take the place of a gallon of gasoline than the gasoline itself would need.

He has also heard about hydrogen, but says it is expensive to make and difficult to distribute.

"You can't just pull up at the Exxon station and say, 'Fill her up with hydrogen,'" he told CBS News correspondent David Pogue.

But a better solution might be ready to roll sooner than you think:

"Electric cars could be a game changer," Vaitheeswaran said.

Toyota's Prius is a half-electric car and cracked the top ten cars sold in America this summer. It's a hybrid, so it has both an electric motor and a gas engine. At low speeds, the electric motor provides all the power, you're not using any gas. When you need more power, the gas engine kicks in as well, and then when you're slowing down and braking, the power from the wheels is reclaimed and stored in the battery. All told, the Prius gets 45 to 50 miles per gallon of gas, but it is still using gas.

But the public's perception of the electric car is about to get a big makeover, and it's going to start with the Tesla electric roadster. It goes from 0 to 60 in 4 seconds. You plug it at night, and the next day it can go 200 miles on a charge. There's no gas tank, no tailpipe, no oil changes and certainly no boredom.

Not bad for a car company that's based in Silicon Valley.

Martin Eberhard co-founded Tesla Motors with a bunch of software and engineering experts who had no car-design experience. As a result, Eberhard says they weren't held back by conventional wisdom.

"I thought we should build a car that's actually better than those gasoline cars, a car that people want to drive," he said. "So that it doesn't require some great leap of altruism on the part of everybody suddenly to break our addiction to oil."

Electric cars don't produce any pollution or greenhouse gases, but some worry that they will shift the pollution to the power plants that burn coal when making electricity.

"If you do the math, you'll find that an electric car, even if you use coal to make the electricity, produces less pollution per mile than burning gasoline in the best gasoline-powered car," Eberhard said.

But if you do a little more math, you might get a little electric-car sticker shock. This radical innovation doesn't come cheap. The Tesla starts at $98,000. At this price it compares comparably favorably with sports cars that have this kind of performance.

Actually, the Tesla handles like a sports car and can go quite fast.

It's selling fast, too. The first 570 Tesla roadsters have already sold out, and there's a one-year waiting list. Fortunately, not all Tesla Motors cars will cost so much; the roadster is just an opening move.

"With that progress, then we consider the next car," Eberhard said. "Then we look for a car that's in the $50,000 range that can seat, you know, five adults, as our next model."

So why does it take a Silicon Valley startup to reinvent the electric car? Why can't Detroit do it? Actually, it can. Bob Lutz is vice chairman for Product Development at General Motors. The Chevy Volt electric is his baby and it won't cost $100,000.

"My personal target still is to bring this car into the market at, you know, nicely below $30,000," Lutz said.

The Volt can run for 40 miles on a battery charge, which GM says is enough daily range for 82 percent of the population. But for longer trips, the Volt also has a tiny engine (either gas or ethanol, or hydrogen) that recharges the battery as you drive.

"That engine never drives the car," Lutz said. "It's not hooked up to the wheels. Think of it as a portable generator that gets your battery back up."

The car is almost an inside-out traditional hybrid. Instead of a battery helping out the gas engine, the gas engine helps out the battery.

But skeptics like Vijay Vaitheeswaran may have a hard time believing that these cars are the solutions.

"I would watch very carefully what GM actually does," he said. "The country saw a small moment of hope, you know, for electric cars for zero emission vehicles in the '90s, when California saw GM produce the most aerodynamic production car ever made. It was called the EV1. And it was very popular amongst those who could get their hands on it."

You can see the end of that sad story in the documentary, "Who Killed the Electric Car?" Filmmaker Chris Paine was the director.

"In the 1990s, California told car companies that they had to put electric cars on the road," he said. "It took about eight years for a variety of industry interests to kill these mandates. And as soon as they killed them, the car companies took the cars back and destroyed them. And people were very upset about it. In General Motors' case, they took the cars out to Arizona and they secretly crushed them all."

Today, Bob Lutz admits that crushing the EV-1s may not have been the best way to conclude that experiment.

"Now, it turns out that from a PR standpoint probably the dumbest move we ever made," Lutz said. "It was done for all the right legal reasons, but PR-wise it was dumb. So, now I'm getting e-mails saying, 'I hope you rot in hell.'"

But Lutz says that this time, GM is dead serious about the electric car.

"I mean, this car means more to me than anything else I've had anything to do with in the 42 years that I've been in the business," he said. "I think this is because it's transformational. It's all new, which is why it just truly excites us."

Tesla and GM both face the same technological roadblock: coming up with a safe, powerful, long-life battery.

"This is what the battery box looks like if you pulled it out of the car," Eberhard said. "And what's inside here is a system built around standard lithium ion batteries. So if you broke open the battery pack on your laptop computer, you'd find a set of these inside - 6,831 of these."

Scrappy little Tesla Motors may hope to save money and development time by adapting off-the-shelf battery parts. General Motors, though, has the mass market to think about, so they're developing a new lithium-ion battery for the Volt from the ground up - a huge, international, multimillion-dollar effort in labs like GM's battery testing lab, where Denis Gray is the director. The lab tests prototypes from the two engineering firms that are working on the Volt battery.

"Some of us replace our cell phones, our Blackberries, every year because a new model comes out or we've gotta change the battery," Gray said. "I can't do that when it comes to vehicles. Customers won't be very happy with me if I change it after six months."

The entire Chevy Volt project hinges on Gray's ability to lick the battery problem.

"Bob Lutz, Rick Wagoner, they're constantly asking how are we doing? Are we making the progress that we need?" Gray said.

In other words, if Gray's team doesn't come through, then there will be no Volt.

"The problem is nobody has done a lithium ion battery pack this big," Lutz said. "And we say it's the big unknown because it is. But our battery suppliers say, 'Hey. Stop saying that. We're telling you the battery's gonna be okay.'"

So who killed the electric car? Nobody, yet. In fact, just about everyone's excited by the possibilities - even Vijay Vaitheeswaran.

"I think it's a real grassroots revolution," he said. "Could be the next big grassroots revolution in American politics. What I call the great awakening of America to climate change and oil addiction."

Chris Paine is excited; in fact, he's making a sequel to his movie.

"The next film is, 'Who Saved the Electric Car?'" he said.

The first Teslas will hit the streets this fall. And if the battery gods smile on GM, Bob Lutz's Chevy Volt will be joining it in two years.

"Will it live up to its promise of 40-plus mile electric range?" Lutz said. "Will the battery last ten years? Can we bring it in at a price that most people could afford? If the answer is 'yes' to all that, then I think the future for electrics is absolutely unlimited."