Peter Drives

Speaking at a Daimler truck factory, President Obama proposed a broad set of intiatives for alternative-fuel vehicles.

NEW YORK (CNNMoney) -- President Obama outlined new plans Wednesday to support the sales and use of alternative-fuel vehicles -- including cars and trucks that run on hydrogen and natural gas instead of just those that run on electricity.

The plans are part of a $1 billion National Community Deployment Challenge intended to support the use of natural gas and other alternative fuel technologies, in addition to plug-in vehicles. The president also announced separate incentives to encourage individuals and businesses to purchase alternative-fuel vehicles.









The president proposed increasing the current $7,500 tax credit for advanced technology vehicles to a maximum of $10,000. The credit would also be broadened so that it applies to more different types of vehicles instead of just plug-in cars, as it does now.

"This is good news for any manufacturer who's taking a portfolio approach [to alternative fuel vehicles]" said John Hanson, a spokesman for Toyota.

Toyota (TM) has been working on hydrogen fuel cell vehicles as well as plug-in cars, and plans to have some hydrogen cars on the market within the next few years.

Also, funds from the National Community Deployment Challenge will be used to help 10 to 15 "model communities" create incentives and infrastructure to support advanced vehicles, according to the White House proposal.

Communities will be able to use the funds in support of plug-in electric, natural gas, hydrogen fuel cell or any other advanced vehicle technology. The communities would then become "real-world laboratories," the White House said, providing models for full-scale deployment of these advanced technologies

The program would also support the creation of up to five liquefied natural gas corridors that would allow commercial trucks to use natural gas to transport goods.

Natural gas is less polluting to burn than gasoline and is cheaper on an energy-equivalent basis -- the volume of natural gas producing the same amount of energy as a gallon of gasoline costs much less. Unlike petroleum, natural gas can also be supplied in large quantities in North America.

"By accelerating deployment of alternative-fuel trucks and making electric vehicles more economical, these new initiatives will expand the benefits to our wallets, to our economy and our environment," said Luke Tonachel, senior vehicles analyst for Natural Resources Defense Council, in a statement.

The president, speaking at a Daimler truck factory in North Carolina, also talked about increasing the fuel economy of commercial trucks. Daimler has been a partner in the Energy Department's SuperTruck program, a program aimed at increasing the fuel economy of 18-wheeler trucks by 50%. Daimler makes Freightliner trucks.

Obama proposed a 50% tax credit to cover the additional cost of alternative fuel trucks -- including those that run on natural gas or electricity. Creating alternative fuel trucks often involves purchasing a gasoline- or diesel-powered vehicle and "up-fitting" it to use an alternative power source.

Mike Levine, spokesman for Ford (F, Fortune 500) trucks, pointed out that Ford already has the broadest range of commercial trucks, including vans and large pickups, with natural gas-ready engines. With more demand, he said, Ford is ready to do more with natural gas commercial trucks.

Both General Motors (GM, Fortune 500) and Chrysler Group have announced they will soon be making bi-fuel pickups that can run on both natural gas and gasoline.