GM eyes bigger ethanol push in Minnesota

MINNEAPOLIS (Reuters) - General Motors Corp said on Wednesday it would partner with renewable energy company VeraSun Energy Corp. to boost the number of gas stations in Minnesota where consumers can fill up their vehicles with the alternative fuel ethanol.

The world's largest auto maker, which plans to build 400,000 so-called flexible-fuel vehicles this year, will announce the locations of the 10 filling stations later on Wednesday as it seeks to boost awareness of the fuel made mainly from corn.

The stations add to the 200 that already pump ethanol in the state boasting the highest per-capita usage of the fuel in the United States. The stations will pump the E85 gasoline blend, which is 85 percent ethanol and 15 percent gasoline, the company said.

Currently only about 600 of the nation's 170,000 filling stations sell E85.

"We are helping develop the infrastructure to increase awareness and offer consumers a choice," Beth Lowery, GM vice president for environment and energy told Reuters in an interview. "Right now there are many consumers who either don't know their vehicles can run on ethanol or have nowhere to pump it."

The announcement comes after GM in January launched its "Live Green, Go Yellow" campaign aimed at promoting awareness of ethanol -- an effort analysts say will cost the struggling company tens of millions of dollars.

Interest in E85 has grown in recent months as regular gasoline prices have climbed while ethanol prices have remained steady because of a rapidly growing supply and federal tax subsidies.

The fuel produces less pollutants than gasoline, burns cleaner and is a renewable, U.S.-based resource. But because ethanol-dominant fuels contain less energy than gasoline, vehicles powered by it get fewer miles per gallon.

About 5 million flexible-fuel vehicles -- which run on any blend of gasoline and up to 85 percent ethanol -- are currently on the road in the United States. Of those, 1.5 million are GM vehicles.

GM, which has been struggling with high labor and commodity costs, loss of U.S. market share to foreign rivals and sluggish sales of sport utility vehicles, is banking on its newly-redesigned line of SUVs called the GMT-900 series to help turnaround its North American operations.

All the GMT-900 series vehicles this year will come with an option to use ethanol, except for the Escalade. GM has not disclosed how much it costs to make vehicles ethanol ready but analysts have estimated the price tag at about $300 to $400 per vehicle.

(Reporting by Jui Chakravorty, editing by Jerry Kearney; jui.chakravorty@reuters.com; Reuters Messaging: jui.chakravorty.reuters.com@reuters.net; +1-313-967-1903))



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