The hydrogen-fueled car is an updated model of a hybrid that uses a duel fuel system employing hydrogen and gasoline. In hydrogen fuel cell vehicles, hydrogen is converted into energy to run an electric motor, producing water as a byproduct.

Prices of hydrogen cars will likely be set far higher than gasoline cars in coming years even after commercialization.

``In case of the Verna model of Hyundai Motor, the prices of fuel cell vehicles are about 100 million won while the prices of gasoline-fueled Vernas range between 8.5 and 14.6 million won,’’ an official of Hyundai Motor said Wednesday.

Saying that hybrid cars cost more than gasoline cars, he cited the expensive hand-making processes involved in producing hydrogen cars and hybrids as factors precluding a reduction in prices.

``The high prices also reflect higher costs for research and development,’’ he added. ``As for carmakers, there is no choice but to bear the burden of great losses by lowering prices if they want mass sales.’’

He expected the prices to drop to reasonable levels when the establishment of production lines is realized.

Though the government plans to give a variety of benefits, such as tax deduction and less insurance burden to owners of hydrogen-fueled cars and hybrid cars, it will not easy for carmakers to be successful in making mass sales of eco-friendly cars as long as prices do not drop to those of gasoline cars.

Owners of the eco-friendly cars will be able to get the same level of benefits as compact car owners at least.

Aside from the price issue, domestic carmakers need to overcome the technology gap between themselves and foreign players.

``Korean carmakers are latecomers in the development of more environment-friendly vehicles, and have faced technological difficulties in commercializing the cars,’’ said an official of the Ministry of Commerce, Industries and Energy (MOCIE).

To overcome the technology gap, the Korea Automobiles Manufacturers’ Association has requested the government increase the budget to 100 billion won.

Hyundai Motor has decided to start mass production of fuel cell cars and hybrids from 2010, following global players including Toyota Motor, Honda Motor, General Motors and DaimlerChrysler.

Toyota Motor, which launched the world’s first hybrid cars in 1987, has set an annual target of 1 million global sales of the energy-efficient models by 2010 and plans to unveil hybrid versions of all its vehicle models within 10 to 15 years.

Honda Motor has recently announced they will commercialize the sale of hydro-fueled cars in two years.

Hyundai Motor has been actively investing in the eco-friendly car sector since 2002. Last year, Hyundai Motor provided 50 hybrid versions of Click mini-cars to the government for testing.

It is expected that some other Korean carmakers _ Kia Motors, an affiliate of Hyundai Motor, and GM Daewoo Auto & Technology _ will also vie for the hybrid car market.

During the second half of 2004, GM Daewoo, Korea’s third-largest automaker, unveiled for the first time here its first hybrid car and a fuel cell vehicle, in conjunction with the second anniversary of its foundation.

GM Daewoo officials say the carmaker is closely working with U.S. GM to devise the hybrid and fuel cell propulsion systems.