Startups rev engines at Detroit auto show

The hybrid Fisker Karma is targeting a 2009 launch.

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(FORTUNE Small Business) -- One overlooked piece of news coming out of the North American International Auto Show in Detroit is that small business is starting to invade the Big Three's territory.

Fisker Automotive, based in Irvine Calif., unveiled an $80,000 battery-powered sports sedan that it hopes to start selling in 2009. The Fisker Karma is a plug-in hybrid that has a top speed of more than 125 m.p.h., can hit 60 m.p.h. in 5.8 seconds, and can travel 50 miles on a single charge - though not at 125 m.p.h. The startup is backed by the venture capital firm Kleiner Perkins Caufield & Byers, which former Vice-President Al Gore joined recently as a partner. The Fisker is the most recent of a slew of electric car startups, including Tesla Motors and Aptera.

Also at the auto show, Toyota (TM) announced that it will start selling a plug-in hybrid-electric vehicle before 2010. While Toyota is designing its own lithium-ion batteries to power the car, a number of small companies such as A123, Altairnano, and EEStor are working to provide their own systems. Recently, General Motors (GM, Fortune 500) asked A123, a firm in Watertown, Mass., to help it develop lithium ion batteries for its plug-in hybrid the Volt. (For more on the electric-cars frontier, see Fortune Small Business's Next Little Thing coverage: "Putting the zoom into electric cars.")

To hedge its bets in case electric cars don't make it, GM in early January purchased an equity stake (it won't say how much it paid) in Coskata, a start-up company in Warrenville, Ill., that plans to make ethanol from crop wastes, wood chips, and even garbage. The ethanol company has proven the technology in its labs and next hopes to build a pilot plant to show that its product is commercially viable.

Coskata is one of a new crop of ethanol makers that think they can make an automotive fuel that is cheaper and cleaner that made from corn. No one has done this yet at commercial levels - and working this alchemy can be difficult. Ethanol maker Xethanol settled a class action lawsuit in November brought by investors who believed the company had exaggerated its ability to make ethanol.