With the automobile market fragmenting into smaller niches, companies that survive will be able to place multiple bets, gauge market response and move quickly if demand materializes for a new technology.

The pursuit of the next niche in advanced car design — and in alternative power supply — is an increasingly bigger part of the mission for German automaker BMW’s low-key engineering lab in Oxnard.

Officially known as the BMW Engineering and Emission Test Center, the low-slung steel and glass building is located next to the German car company’s new-vehicle processing center near the Port of Hueneme.

Built originally as a place to conduct emissions testing and host road tests for new models, the center, which opened roughly 10 years ago, has begun to play a bigger role as the automaker responds to climate change and rising petroleum prices by experimenting with alternative-fueled power plants.

During the past two years, the Test Center hosted a fleet of 100 BMW 7 Series sedans custom built to run on either hydrogen or gasoline. The center was outfitted with a high-tech liquid hydrogen fueling station, and the lightning-fast 12-cylinder sedans were provided to high-profile celebrities in a bid to raise the profile of zero-emissions vehicles like the hydrogen-powered 7 Series sedan.

Next up is the battery-powered Mini. Some 500 of the electric models are in various process of delivery and final checkout — they will be leased to consumers for one year for $850 per month — including insurance and a home charging station.

“With the brand Mini, we’ve been very lucky,” said Werner Lehner, who has overseen BMW’s emission test operation in Southern California since 1986. “The vehicle corners well,” and it was relatively easy to adapt to its American-made battery pack, he added.

But even with a small, light car such as Mini, there are tradeoffs. For example, the two rear seats of the vehicle had to be sacrificed to accommodate the rechargeable power plant.

With the hydrogen-powered 7 Series, the tradeoff was fuel availability, underscoring again the problems of liberating the automobile business from  the petroleum industry. Still, Lehner counts the 7 Series dual fuel experiment as a success in showing that gasoline is not necessary for a high-performance car.

“We wanted to show the public and the politicians this is possible right now,” he said.

A hopeful sign for the future of hydrogen power is the April 8 announcement that the California Air Resources Board will award $6.8 million to enable the construction of four hydrogen stations, including three in Southern California. The stations are designed to provide hydrogen gas to refill fuel cells but they easily could be modified for refueling liquid hydrogen vehicles, said Lehner.

When the test center isn’t fine-tuning battery packs and hydrogen fuel injection systems, it can be checking on the emissions from the X6 hybrids that are beginning to enter the market. Or it may be prepping a heavily camouflaged Rolls-Royce prototype for a road test.

The 77,000-square-foot facility has about 80 employees and it tests cars on roads throughout the western U.S., including extremely cold climate conditions in Colorado and Alaska. With the adjacent processing plant and the Thousand Oaks-based BMW Designworks center, the German automaker has a big but fairly stealthy presence in Ventura County.

About one-third of the Oxnard test facility is devoted to sophisticated emissions testing of both new models and post-production vehicles that are brought in with the owner’s permission so that BMW can get precise readings on what happens as a vehicle accumulates miles on American roads.

Lehner believes the global automobile industry is in a period of major transition when it comes to drive systems — one that will take quite some time.

Jim Ryan, program director for BMW Clean Energy, which ran the 7 Series program, thinks really producing a green car means more than just filling it with liquid hydrogen. It also means deriving the electricity to produce the hydrogen from “green” sources, a process that could take years to fully develop.

Lehner said it could take 25 to 30 years to fully liberate the automobile industry from petroleum and build cars that run on clean energy.

He noted there are two certainties that automakers can count on for the future. One is that at some point petroleum prices will move upwards again, although the timing is unpredictable.

The second is that as alternative-fueled vehicles are brought to market, the public will discover that mobility comes with a price. Whether it is fuel cells that have a limited range before they need recharging, or batteries that fill the back seat of a Mini or a hydrogen drive that gets great gas mileage but has just 12 or 15 refueling stations in a major city, there will be tradeoffs.

In the meantime, BMW looks like it’s in strong enough financial position to follow the narrowing niches of the auto market and find the tradeoffs that make for profitable production runs.

And the Oxnard test facility is where the cars of the future are going to hit the asphalt first.

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