BusinessWeek's David Kiley had a fun idea to spend some time talking with some industry heavy-hitters about CAFE and fuel economy. He spent a few minutes talking to both former Toyota USA President and current #2 at Chrysler, Jim Press, as well as GM Vice-Chairman "Maximum" Bob Lutz. The topic was the fuel efficient topic of choice among greenies, hybrids. In the article, Lutz claimed the upcoming Chevy Vaporware Volt might end up with a sticker price at around $48K. Normally that would make a pretty spectacular lead for us, especially given it's a price tag that's betwen 33% and 60% higher than originally stated by the brand all about the 'merican revolution and the GM exec born from jets. Fortunately for him, his comments were eclipsed by Press on the Prius.
And why not, as Press noted the inherent unfairness of competition from Toyota in the hybrid game, saying
"...the Japanese government paid for 100% of the development of the battery and hybrid system that went into the Toyota Prius."
Phew, that's nice work by an automaker if you can get it. Here in the US, we're lucky if we can get a bailout for our automakers if they're about to go bankrupt. Oh wait, sorry Jim, Chrysler already used up that chit. But, we know how keen US politicians seem to be on helping out an industry which employs millions of people and effects almost every American's daily life, we're assuming similar plans are in the works. Yeah, right. [MSNBC]
DISCUSSION
@rlj676: "My point is people aren't/won't pay the premium for a hybrid over a comparable car. "
And my point is that you are WRONG... because if you were right, then the Prius (especially the 1st gen model), Escape hybrid, Civic Hybrid and other models would all have been flops... and certainly the Prius wouldn't be #11 in overall US sales. So far, the only hybrid flops are the Insight (too tiny to be mainstream) and the Accord V6 (expensive for what was a mild hybrid.
At least I've stopped you from saying/implying that hybrids only make up 1% (when 2-3% is reality...for now) of the total market. And I got you to concede that some hybrids have become profitable. In spite of your kicking, screaming and namecalling, I'm making progress with you.
"THEY ARE STILL ONLY 2% OF THE MARKET. It takes a truly ignorant half-wit to think this is NOT DUE TO LACK OF ECONOMIC VIABILITY."
But what do you think the market for hybrids will be once GM ramps up the hybrid stuff they're coming out with by 2010? I'm not just talking about the Volt... that car is just a 'halo vehicle' sideshow. I'm talking about all the trucks and perhaps cars that will have their two mode hybrid system... that's the real action that'll save GM's ass from CAFE.
Here's a lesson in economic viability for you... what's one of the most profitable car companies in the world who has less than 1/2 of the market share of the Prius? Any ideas? Didn't think so.
Porsche. They're tine and exceptionally profitable with much less than 1% of the market. How can this be? I *could* explain it... but would you understand the answer?
Oh and they're coming out with a hybrid Cayenne as well.
And their little piddly non-existant share of the market is so "crap" that they had they only had the financial ability... ummm.. to take a controlling stake in VW... a company several times their size.
You see, VW was big, but not too profitable. Kind of like the situation Ford,GM and Chrysler are in. What good is being big if you're only making big losses?
Being big or small or having 1% or 50% of the market has very little to do with economic viability... or profitability. Plant/resource utilization, for example, is a much more critical measure.
But you'd understand that if you understood Economics.
"So why the hell AREN'T people buying them then?"
You can't buy what's not available... which is the exact reason why the number of Chevy Volts sold is exactly zero at the moment. And going back to the Prius... supply was so tight a while ago that it was measured in *hours*.
And I provided links that support that... and if you don't like the links I provided, perhaps you can provide some of your own. Oh that's right... you don't have any and you "don't need them" 'cause you work in the treasury where I'm sure all the planning, engineering and manufacturing gets done.
When I assess companies for investing, I look for executives like you (who only know how to look backwards instead of forwards) so I know what companies to avoid.
It's clear you don't know the first thing about manufacturing and what it takes to ramp up production... particularly when it comes to new technology... the field *I* work in.
And it's the new technology bits that are constraining Ford and others on the hybrid end of things... I know that from talking to *engineers*. It definitely ISN'T a lack of auto assemblers or a lack of interest that's keeping hybrid sales down.
Technology is something I know well. And manufacturing is something I'm also quite familiar with. These are two areas that I have no doubt you are completely illiterate in. And God help any company that depends on you to make decisions in these areas.
And I'm sure you have a nice house, nice car, tiny debt and a comfortable life... But I strongly suspect you're at least 20 years older than I am.
I'll have way more than that in 20 years old man.