Comments on: Screwing Up the Auto Industry

By: Ed Reid

Ed Reid — Wed, 07 Jan 2009 16:44:48 +0000

I predict that the new “Congressmobile” will be a cross between the Yugo and the Lada. It will be named the Yada. The view from the end of the assembly line would then be “Yada, yada, yada”. (Apologies to Jerry Seinfeld.)

By: techreseller

techreseller — Tue, 06 Jan 2009 20:40:59 +0000

This is such a simple answer. If we do not institute a greater gasoline and/or carbon tax, we are wasting time and money. People will buy small cars and hybrids when the price of gasoline incents them to. Do Europeans buy small cars to help the environment. Heck no. They buy small cars because fueling a big car costs too much. People respond to price signals. That is it. You can argue all day whether this is the correct course or not, but if you believe America needs to reduce oil consumption, raise the price. Econ 102.

By: mlynch

mlynch — Wed, 31 Dec 2008 14:05:09 +0000

It is interesting that on the same NPR show that Waggoner apologized for failure to support the electric car, they talked about the sharp dropoff in demand for the Toyota Prius as the tax break expired.

At $4/gallon gasoline, there will be some demand for hybrids beyond just ‘faddists’ (or early adopters). But at $2/gallon, this drops sharply, unless someone (?) provides large tax breaks, which seems likely.

By: Auto Industry Bailout » Blog Archive » Screwing Up the Auto Industry — Masterresource

Wed, 31 Dec 2008 12:43:08 +0000

[...] Chrysler , for its part, abandoned its large car line, to its regret, while oil prices declined as if every pundit, (nearly) every computer model, and (nearly) all the economists had not predicted otherwise. [This roughly corresponds to ...[Continue Reading] [...]

By: Mike

Mike — Wed, 31 Dec 2008 00:35:44 +0000

I think you are factually correct about the economics of the electric car. However, one thing that I think may provide for a different outcome this time around is the underling cause of the electric car demand.

You are assuming that what will drive demand is the fuel efficiency and ultimate positive effect on the environment. This may in fact not be the case as the hybrid vehicle will be purchased for the same reason as the SUV; it is the “in car”, and therefore, one of the most important factors when us Americans make our purchase decisions.

So, while as you, I may not agree with the solution, I would argue that due to a “tipping point” type inflection from the demand side, forcing Detroit towards the electric car may actually subsidize them long enough where when the fad runs out, the economics may then make sense. I.E. they might just get lucky this time around.