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Monday, January 31, 2005

Pricey Hybrids?

Carlos Ghosn, probably THE most talented auto executive in the business, taking a basket case like Nissan and turning it into the second largest Japanese auto manufacturer in the world, thinks hybrids are too expensive to be realistic, according to this article.

At current gas prices, with current production numbers, I'd say he was right on. But what if gas went up to three dollars a gallon? And what if the demand of hybrids increased ten fold? Wouldn't a ten fold production increase in hybrids, decrease the expenses in making them? According to Economics 101, the more you make of a product, the more you can spread production expenses across the entire produced amount. That means a cheaper creation price, and a cheaper price for customers. When Toyota first started making the Prius, they said they were losing money on everyone sold. By the second generation, that was no longer true.

I'm really suprised at Ghosn's short sightedness, and seemingly complete lack of knowledge of the world's energy future. Automakers need to realize that the stuff that powers their products is finite, and also needs some analysis as well.

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