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Posted by: Michael Mandel on October 19
In today’s Wall Street Journal, there was a quote from GM Vice Chairman Robert Lutz, taken from remarks he made earlier in 2005. The quote was
I’d say that Toyota scored a major coup with hybrids even though they didn’t have a business case.
No business case, huh. Jeff Plungis of the Detroit News lays out the Lutzian analysis. In an piece on October 16, he writes
The nonbelievers - industry leaders such as GM’s Bob Lutz, DaimlerChrysler’s Dieter Zetsche and Nissan’s Carlos Ghosn - think the business case for hybrids is far from proven, and that after the initial excitement dies down, there may not be enough car buyers out there to justify the added cost of what is essentially a second powertrain.
Yet hybrids are hot enough that no one wants to be left behind. Even the less-enthusiastic companies — GM, DaimlerChrysler and BMW AG — are speeding up their plans to get into the game.
What consumers might not realize is that buying a hybrid isn’t a big money-saver. Various analysts estimate it can take up to 10 years for savings at the gas pump to equal the extra cash a hybrid costs.
Can you say the words, “disruptive technology”, kiddies? The very definition of disruptive technology is that in the beginning it looks inferior to the existing technology.
But give the Japanese another 5 years to improve the production processes on the hybrids, and the tradeoffs may look a lot different.
Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.