A blog about economics instruction. "Things should be made as simple as possible, but not any simpler."--Albert Einstein

Monday, April 25, 2005

Hybrid Car Sales Up as Gas Prices Reach Record Highs

I don't know much about hybrid cars other than that they cost way more than their traditional siblings. On the one hand, I've read that they purportedly offer purchasers high gas mileage. On the other hand, I've read that buyers of hybrids have been disappointed in the actual miles per gallon.

The one thing about hybrids that makes the most sense to me is that their sales are headed upward at a fast clip. Because hybrids are relatively new and not many models are offered, they still make up only about 1 percent of all new vehicles sold. Pay no mind to that number, though, because proponents of hybrids see a rosy future for them. R. L. Polk, the firm that collects data on auto sales, explains the popularity of hybrids this way:

. . . federal and state tax credits for fuel-efficient vehicles have helped spur hybrid sales. More people also are buying into the idea that driving a hybrid is socially responsible . . .

I think the key motivation driving hybrid sales is ignored by that explanation. High gas prices always increase the demand for more fuel efficient vehicles. In the 1970s Ford's Pinto and Chevy's Vega rode the crest of the wave of rising gas prices to the winner's circle. Those vehicles were quietly discontinued when it became apparent that they were trouble prone. I wonder how reliable is the hybrid technology. The economics of hybrids is already pretty iffy given the higher initial purchase cost. If they prove trouble prone and costly to repair, consumer demand for fuel efficiency may have to be satisfied in some other way. Check out the cool 1958 GoGoMobil converted to electric power at this link. For a look at the full line of GoGoMobils, go here. Back to the future, anyone?

Link

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