Thursday, January 15, 2009

Economics seems to be winning out... too bad..

The following is a pretty interesting article I read on Newsweek’s web site about "Efficiency vs. Economics" as it relates to the car manufacturing industry and I suspect that same kind of economics will play into "wind energy", "solar investments" and "hydrogen energy" capital growth plans particularly as these relate to new "Green" building technologies. Bottom line is they were all starting to look attractive when oil was $140 a gallon but as they demand for oil decreased and the price fell off so did the probability of investors getting returns on these new types of investments... couple that with the beating investors took in the markets over the last year and there just isn't any appetite to do "green investing". If you look at the article closely you will note that although everyone wants to be "green" even the environmentalists aren't going to fully change until it makes financial sense... is there a solution... I don't know but I think if we all start practicing "practical" energy efficiencies until the investment climate gets better than at least we doing something to save our planet’s carbon.. that's what we tried to do in building our new head office building as we couldn't afford to get to "Leed" certification but we do have a much more energy practical building http://apm.ca/whyGreen.html than our previous one... am I going to do a wholesale change to how I approach my own personal energy uses... no… but I am going to try a lot harder without having to get rid of the fast cars… yes... maybe drive them slower and less...
Efficiency vs. Economics
Will the recession prevent hybrid and electric cars from going mainstream?

By Julie Halpert Newsweek Web
Jan 14, 2009
David Blume, a 48 year-old seafood retailer from Bloomfield Hills, Mich., feels guilty about the gas he burns during his 60-mile roundtrip commute—up to a point. A self-described environmentalist, he considered purchasing a hybrid, but balked at spending $5,000 more, an amount he won't soon recoup with gas prices at their current level. He ultimately picked a conventional Honda Civic that gets 37 miles per gallon. "I'm all for saving the environment, but my first priority is putting my kid through college," says the father of a high-school senior. "I won't even consider a hybrid unless gas prices change dramatically again."
Such sentiment could pose a major problem for beleaguered automakers that are shifting away from SUVs and banking on fuel-efficient hybrids and electric cars to stay in business. As expected, the cars showcased at this year's North American International Auto Show in Detroit were vehicles that run primarily on batteries, including the much-hyped Chevy Volt, the Jeep Patriot and the Dodge Circuit EV sports car. Also front and center were updates of already popular hybrids like Honda's Insight and the revamped Toyota Prius.
Carmakers saw the show as an opportunity to advertise positive change. "People were expecting a funeral for 2009," says Jon J. Lauchner, vice president of global program management for General Motors, but "GM is here to stay. There is no reason to think we won't get past this rough patch." Glancing around the auto show floor, he adds, "We have cars that people will buy and will buy in big numbers."
That may be a bit optimistic. Given the bleak economy and relatively tight financing market, buying a new car just isn't as easy as it once was. The million-dollar question going forward: Will the recession kill the chances of hybrid and electric vehicles from going mainstream? Asking drivers to pay more when they've got little to spend is proving to be a tough sell for the auto industry. "With gas under $2 a gallon, it's hard to convince consumers to invest that additional money," says John Nielsen, director of auto repair and buying for AAA in Orlando, Fla.
For the moment, driving green requires a substantial upfront investment. The GM Volt, which plugs into a household electric socket to charge, is slated to retail for $40,000, nearly the same price as a conventionally fueled Mercedes C Class. While Jim McDowell, vice president of BMW's Mini division, says drivers are going "bananas" over its pilot electric vehicle, the one-year monthly lease price is $850, more than twice as much as the comparable non-electric Mini. And hybrids, which use gasoline to power a combination electric-gas motor, cost more than comparable gasoline-powered vehicles. For example, Honda's 2010 Insight is slated to be the least expensive hybrid sold in the United States at under $20,000. That's still nearly $5,000 more than a Honda Civic running on unleaded. And for all the positive press and public opinion about Toyota's Prius, sales of the car plummeted 44 percent from December 2007 to December 2008.
Washington has put a lot of pressure on carmakers to go green, but that doesn't mean consumers are willing to buy, says Geoff Pohanka, a dealer with Pohanka Automotive Group in Marlow Heights, Md. The "economic crisis is trumping the environmental crisis," and it will "be a bumpy road" with many of these vehicles, especially the larger hybrids, sitting on dealer lots, says Pohanka, whose dealership sells numerous makes including cars from GM, Chrysler and Toyota. While the IRS does allow tax breaks on hybrids, they're limited and range from only $300 to $3,000 for 2008 and 2009 cars.
Buyers are feeling too squeezed by the economy and just are no longer willing to pay a premium for cars like the Prius, says Jon Kinkov, managing editor of autos for Consumer Reports. Americans are fickle and "there won't be a wholesale rush" on hybrids unless their prices come down and gas prices go back up.
Detroit says it's taking sticker shock into account. Sue Cischke, Ford Motor Co.'s group vice president of sustainability, environment and safety engineering, acknowledges that hybrids and electric vehicles need to be made more affordable. As technology evolves, she insists, and more of these cars roll out of showrooms and are produced on a bigger scale, prices will begin to come down. Exactly when that will happen is unclear.
Michael Simon, a 52-year-old professor in Ann Arbor, Mich., is waiting for hybrids to become more mainstream before he trades in his 2001 Honda Accord, which has racked up 195,000 miles during Simon's 92-mile roundtrip commute. An environmentalist who composts vegetables in his backyard, he would prefer a hybrid—but not yet. "I'm holding out," he says. "As long as my Honda is safe, I'll continue to drive it."

2 comments:

Mark said...

Tim,

I think you would look real good in a new Fisker Karma hybrid....

Hans Connor said...

Right on, Tim! If our society can't get to all the environmentally-friendly technology there are many ways to practice good environmental stewardship just like APM is doing. Coincidentally, these things also save money. Cutting back, turning the lights off, reducing, reusing.... All those things my parents did and yelled at me to do! They were being "frugal" but they were also being easier on the environment. Just as you say, businesses can be efficient and environmental at the same time.