Laurie David - Misguided logic?

Don,

I disagree with your logic too.

There is no HUGE profit in selling hybrid cars. Automakers are investing hundreds of millions of development dollars. It is unlikely they are recovering their investment monies via selling price upcharges at these relatively low volumes (under 200,000pcs per year).

As a shareholder, I want my automaker to squeeze out every last $$$ selling big fat SUV's until the market dries up.

I have no argument that Hybrid technology is good for the environment and that everyone should be driving one. I just can't skip the business model portion of the argument... something that Laurie David is doing.

G.

As is typical of the folks, like "G," who quote the party line about shareholder value and other fairly meaningless phrases, they simply miss the point. GM says Toyota isn't making a profit on hybrids--Toyota says they are. GM's sales are steadily falling, Toyotas are rising..... I will tend to believe the company who has a proven ability to make money, increase market share and stay in business over the company with no vision, no innovation and no leadership----ahhh, but they do pay exceptionally large bonuses to their executives. That's leadership, by gosh.

You want GM to maximize its profits so that your stock goes up. Which is to say, you want YOUR profits maximized. That's fine. However, why do you, and many others, not get the connection between vehicle mpg, wars for oil, global warming costs, and health care costs.

Let's look at the costs GM (and others) are causing you to spend: The more oil you need (want?) to fill your gas guzzler:

1) the more oil companies have to plunder third world nations for their resources. This makes a lot of people hate Americans--look at NIgeria, Venezuela, Bolivia, and of course the middle east.

2) the more CO2 is put into the atmosphere--causes global warming and related droughts, floods, stronger hurricanes, etc. all major costs in terms of repairs, lost crops, famines, possible disease outbreaks, etc.

3) the more NOx, SOx, and particulate matter put into the atmosphere---health-care costs related to asthma, chronic obstructive pulmonary diseases, lost time from work, school, "ozone action days" (i.e., lost "freedom from being able to go outside and enjoy the fresh air") etc.

4) the more we have to spend through the defense department to protect our nationa interests (spelled: O-I-L). We now spend $9 billion / month in Iraq based on a lie from a president and his henchmen who did NOT listen to all the experts about how to plan and prepare for this war.

Many people try to make business-type arguments to justify GMs (and others') stupidity and lack of vision, and their own for buying a gas guzzler, However, for some reason these same people have tunnel vision and do not look at ALL the related costs. GM may be trying to maximize its profits, but it is MINIMIZING yours! Many people would be smart enough to see this if it weren't for the misinformation being put out by many of these same vision-less companies (oil and auto).

These costs may not be in GMs economic analysis--and one can argue whether or not they should be, but they should be in yours, your state's and your country's.

Me, I drive a hybrid to save money, I invest in auto and oil companies to make money on the dummies who buy gas guzzlers--and also to vote against the board whenever the opportunity arises.

Remember: consumers have the ultimate power--we just need to be smart enough to use it.

(By the way--when was the last time a shareholder got to vote on some important issue on their proxy ballot...? Doesn't happen very often.... So much for being an owner of a company!)

I agree. I have sold my auto company stocks--still own the oils though!

Vince,

Tell me how your hybrid saves you money. Consumer Reports says you won't.

G.

This may sound a little convoluted, so please bear with me.

I compared the Prius to the Subaru Legacy (of which I have owned two) the Honda Accord and the Toyota Camry, since they are all considered mid-size mobiles. I work with people who currently own Camries and Accords. Camries have a base price of around $18K to $26K depending on options. Total price can be much higher. Legacy prices are similar, but I am not sure about Accord. The Prius base price is (was) $21.4K when I bought it. Therefore, my reasoning is that there is no premium to buying the Prius since the base Prius has a few more options than the base Camry. However, my comparison is based mostly on interior room. Check out the rear leg room of the above cars, and also Volvo, 3 or 5 series BMWs, etc and you'll find the Prius stacks up very well. Any car provides enough room for the drive and passenger, but many leave no leg room for the rear seat passengers.

Since there is no premium to buying the Prius, the (simple) payback to me is immediate. Obviously the batteries will make a dent in this reasoning, however I am willing to take that chance, especially with Toyota. And the way sales are going, I think I made the right choice. Also, since I have read a lot about peak oil (and have put my investment money there) I knew gasoline prices would keep going up. (I ordered my Prius when gasoline was about $1.50/gallon.) I also had the good fortune to know several Prius (Gen. 2) drivers before I ordered mine, and they were both getting 48-53 mpgs. So, I knew not to trust anyone telling me otherwise. Not everyone has that added benefit. Since I have always kept good gas mileage records for every car I owned, I knew the Camry (33 mpg highway), Legacy (28 mpg) and Accord would probably average out to 30 (26) mpg for me. So, I figured I would be getting the same quality car, the same utility, but better gas mileage, for no significant extra cost.

There are also many other paybacks to consider beyond what I pay for gasoline. By using less gasoline: I reduce demand for oil, I reduce pollution which reduces (the increase in) health care costs, I reduce global warming potential, which reduces (the increase in) global-warming related natural disasters, and I reduce the need for our country to try to forcibly take oil from other countries, and hold our collective noses while we negotiate treaties, business deals, etc. with people who dislike us, and we them. Most people will not see these paybacks in their own home economics, however, they are real and a state, region and especially the country will.

There are some towns in Texas (near the refineries) where 35% of the children have asthma! Think about how much that will cost us for the rest of their lives. What is the cost of the lost freedom these kids (don't) have because they can't run around and play as much as the other kids. And this doesn't even count the adults who now have asthma after moving to that area.

Companies don't care about these benefits since they just get contracts to drill for oil once we take over a country, and the US taxpayer pays for the security....more corporate welfare in my book.

Consumers have the ultimate control; we just need to learn to use it. We can save more energy my reducing demand, than we can find by drilling for it, or stealing it. It is now, and will be even more so in the future, cheaper to save energy than to buy it.

Joan,

You didn't even mention tax incentives... both federal and local....

Let me ask the opposite.

How do hybrids make money for automakers?

Add in the component costs (batteries, power inverter).

Amortize the engineering cost over the 3 - 4 year development time.

Divide by annual sales (50,000??).

Show me the (profitable) math.... please.

G.

This just in: another example as to how a company as stupid as GM is raising your costs--just so it can help already-wealthy people buy gas guzzlers, pollute your air, increase your health care costs, increase your global warming costs, and increase the costs of gasoline itself by raising demand:

http://news.yahoo.com/s/ap/20060524/ap_on_re_us/gm_gas_rebate_4

They (GM) and the country would be much better off if they gave that money to their R&D engineers!