GM is hurting big time. Today their stock fell to a 53 year low. Ford aint doing so great either. In fact, just about all American companies that produce products heavily dependent on oil and gas are hurting big time. American Airlines is laying off thousands of workers and hiking prices for all checked luggage to try and offset fuel costs. Dow Chemical (which makes a gazillion products, many of which are or come from petroleum dependent processes) has already upped all of their prices across the board.
We can get into offshoot arguments about whose to blame and why until the cows come home, but I think we can all agree that this problem is largely due to the cost of oil and it's refined products. It's simple really. If gas costs an arm and a leg, who is going to go out and buy an F-350 that will burn through hundreds of dollars worth in a week? The Hummer line is going to be discontinued altogether and sales of trucks and SUV's are in the gutter.
The kicker is, there's a solution to all this which makes a lot of sense AND the market supports it. GM, Ford, Chrysler, the airlines and industry need to admit that we need to look at alternatives to gasoline AND admit that those alternatives exist and can be implemented today. Why does the market support this? Let's take a look at the electric car industry.
Electric cars are on the market right now. Very few are actually manufactured in north America and they're very expensive so you don't see many scooting around. In a comparison ratio between average cost of gas and electricity, a good electric car can easily get the equivalent of over 100 miles to the gallon and battery technology is getting better all the time. The newest ones out can charge to full capacity in just a few hours and go hundreds of miles on one charge at highway speeds. Need a gas station? You just need access to an electrical grid which is already in place and widely distributed. There's no special infrastructure needed for electric cars, and with only 15-20 moving parts they break down far less than an internal combustion vehicle with almost 700 moving parts.
The argument we keep hearing is that electric autos are simply too expensive for the average joe to buy. This is true, but easily fixed. Look at the Tesla Roadster. This is one such car currently available for purchase in the U.S (import of course) It's built at a small factory in London, and the cost is well over 100 thousand. Why is it so expensive to buy one of these? Because demand for them is through the roof. If you want to buy a Tesla Roadster right now you have to reserve for sometime in the middle of 2009 because all production before that has already been snapped up.
Do you see where I'm going with this? Small factory in London that's selling these cars like hotcakes, so much so that demand far outstrips the available supply. Over here you have big giant auto companies with factories that are practically idling for heavy gas-usage vehicles and will continue to shut down more of these plants as time goes on. Here in Canada GM is shutting down a big factory in Ontario in the near future.
Rather than sit on their hands and cry about how no one is buying their crappy ineficient gas guzzlers, this is a prime opportunity for big auto in the U.S to swing back and start building electric cars. Instead of shutting down factories for trucks and SUV's, retool them for electric cars instead. This is not a revolutionary technology- GM quite succesfully tested an entire line of electric cars on the market in California in the mid-90's. As the famous saying goes "we have the technology"
If big auto begins mass producing electrical cars, the cost of buying them will go down fast. Simple truth today is they're so expensive because they're not in mass production. The alternative? Big auto closes more factories, puts more people out of work and sells mostly hybrids and smaller gas-powered cars. Sure they'll still sell trucks for corporate fleets and the odd well-off fella who doesn't mind a steep gas bill. Eventually even their market for gas-powered cars will go. All the big north American Auto companies are already getting fleeced by foreign competition in the sedan/compact/hybrid market. Oh yes, I forgot we can drill for more oil. Nevermind that even if this works and it brings prices down to reasonable levels (which it won't as I stated in my article yesterday) it will take at least a couple of years before this happens. By that time, the foreign auto market will already be running the show over here and Ford and GM will be musem pieces mostly.
So in re-cap: Small foreign electric car companies are making a killing because they make a product in hot demand. Their production capacity is too small to come close to meeting the demand out there so the product is ridiculously expensive. Big U.S auto companies are crying and closing factories because demand for their current products is dropping off precipitously. They have tons of manufacturing capacity but they're making the wrong product. They can try to compete with foreign companies in the hybrid market but now would be the time to get in on the electric car market and fill a void before someone else steps in and does it first!
If sales and demand for Tesla Roadsters and similar electric cars continue, these small overseas outfits will rest assured be investing some of their profits in bigger factories which will allow for greater market penetration. They've already proven this can be done, and if big auto doesn't wake up and realize which way the wind is blowing they'll miss their chance.
Big auto in the U.S is down right now, but they're not out. Not yet anyway. They've got a few years in which they can turn the situation around to their advantage. Our history books are full of examples of American ingenuity that seized the day with new technologies and new ways of doing things. It's just the way life works, the way the world works. Either we grow and change, or we stagnate and get left behind. Sitting around crying about how we need more gas so people can buy our obsolete machines is, sadly, not living up to our legacy of innovation.
The high gas prices we are all suffering with right now are indeed unfortunate, but in every setback there is opportunity for advancement. It's time we collectively realized this and stepped forward into the 21st century!