Thursday, September 15, 2005

Hybrid Cars Blog --plug-in hybrids.

The Hybrid Car Blog takes issue with BMW's prognostication. Mr. Panke says that hybrid car sales will never rise above 1%-2% of the total market. What poor vision?

My belief is that the hybrid becomes more and more electric as each model adds more electric components. My local paper, Winston-Salem Journal, posted an article today that suggest the market share will rise to 3.5% in 7 years. I suspect that level is exceeded.

The environmentalist who have been willing to buy for the benefit of clean air while knowing that the technology has not made economic sense in the short run are to be congratulated. Now that production is scaling up, the cost per unit will come down. The cost of semiconductor chips, the drivers of many of the electric components continue to decline.

The days of the drive shaft are numbered. Production of drive shafts will continue for many years but eventually economics will win. The cost of grid electricity is less than the cost of the internal combustion engine. It is only a matter of time until grid electricity is charging car batteries at night. The supplemental engine will be the internal combustion gasoline engine for quite some time but eventually a cost competitive fuel cell will drive the electric motors, fans, brakes and other components. The hybrid will stop being a hybrid when it is all electric.

The wagon works companies generally did not survive the change over to the automobile. Car companies that do not adopt the new technology have little chance. The change-over will not be fun for parts companies either. Can the maker of a mechanical, belt driven water pump convert to mass produced standardized electric pumps?

We live in exciting times. As an investor, can you find the best way to play the "new economy"?