Friday, April 03, 2009

Demand for Small Cars & Hybrids Down

These two stories appearing the same day last week in the NYT's caught my attention.

The first story describes how, with much hype, Tesla Motors unveiled its "affordable" all electric sedan. Tesla's Model S is expected to cost about $50,000 after tax credits. The company is awaiting a decision on its request for a $450,000 million government loan needed to put the sedan into production.

The second story indicates that as gas prices have declined so has demand for small cars, including hybrids.

Could the combination of massive government investments in the U.S. auto manufactures and the fact that consumers' demand for more fuel efficient cars is tied to gas prices provide political support for a national policy to stabilize gas prices? Apparently, a "whisper campaign" in Detroit has already started in support either raising the gas tax or setting a system that maintains gasoline prices at a certain level.

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