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Author: mindshar Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 42  
Subject: Re: Too many studies, too little execution Date: 11/15/2008 6:05 PM
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I too would love to see the US automakers take a leading role in electric vehicle technology.

The big problem that I see is the lack of reliability in the economics of electric vehicle technology today. With oil getting (relatively) cheap again and batteries remaining expensive, the economics of PHEVs and electric vehicles are poor. Paying the additional gasoline costs for 100,000 miles of a conventional vehicle is cheaper than the incremental cost of the battery pack for a PHEV (or EV).

How are we going to get consumers to buy vehicles that are money-losers? Sure affluent, hardcore greens would buy today, but the average consumer is already strapped and can ill-afford a big hike in their car payments. Are we going to force the Big 3 to sell them at a loss when they are already on the ropes from their high cost structure?

http://seekingalpha.com/article/105061-should-we-really-bail...

The first step to getting our auto industry to make long-term investments is to allow our auto industry to be competitive and profitable. Sadly, organized labor is just as susceptible to the greed and short-term thinking that we've seen on Wall Street, and the monopoly power of some labor unions have allowed them to do just as much damage to their industries as Wall Street has done to the U.S. financial system. It is organized labor's "inconvenient truth", and is something that needs to be addressed before we can ever hope to rely on the U.S. auto industry to make long-term investments that take decades to pay off.

The best solution in my mind would be:

- Start regulating labor unions as monopolies so that wages and benefits are reasonable, and so US automakers have the ability to be competitive in the long-term.
- Institute a long-term plan to incrementally increase gasoline taxes, which would establish a price floor that helps to ensure the economic viability of PHEVs and EVs in the future.
- Take the incremental gas tax revenue and distribute it as tax credits for PHEV and EV buyers.
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