If you’re an environmentalist-type who likes “green” cars, be
grateful for gas hogs — in particular, large SUVs and
pick-ups.
Their fuel-guzzling, planet-despoiling ways may offend you —
but without the huge profits they’ve earned the automakers who
build them, there would be a lot less loose change available to
research new alternative fuels technologies — or more to the
point, to subsidize the production of hybrids like the Toyota
Prius.
Toyota — maker of the Prius, the world’s first and most
successful hybrid gas-electric car — doesn’t make a penny on the
things. Each one is reportedly sold at a slight loss to the company
— even today. On the other hand, Toyota — like GM, Ford and other
automakers — makes a tidy profit on its large trucks and SUVs. How
much? About $6,000 per full-size SUV. Small economy compacts, on
the other hand, are what is known as “loss leaders” inside the
industry; despite their great gas mileage and the fact that they
are sold in large numbers, the profit per car is typically $1,000
or less.
The big money is in big vehicles.
Take that profitability away — for example, by mandating that
all new cars reach a “fleet average” of 35 mpg, as our
congressional solons recently decreed — and you have kicked the
legs out from under the automakers. And made it a whole lot harder
to justify building more cars like the Prius.
It’s like health insurance, in a way. The healthy people who
don’t file big claims make it possible (via their premiums) to
provide for the care of those not so healthy. Take away the source
waters, so to speak, and the well soon dries up.
You may not personally like big trucks or SUVs — but many
people do need them (and others just want them, which you’d think
would be okay in a supposedly free country). Penalizing the
automakers for adjusting their supply to satisfy the market’s
demand via top-down ukase from Washington makes about as much sense
as harassing ice cream parlors for dispensing triple scoop hot
fudge sundaes instead of bran flakes.
People want what they want — and businesses function by
catering to those wants.
That’s the way the system works.
To expect businesses — whether they make cars or hot fudge
sundaes — to devote resources to products that don’t make them
money is to ask them to commit economic hari-kari.
Bill Reinert, Toyota’s national manager for advanced
technologies, asks, “Without these profits, where does the
investment capital come from for our research on plug-ins or fuel
cells?”
Where, indeed?
Will the government step in to provide the funds lost courtesy
of its bureaucratic do-gooder legislation? OK, but where will those
funds come from? There’s not much profit in government; it merely
consumes that which it collects from the productive economy. Are
taxpayers to be hit up for the necessary funds to subsidize ongoing
development into fuel cell, advanced hybrid, and other
not-yet-commercially workable technologies?
Would you rather it be a tax hike on you? Or a voluntary tax on
your neighbor who chooses to drive a large SUV?
Somebody’s got to pay — if we don’t want all these “green”
technologies to die on the vine.
Right now, the people footing the bill are those who are buying
big SUVs and trucks — to the tune of $6,000 or more per person.
That’s a pretty hefty self-tax — and hey, it’s going toward a
cause the “green” folks ought to be pretty pleased about.
If I were a Prius driver, I’d want Toyota to sell as many
Tundras and Tacomas as possible. Does it make sense to kill the
goose that lays the golden green egg?
