"Car companies are at a crossroads"

In the article Taken for a ride, Thomas Kostigen takes a very bearish view of hybrids and fuel cells.

Kostigen does make some good points. Specifically, he notes that American car companies, particularly GM and Ford, have become more like financial companies that make automobiles, rather than automobile manufacturers that also have a financial arm.

Mr. Kostigen opens his article referencing Nissan's claim that hybrid cars make no economic sense. He also notes that fuel cell cars are even more of a dream than hybrids.

Well, Nissan's claim really doesn't mean much to me. How can you say hybrids don't make economic sense, then announce your first hybrid, which is exactly what Nissan's CEO, Carlos Ghosn, did when he ridiculed hybrids.

Ladies and gentlemen, hybrid cars don't make business sense, which is why I'm proud to introduce our first hybrid car, the Altima hybrid.

That's double-talk, and what else can you expect from Nissan?

Here at Nissan we believe hybrids are the future. That's why we haven't invested in this technology and are forced to lease it from our main competitor, Toyota.

Since the Altima hybrid still won't be out for more than a year, in reality, what else could Mr. Ghosen say?

The fact is, the only reason GM and Nissan are making hybrid cars is because they realize that if the model succeeds, they will be out of the car business without any hybrid models.

In my book, Mr. Ghosen's spin is nothing but an attempt to buy time.

Yet, Mr. Kostigen concludes his article, "The future of car companies may not rest in how sleek, fast or comfortable their products are, rather in how efficient (read economic, not fuel) they can make them.

O.K., I can agree with that statement.

Then Kostigen states, "That's bad news for environmentalists and alternative-energy seekers. It also provides keen insight into how an industry that's had a chance for years to be cutting-edge consistently goes retro in doubt."

Does the new Mustang or Charger ring any bells?

Yet, even if Kostigen is correct, and price is all that counts, Japan wins without doubt. In particular, Toyota takes over the automotive world.

Toyota's kaizen-driven manufacturing philosophy, i.e., efficiency driven, has already given the Japanese company a huge advantage over the likes of GM, Ford, and Chrysler.

More important; however, is the fact that Toyota President Fujio Cho, just recently announced to the automotive world that the hybrid powertrain is the key to Toyota's future.

Already Toyota Prius demand is far beyond supply, and a 100,000 new Prius will not fill demand in 2005. Without a real competitor, the Prius is demonstrating that it will achieve much more than "niche" production.

Yet, Toyota is only getting started.

Toyota's next hybrid, out in just a couple of months, the Lexus RX 400h hybrid, has already received more than 10,000 orders, as well as interest from another 50,000 consumers. In fact, initial demand on the RX 400h, the world's first luxury SUV, was so far beyond supply that its release date had to be pushed back.

Shortly after the Lexus 400h hybrid is released, the Toyota Highlander Hybrid will follow. Unbelievably, interest in the Highlander hybrid is even far more spectacular than the 400h hybrid.

Next year alone, Toyota could easily sell 250,000+ hybrids, if it is capable of producing that amount of vehicles.

Of course, if gas prices continue to rise, and state legislation continues to demand fewer emissions from automakers, 250,000 hybrids won't even be enough to come close to matching this year's demand.

While Mr. Kostigen is correct in noting that most car companies are not worth investing in, one certainly is, Toyota.

And that's good news for environmentalists and alternative energy seekers.