While all of the world's major automakers are continuing to develop alternative fuels and drivetrains, the current economic situation very likely means that a massive move toward non-liquid fueled cars is likely a lot further out that many of you many hope. One look at September auto sales will tell you that the entire industry is in trouble including the seemingly all powerful Toyota. As the financial system continues to struggle and unemployment climbs, people are having a harder time getting car loans as well as mortgages. If people can't afford the cars that are available today, it's hard to imagine how they will be able to afford some of the alternatives that will be much more expensive to build for some time to come. Given the current financial position of many automakers, it's hard to see how they will be able to subsidize the cost of new technologies in any significant volumes. At the Paris Motor Show last week BMW Chief Executive Officer Norbert Reithofer said, "There's too much hype about the electric car." Electric vehicles may make up 5 to 10 percent of new car sales in 2020, "but not more," he said.

If the U.S. economic meltdown hadn't spread to Europe the situation might have been different. With sales dropping in Europe, even companies like Volkswagen and BMW are joining Ford and others in focusing more on shifting to smaller more efficient vehicles that will be affordable rather than building alternatives. It's a vicious circle because until alternatives gain some volume, costs will not come down. But in the current climate few will be able to afford to be the leaders. Thanks to Jonathan for the tip!

[Source: Bloomberg]

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