Tom -

I don't share your pessimism on the ability of taxes to change consumer behavior. Provided you set it up as a slow but relentless ramp up to a permanently high level and then spend the proceeds on income tax cuts, buy-to-crush programs for old gas-guzzlers and universal broadband access, demand can and will adapt.

Moreover, local governments will figure out how to provide new forms of public transportation, e.g. dynamically routed buses/vans.

The important point, which you make eloquently, is that lawmakers need to adjust market externalities such that consumers voluntarily buy the goods and services that achieve the stated public goals of reduced dependence on OPEC and/or reduced national CO2 footprint. Forcing manufacturers to produce something for which there is insufficient demand at untenable price levels doesn't work (cp. Soviet 5-year plans).

As I've said before, what the United States needs RIGHT NOW is another dollar or two in gasoline taxes.  That'll change the vehicle market, all right.

I'm with a bunch of smart (and wealthy) folks who think that the money should go into payroll tax reductions, so the total amount of money in people's pockets stays about the same.  Only the incentives would change.  But as people responded to the incentives, the rebate would go down and squeeze the laggards.

Detroit shill: We should recognize that the customer will choose the solutions that best meet their needs.

Translation: Through the exploitation of customer insecurities, we can sell huge numbers of SUVs, regardless of negative impacts on the customer, the country, or the world. Don't you dare make us stop.

Pangolin,

I agree with everything you said with one exception.

"Detroit has no intention of producing the Volt or any vehicle resembling a PHEV. The improved performance and simplicity of electric traction systems removes the income stream provided by spare parts for existing vehicles and replacement of vehicles when complex powertrains wear out."

If this thinking is true then how do you account for technology changes such as radial tires? Tire makers had to downsize because radials last longer. But individually they had to compete, so they raced to make the longer-lasting tires. It was a painful adjustment for them, but they did it.

Likewise the electrification of the automobile will proceed, unless you believe Toyota, Honda, GM, Ford, BMW, etc have all colluded to stiffle competition. That would be highly unlikely, and illegal.

Tom,

I don't know why GM crushed the EV1 proto's (and there were so few of them that they should be considered prototypes). There are many possibilities. Here's one you may not have thought of.

I used to work in laptop development for a major computer OEM. Accounting got after us engineers for keeping prototype parts and systems to build our own computers. The company wrote off the equipment (typically around 500 systems) as an R&D expense. That means it's worthless and must be scrapped. If you continue to use it then it still has value. Since prototypes for a $2000 computer may cost over $20,000 each it was an important expense writeoff. And it was causing problems with the auditors.

Now those EV1 prototypes probably had a book value of at least a million bucks each. If you don't crush them you can't write them off. That's my speculation. Maybe somebody else knows more about it.

Lastly, I worked with battery vendors, all Japanese companies, and visited their factories many times in the mid '90's. So I have some experience with battery technology around the time of the EV1. I believe GM killed the EV1 because the batteries weren't ready for a mass-produced vehicle. A lot of development has happened since then, and this time the leaders are American companies (A123 and Altair Nano). Their batteries are way better, and other technologies (power control, traction motors, etc.) have advanced as well.

GM was too early, but only got bashed for the effort. I have frequently criticized GM in my GCC posts, but not for killing the EV1. They may have developed the EV1 just to comply with the ZEV mandate in California, which was also way too early (another case of well-intended but counterproductive government interference). This time nobody is going to stop the electrification of the automobile, IMO.

what you have to remember is that this guy is working for a psychpathic corporation
whos one aim in life is to sell us cars by which by their very nature are slowly but surely destroying life on the planet that we live on . He does not care about you , he does not give a f**k about anybody , his aim in life is to return income to shareholders, though in fords case hes not doing a very good job , he will be delighted to sell you a car that is less efficient than Henry Fords tin lizzy of 1921 despite the decades of funding and a world war that have gone into the ICE, he will spend hours elabourating over the wonder of fuel cells , he will tell us that ethenol an biodiesel will free us from the dependance on foriegn oil, and the wars that that brings, in fact he will tell you anything you want to know , but if you just mention the word" electric car" in his company just watch for the mood swing !
GM have shown their colours with the EV1 , and none of the large companies are any better, all of the worlds major car companies are fighting to stay in buisness ,and you know if someone told me that they had all got together to remove the electric car from the loop , I might just believe them !

Andrey -

There is actually already a lot more co-opetition between brands than Joe Average is led to believe. For example, GM Powertrain is a global division that employs 85,000 people and is responsible for the engines, transmissions etc. regardless of the target market. Weaknesses in engineering expertise and inadequate economies of scale are routinely compensated for via outsourcing and/or joint ventures with other manufacturers.

IMHO, the real reason that European and Japanese manufacturers tend to offer more sophisticated (and expensive) drivetrains are rooted in the long-term impact of the externalities of their respective home markets: higher fuel taxes, vehicle license fees based on engine displacement or rated power etc. Consumers there trade off initial purchase cost against operating expenses, so these externalities mean fancier technology is economically viable IFF the products also features high life expectancy.

When governments also raise emissions, crash safety and recycling standards in short order, one consequence is that it takes a long time for those improvements in the law to be reflected in the vehicle fleet. Another is that auto makers try to compensate for lower unit volumes by upselling customers to even more expensive engines, trim levels and other features. This applies especially in Germany, where strong unions make shedding excess production capacity almost impossible.

By contrast, Americans expect low prices for both their cars and their fuel but tend to upgrade to newer models sooner. Rising fuel prices and competition from Japanese manufacturers has actually led US auto makers to focus on build quality in recent years. Unfortunately, it's much easier to lose a good reputation than it is to regain it, especially when you are burdened with sky-high pension and health care overheads.