Interesting piece in the New York Times today about automakers stepping up production of hybrid and electric vehicles even as sales of the alternative-fuel vehicles are dropping.
The story likely will serve as validation to electric-vehicle naysayers that automakers are wasting their money by developing electrified cars.
But automakers could be making a smart bet in getting ahead of the market.
They know they will need more electrics to meet stringent new federal fuel economy standards that take effect later in the decade. And they know that consumer vehicle purchases shift dramatically to more fuel-efficient vehicles when gas prices jump above $4 a gallon, as they did in 2008. That could very well happen again this year.
And if I were a competitor of Toyota, I'd be looking nervously at its new compact 2013 Prius C hybrid that was introduced this week at the Detroit auto show. Toyota's latest entry in its Prius "family" of vehicles promises 50 miles per gallon fuel economy at a starting price of under $19,000.
The relatively high prices of hybrids and electrics have served to brake their sales. I'm guessing the smartly priced Prius C will appeal broadly to a new generation of environmentally conscious young buyers who are looking for quality, value and fuel economy.
That's how Toyota broke into the U.S. market some 40 years ago. Its strategy turned out pretty well.
Click here for an illuminating chart on gasoline prices since 1996. It gives you an idea why automakers are placing long-term bets on the viability of hybrids and electric vehicles.
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