by Christopher Polo

Created on: May 28, 2009

Even as manufacturing giants like G.M. and Chrysler have begun to declare bankruptcy, one thing has become clear: without a massive change in automotive policy, we may see the collapse of some of the best known and respected names in automotive history. However, not everyone in the auto industry is as pessimistic about the future. Recent start-up companies like electric car manufacturer Tesla Motors may have given hope to many potential investors and automotive analysts. As a new source of "green" manufacturing jobs and market share, electric and hybrid cars seem to be the future of car production. Especially with Daimler AG's recent purchase of nearly 10 percent in Tesla, which makes it effectively worth nearly half of GM's market value (550 million dollars). But will this boom in alternative energy investment be enough to kick-start the US economy and the automotive industry?

A Potential Trade-off

At the end of 2008, the Toyota Prius was one of the most desired cars available in the United States. In fact, Toyota was so swamped with orders that the reservation list for a new Prius shifted from weeks to months in a matter of days. And with an estimated 50 MPG, it's hard not to see why many chose it over more conservative cars. As gas rose over 4 and a half dollars at the height of the gas crunch, fuel efficient vehicles were suddenly in demand. Hybrids versions of vehicles like the Honda Accord also sold in record numbers compared to previous years.

Meanwhile, parking lots filled with Hummers and other gas guzzling SUV's remained curiously empty of customers. Almost unbelievably, the most desired car in America shifted for the first time in over 18 years from a pickup truck to a more gas friendly sedan. For a while, it seemed that America had finally come to its senses and begun to the choose more responsible car, like much of the rest of the world. However, as the economy gradually declined, so did gas prices. But did America learn its lesson? Maybe.

While truck and SUV sales are on the decline, so are hybrids and electric vehicles. And although reports indicate that many potential buyers are holding off on buying their new car until the economy brightens, the savings produced by energy efficient vehicles and electric vehicles may provide the impetus for future car purchases and financing. If gas does rise again, many more people may decide to make their next vehicle a fuel-efficient vehicle or electric vehicle.

This shift will benefit not only start-ups

• 1
• 2
• Next Page >>