The Car of the Future - But at What Cost?

Washington DC November 26, 2008; The AIADA newsletter reported that many members of Congress believe they know what the car company of the future should look like.

"A business model based on gas -- a gas-guzzling past -- is unacceptable," Sen. Charles E. Schumer (D-N.Y.) said last week. "We need a business model based on cars of the future, and we already know what that future is: the plug-in hybrid electric car."

But car manufacturers still haven't figured out how to produce hybrid and plug-in vehicles cheaply enough to make money on them.

According to analysts, Toyota is still losing money on every Prius it sells. General Motors has touted plans for a plug-in hybrid vehicle called the Volt, but the costly battery will prevent it from turning a profit on the vehicle for several years, at least.

The hurdles ahead for cars with new technologies pose dilemmas for automakers trying to stay in business during a downturn. "These are hard choices," said Toyota chief technology officer Bill Reinert told the Washington Post.

"Do you bet on lighter, smaller, more fuel efficient, but ultimately less profitable cars or do you hold back a little on technology development and look at new versions of existing cars."

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