Could 'Green Cars' Keep Detroit In the Red?

Development of plug-in cars being driven by government more than consumer demand, contends Newsweek.

Published: 17-Jan-2010

Electric and hybrid cars may be some of the star attractions at this year's Detroit Auto Show, but could they hurt the Big Three's chances of making a turnaround? Newsweek thinks that might be the case.

The magazine says government pressure is driving development of Ford, GM and Chrysler's green cars, even though those vehicles might not sell well in the near future. In a story titled "Who Is Really Running Detroit?" analysts told Newsweek that prices for hybrid and electric vehicles may be too high for many consumers, despite the fact that Washington lawmakers are pushing for them in the wake of the auto bailout.

Jan. 15, Newsweek: Since green cars will cost more, the markets for them will be small—at least for the next 10 years, says John German, a program director at the International Council for Clean Transportation. The production of electric and hybrid vehicles that you can plug in is definitely being driven more by the government than by consumer demand, says Mike Omotoso, senior manager, global powertrain for J.D. Power and Associates. If the costs of these vehicles remain higher than their gasoline-powered counterparts and fuel prices stay relatively low, he says, they'll be slow to catch on. In fact, he predicts that, at least initially, the biggest purchasers will be government fleets, so the government will buy vehicles that they directly or indirectly paid to produce.

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