In the automobile industry, hybrid cars are one of the first technologies developed to create more fuel efficient vehicles. With on-board electrical power generation, the cars are among the most fuel efficient in terms of fossil fuel consumption. With any new technology, however, some economic ramifications must be considered--both positive and negative.
Automobile Industry Boost
As demand increases for hybrid cars, the technology should become more affordable, especially for subsequent model years. While it is unlikely that prices will decrease dramatically, prices probably will not increase either, as the cars will become more efficient to build. This will, in the long run, lead to more affordable hybrid cars. In the end, affordable hybrid vehicles could provide a big boost to the ailing automobile industry.
Traditionally Fueled Vehicles
Any increased demand for hybrid vehicles will, conversely, lead to a decrease in demand for gasoline- or diesel-powered vehicles. While this will not be a direct one-to-one ratio, a certain decrease in demand for traditional vehicles should be expected. Those manufacturers who fail to offer enough suitable options in hybrids could eventually find themselves in dire financial straits.
Perhaps the sector of the economy with the most to lose due to the economic impact of hybrid cars is the energy sector. In 2009, the Wall Street Journal first reported that energy companies were becoming concerned that demand for fossil fuels, especially oil, may have peaked not only because of a slow economy, but also because of hybrids and other automotive technologies in the process of being developed. In such a case, these companies may have to find other ways of supplying energy, aside from simply putting raw crude oil on the market, if they are to survive.
Retailers that supply the finished gasoline or diesel product to the customer share concerns with energy companies. If there is not as much demand for these products, consumers will have less incentive to stop by the store. This will not only lead to decreased sales of fuel, but also of in-store products such as snacks, drinks and prepared food, which is often where the high profit margins are for gas station convenience stores.
While the energy companies may not get as much of your money, you may or may not see a net benefit financially. A simple fuel savings calculator can give you a rough idea of how much you will save by switching to a hybrid vehicle. However, at the present rate of price differences between higher-priced hybrid cars and traditional cars, it is almost impossible to save enough in fuel to make up the difference. Consumeraffairs.com estimates it would take driving 120,000 miles before the cost difference between a hybrid Toyota Prius and a traditional Toyota Corolla was made up in fuel savings.
Kenneth Black has been a freelance writer since 2008. He currently works as a staff writer for "The Times Republican" in Central Iowa. He has written extensively on a variety of topics, including business, politics, family life and travel. Black holds a bachelor's degree in business marketing from the University of Phoenix.