locussolus - A small premium to do the right thing

March 6, 2003

According to CNN, Ford will sell the hybrid version of its Escape SUV at a loss in order to break into the market. I thought this was interesting in light of Calpundit's post on SUV profit margins (here is my response to that post).

Obviously this behavior isn't a surprise if automakers (and according to the article, Toyota and Honda do the same with their hybrids) feel there's potential for long-term profitability. But it is a surprise in light of the Bush admin's policy on hybrid cars - namely, that they're an inferior technology. Presumably, the losses incurred by Ford would be covered - at least partially - if Bush pushed hybrid technology instead of hydrogen. That Ford is building hybrids anyway says something about the viability of the product - both technologically and from a profit standpoint.

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