Energy Futures

The challenge of "green" is aggregating small amounts of energy – ultimately days of sunlight per surface^[1] – into amounts useable in quantity and continuity. Plants convert some of that energy continuously in daylight hours, but aggregating is the challenge. Currently we rely almost entirely upon a fossil fuel process that takes eons and is not sustainable – even if the amounts of recoverable fuels remains large, the environmental side effects are rising, not falling. Global economic growth has almost immeasurable benefits – hundreds of millions of Chinese no longer face hunger daily. Only recently has the government sufficiently overcome the fear of famine to eliminate the mandate that farmers grow grain. In China point- and regional-source pollution is now sufficiently bad to generate local political action, as it was first in California and then in the US as a whole in the 1960s. But no local government, and most national governments, are uninterested in denying access to electricity (air conditioning, refrigeration, lighting) or mobility (cars). Desirable or not, I don't think it's realistic to expect that governments will do much to repress energy demand. Supply-side developments are thus crucial. That means improving the feasibility of solar, wind, hydro and biomass.

What’s With the Higher New Vehicle MSRPs?

Ruggles – AFN – Dec 2013

The price of new vehicles has been rising at a steady rate despite record auto manufacturer profits.  This has been accomplished by just raising the price, through added content to base vehicles, and reduced expenditure on incentives. What is driving this trend? I see no evidence of any real movement in manufacturing costs. Labor costs via the D3 UAW contract are locked in for the next few years. What’s the deal?

NADA White Paper on Incentives

I found the NADA White Paper on Used Vehicle Depreciation (pdf) interesting. Key sections are:

• Why we’ve seen so much volatility in depreciation in the past
• What to expect in terms of depreciation through 2014
  
• How external factors influence depreciation trends
  
• Which vehicle segments face a greater upturn in depreciation

Ruggles

“Buy a Car, Get a Check” and the recent NADA White Paper on Incentives

ruggles: the following is a collection of notes and has not a published column.

NADA recently published a long awaited white paper on incentives. While it is chock full of salient data and information, there are some things missing. I will try to fill in some blanks based on my own experience and perception. Before getting into the discussion, it is important to understand that the conclusion of the report, that incentives degrade residual values and therefore brand equity, is unassailable. My purpose is to add to the discussion.

The Best Selling Vehicles by State

David Ruggles

I found this chart from Dealer Communications quite interesting. Business Insider notes the following on the topic:

The auto industry has become so globalized, you can find the same Ford in Detroit and in Beijing. So it’s not surprising that Americans’ taste in passenger vehicles has become a bit homogenized.

To find how much difference there is in our car-buying habits, we asked Kelley Blue Book to pull the data from the start of the year to find the best-selling ride in each state.

Not surprisingly, Ford F-Series family of trucks dominated the list, coming in at number one in more than 30 states. But Americans elsewhere have different tastes: Florida and Maryland went for the Toyota Camry. Hawaii liked the Toyota Tacoma.

So regions persist – large pickup trucks are near-unique to the US and Thailand – amidst increasingly global tastes, as per an earlier post reflecting an interview with just-retired Ford Chief Creative Officer J Mays at World Cars World Trade.

Why Pay for Science?

Mike Smitka

In my Industrial Organization class we chatted about the logic of funding basic science in a world of which the US is an ever-smaller slice.^[1] The economic gains to basic research remain highly uncertain, and applications may not come for decades.^[2] Furthermore, science is mobile: conventions are international in nature, results – in economics, working papers indexed HERE – are disseminated rapidly. So aren't the incentives to free ride? At the level of a US state there's no obvious need to fund basic science, yet the focus of "flagship" universities is just that (and liberal arts colleges such as Washington & Lee face pressures from accreditation, reputation and faculty peer pressure to be mini-Harvards).

The public policy temptation is to free ride upon the R&D expenditures of others.

BK + Five Years

Automotive News has a retrospective with brief quotes from various participants. Let me briefly mention three that I found thoughtful despite the brevity imposed by the 2-page layout.

Data update: November 2013

Here are assorted data for your perusal – unfortunately due to the government shutdown data releases are delayed or (for certain data) a month will be skipped. For example, the "Employment Situation" was scheduled for November 1st; instead it will come out November 8th. Click on charts to expand to full size. – note that except for a large (negative) blip in the unemployment data, released after this post was written, it's more of the same. With the end of the government shutdown next month will likely see a rebound in the opposite direction.