Let’s talk some numbers:

Go to www.honda.ca and try to price a basic Civic Sedan vs. basic Civic Hybrid (sedan as well).

Civic Sedan (including all the fees and taxes):$20,549.05 – $1,000 government rebate = $19,549.05

Civic Hybrid ((including all the fees and taxes): $31,238.85 – $2,000 government rebate = $29,238.85

Difference in price? $9,689.80

Assumptions:

1) ZERO cost of money, to be conservative (in reality, that difference in price will be even MORE, when you factor in the cost of money (the interest));

2) average 20,000 km per year mileage;

3) fuel consumption estimated as (highway+city)/2:

Civic Sedan: (7.4+5.4)/2 = 6.4 L per 100 km

Civic Hybrid: (4.7+4.3)/2 = 4.5 L per 100 km

Civic Sedan consumes 20,000/100*6.4 = 1280 litres per year

Civic Hybrid consumes 20,000/100*4.5 = 900 litres per year

Savings? 380 litres of gas per year

4) average cost of TWO dollars per litre (currently it’s $1.25-$1.30)

Total savings per year? 380*2 = $760

…

So what do we got?

Pay $9,689.80 more up front to save $760 per year.

How many years do we need to BREAK EVEN? (again, that’s assuming zero cost of money)

$9,689.80/$760 = 12.75 years

Doesn’t look like such a hot proposal economically, does it?

Most people own their cars for 4-8 years, if that.

That compensation of $2,000 for the buyers of hybrids should be increased so that the break even period is UNDER 2-3 years, in my opinion.

Was the government to compensate $10,000 for buying those Hybrids, the break even period would be:

$1,689.80/$760 = 2.22 years – that would make MANY people to seriously consider buying a hybrid

Alex Roitman.

Last summer, I was reading the book The Coming Economic Collapse: How You Can Thrive When Oil Costs $200 a Barrel by Stephen Leeb, Ph.D. and it really got me thinking of the way we live and use petroleum to function as a society. I enjoyed this reading because of the possible implication for creating wealth in a new renewable energy economy. A lot of old carbon economy wealth could be destroyed by high oil prices and money would be changing hands to the leaders in this new economy. The most exciting thing is that I want to take part in this revolution by forming my own enterprise eventually after I am done with school. It’s not too late to enter the renewable energies market – the boom hasn’t even really started.The following website has an interactive map that provides some perhaps reasonable estimates of the world supplies of oil.
Most authors such as Stephen Leeb and David Strahan paint an apocalyptic idea of our future without oil within the medium term future. However, I tend to think that we will get hit first by serial rises in gas prices (or small oil shocks) possibly in a year or two again. The last time the prices of gas significantly rose in 2005, it seemed like the public wanted to regain control over their energy consumption: hence, the subsequent popularity of the SMART car and hybrids. That is why I believe we will have a step-wise transition from carbon economies to a carbon-free one. Only feeling the pain of high prices can really get people going – and innovations aren’t missing.
A physicist from Cyrium I met in Ottawa last May was telling us how much energy is available in world (other than carbon). The problem is more a question of harvesting the energy than finding new energy. He was developing new solar silicon chip more efficient than what is currently on the market. I think I would like to use my expertise in marketing later to bring an innovation from lab to market. In Canada, we still derive very little part of our energy needs from renewable sources.
The one innovation that really got me excited when I visited a trade show last year in Ottawa is the geothermic pump. For Canadians, a very important portion of our expenses goes into heating our homes during winters. According to the rep at the kiosk, geothermic energy could reduce heating costs by up to 75%. By coupling renewable energies such as wind and solar power with geothermic energy, Canadians could still live through winters even in a carbon free economy after passing the Hubert peak.
The book The Coming Economic Collapse made me realize how fast oil could be depleted. We can still profit from this revolution if we position ourselves correctly by marketing one of the new technologies before this boom. Do you have any idea how to profit?

During one of the class discussions, a popular opinion emerged that suggests consumers are not overly concerned as to whether or not we make Green Choices. Unfortunately, I agree with this sentiment; creating a demand for green products or practices is not as simple as slapping on an eco-label and writing out a sustainable development vision on company websites.

Reports have shown that there is a desire to support sustainable development. However, Joel Makower’s article “WC Retro: Green Marketing –Lesson From the Leader” , discusses how our choices seem to contradict our ethical values. As the article explains, Phillips had a light bulb that was energy saving and longer lasting, but was only popular in Europe and not in the U.S. The difference is that the bulb addressed the needs of the European consumer due to high energy costs. They were willing to pay a higher price for the product because it met a need. The US consumers, on the other hand, were not as willing to pay the higher price despite the efficiency because it did not meet their immediate needs.

Therefore, businesses still have to focus marketing efforts on the direct benefits to the consumer and add the tagline of “environmentally friendly” to allow the consumer to feel good about their product purchase.

The very popular Toyota Hybrid avoided the eco-friendly marketing campaign during product launch because they believed consumers would not have taken the product seriously. Instead, they focused on gas savings, a direct benefit to the consumer.

It seems that we still have a long way to go before consumers automatically make green choices. Perhaps industry should be looking at creative marketing instead of the government to help us find a solution.

Catherine Yarker

Toyota recognizes that finding ways to limit the impact of the cars on the planet would be the key success factor for the auto industry and would account for its survival on the long run.

As a concrete response, Toyota introduced Prius, the hybrid car, which has an almost zero emission, burns less fuel, and releases less greenhouse gases in the atmosphere, which are the ones responsible for the climate change. In 2004, Prius was the fastest selling car in America, and Toyota doubled the production in 2005 as a response to a high demand. Improving fuel efficiency, reducing emissions of CO2, make exhaust emissions cleaners and limiting the use of fossil fuels are few concrete items that Toyota is exploring in order to gain a competitive advantage in the market.

Toyota took the initiative to diversify energy sources by introducing bioethanol-compatible vehicles. They have the necessary technology to allow all gasoline engines to run reliable with 10% bioethanol content. I think, this is a response of a various researches in the world regarding using alternative fuels. One such kind of research was undertaken by Iogen Corporation, an Ottawa based Biotechnology Company that produces EcoEthanol, which is a clean, zero-net-CO2-emission fuel that can be used in cars.

I do believe that through its policies and visions, Toyota has built a culture and a long term strategy that is leading to Corporate Social Responsibility and Sustainable Development, which would account for company’s success.
References:
http://www.toyota.com/about/environment/news/images/01envrep-all.pdf
http://www.toyota.co.jp/en/news/06/0613.html
http://www.iogen.ca/
Sergiu Buhatel