As gas prices have risen over the last decade, the demand for more fuel-efficient vehicles has dramatically increased in the world market. As a result, automobile manufacturers have attempted to meet this demand by investing in the development of more eco-friendly, or hybrid vehicles. Consequently, this transformed the automotive industry and heightened the competition between companies that hope to maximize profits by being the leaders in the technological race of the hybrid car.
In 2000, the first hybrid car, the Toyota Prius was released in the United States allowing consumers to be able to drive further, spend less on fuel, and reduce their carbon emissions into the environment. Today, Hybrids typically cost consumers $3,000.00 to $5,000.00 more per vehicle. This is because of the expensive batteries used to power the hybrid and difficulty to supply the population’s demand is forcing these prices to rise.
However, even though there is an lack of supply, the automotive industry should be able to achieve a market equilibrium. The production and distribution of a successful hybrid is not clouded in secrecy from manufacturers or consumers. Yet, it is an anomaly that Toyota controls approximately 80 percent of the automotive market for hybrids, whereas other automotive competitors such as Ford struggle to develop a hybrid vehicle that reduces Toyota’s domination over the hybrid market.
As the international community has increased regulations that demand for more fuel-efficient vehicles, companies like Ford have been forced to enter the hybrid market. Automotive leaders such as Bob Lutz, vice chairman of GM, claim that the current hybrid being developed cost automotive companies more money to produce than the ordinary buyer is willing to pay. Therefore, these new hybrids are becoming increasingly unprofitable in the automotive industry for some manufacturers.
Ford has produced this year’s leading hybrid vehicle, the 2013 Ford Fusion Hybrid. Currently, the Ford Fusion Hybrid is ranked at the top of affordable midsize cars. Yet even though the Fusion ranks higher than its main competitor the Toyota Camry, Ford does not expect the Fusion to outsell the Camry during this fiscal year. As a result, Ford has established a long-term plan to gradually overtake the sales of the Camry. Over the last decade, Ford has already increased its influence from 7 percent to 16 percent and hopes to retain 2013’s high ranking numbers so they can deem the Fusion a success.
Since 2012, Toyota has been able to produce over 100,000 more Camrys a year than Ford, making it impossible for Ford to surpass Toyota in the near future. This is because unlike Ford, Toyota produces a hybrid of nearly every model, allowing Toyota to fully invest in hybrids and have a huge advantage over their competition. This control over the hybrid market causes people to perceive that companies like Toyota are eco-friendly automakers, since these companies have strayed away from promoting gas hogs. Inevitably, consumers see companies like Toyota as more environmentally friendly, due to this company’s effectively restructured public image as an eco-friendly company.
Alternatively Ford has developed a reputation of producing strong cars that are built tough, which cost Ford severely on hybrids sales during the bailout. Recently, Ford has begun restructuring their public image by promoting eco-friendly ideas similar to Toyota through their web page that encourages using less fuel through their eco-boost challenge.
The transition of the automotive industry to hybrids left Ford behind its competitors in the early hybrid race. However, Ford’s increased production in hybrid vehicles, success of the Ford Fusion Hybrid, and reconstruction of public image has allowed Ford to reemerge as an economic success.