Are Massive Price Increases In Store For American Car and Truck Buyers? Yes.

Implications: The American OEM automotive industry has studiously ignored all of the market's warning signals and forced its supply base to absorb the raw material price increases stemming from huge Asian demand and a falling dollar. This was done out of fear of being priced out of their own domestic market as well as from short sighted attention only to their share prices. The day of reckoning cannot be put off any longer not only because of increased commodity prices and a weak dollar but also because the cash-strapped American OEM's cannot afford the burden of the hugely expensive new technologies, which they must implement beginning now to satisfy the arbitrary legal limits on emission and increased fuel economy forced upon them by politicians with no equal on earth for short sightedness and ignorance of economics and of the economic consequences of their actions.

Analysis: The Wall Street Journal estimates that lithium ion batteries large enough to power a Chevrolet Volt for 40 miles before needing to be recharged by the Volt's onboard gasoline powered generator will cost $25,000.00 each!

It is estimated in detroit that GM will have to tack on at least $10,000.00 to each Volt for just the battery.

The issues facing a conversion to hybrid operation of GM's 9 million cars a year by 2017, which is apparently GM's goal, are COST of the battery, SAFETY and Reliability of the battery, and the unknown cost of RECYCLING the battery.

No one on earth today is mass producing lithium ion battery packs of the size that would be needed for a car or small truck. The idea that such mass production with the low scrap rate and quality necessary for a car manufacturer to accept the batteries could be in place by 2010 is just plain silly.

The first such batteries will be astronomically expensive and hand built not mass produced. Can general motors which has lost a cumulative 51 billion dollars in the last 3 years continue to subsidize its customers? No.

Is there a recycling process in place for lithium ion batteries? No.

Is is possible to 'accelerate the testing' of lithium ion batteries so it can be determined just how long they will last, so that their cost of operation can be determined? No.

The rate of increase in the prices of both base and minor metals in the near term is unpredictable. The availability of many of the minor metals outside of their countries of origin is now unpredictable.

Yet OEM auto makers and politicians continue to make predictions.

Only one thing is truly predictable: Car and truck prices will increase sharply soon.