SUBSCRIBE:

Thursday, September 24, 2009

Creative destruction in auto industry

This financial crisis and severe recession bought down two US auto companies: Chrysler was taken over by Fiat; GM is still under government restructuring plan.

This is not necessarily a bad thing.

As you will see from the videos below, when the high wall of auto lobbying finally came down, and new innovative companies got their day, consumers will end up with better vehicles.

How about a pollution-free sports car?



What is needed now is mass demand that can quickly push down the cost of production. Every new innovation will encounter high fixed cost. The question is how to make it more affordable. Government subsidy might be a good solution in this case if the initial demand is hard to sustain.