Product feasibility paper
The American way of life has developed around the automobile. Personal and public transportation allows people to live in suburban communities and commute to work where the majority of jobs are; the urban centers. However this freedom comes with a high price. Urban air quality problems persist and increase. With increase in motorized travel and congestion comes an increase in energy use, emissions and air pollution. Greene and Santini (1993) stated that “dependency on foreign energy sources decreases the American energy security and adversely affect the balance of trade.” Emissions deteriorate environment. And poor environmental conditions together with air pollution cause various health related problems, especially in the respiratory system. All these social and environmental needs have challenged the automobile manufactures to provide sustainable solutions. Hybrid vehicles (HV) offer an opportunity to combine the advantages of electric vehicles such as zero-tailpipe emission mobility in sensitive places like metropolitan areas, with the potential of nearly unlimited long-distance capability using the heat engine as an energy converter. And because HV consumes less gasoline than standard internal combustion engines (ICE) vehicles, it makes the need for foreign oil less. The implementation of Hybrid vehicles technology also contributes new potential risk from the development of other competing technologies as electric vehicles, natural gas vehicles, improved ICE vehicles and fuel cell vehicles. Factors like abundance of natural gas, clean emissions and efficiency of fuel cell vehicles and the total elimination of tail pipe emissions currently in developmental phase by the competitors as GM, BMW, Mercedes, etc will greatly impact the sales market for the Hybrid vehicles. In addition, other types of public transportation such as bus, trains and subway also influence the development of vehicles technology. However the impact by the public transportation is not substantial so it is easy for economists to sometimes even exclude them from the competition list. My selected product is perfectly elastic. With the development of other competitors of Environmentally friendly vehicles, consumers will have the option to base their decisions on cost, technology, benefits, return on investment and ultimately simply preference. This rationale applies in the short and long run thus therefore making Hybrid vehicles perfectly elastic in the short and long run. The four factors driving the consumer demand are income, references, substitutes and future expectations of the consumer. Government mandates like the $3000 tax credit for vehicles purchased from Jan 1, 2003 through Dec 31, 2006 and a $2000 tax deduction from the IRS is likely to encourage consumers from all income levels to consider the purchase of Hybrid vehicle.