The more I follow the "hybrid story," the more I'm convinced that from an investor's point of view, the opportunities here lie more with the auto parts makers than with the automakers themselves.
Well, duh. Ford's been in the hybrid game for what, a year now? Honda and Toyota have been selling the things since 1997. It's not exactly a case of the Japanese buying up all of Sanyo's
Ford's argument is silly -- enough said.
More interesting to this Foolish investor are a couple of comments Padilla made while complaining about his company's Japanese rivals. For one thing, there appear to be capacity issues with hybrid parts production -- suggesting that demand exceeds supply, which means that the parts suppliers have proportionally more pricing power.
In addition, "hybrids on the market now go for a $3,000 to $3,500 premium," Padilla said, "and that only covers a fraction of the costs." Interesting. If true, it suggests that as profitable as hybrids may be for the automakers that have reached scale in their production (Ford says its hybrids still aren't profitable; Toyota says its models are), the suppliers are making even greater profits on hybrid parts. That might make the parts makers one of the smartest ways to invest in the hybrid boom.
Further Foolishness is Job One:
Fool contributor Rich Smith has no position in any company mentioned in this article.