Friday, April 01, 2005


Investment Advice For Car Guys

Normally, I only read automotive-related articles at if they're written by Jerry Flint, but I clicked through one of this articles today to a rather interesting piece of investment advice.

In short, the author suggests investing in companies producing high-current semiconductor products - the sort used in hybrid vehicles. Indeed, I share the author's enthusiasm for hybrids, and it's nice to see someone else who also feels that the auto industry is ripe for revolution.

However, I still have one concern about hybrids, at least those built with contemporary components - it takes a buttload of energy to process semiconductors and battery components. Broken down into oversimplified terms, the end cost of a product consists of raw material, energy, and labor. Modern electronic components are built in highly-automated facilities, which pretty much negates labor as a significant factor. Semiconductors are mostly silicon, which is, um, highly-processed sand. And how is that sand processed into those pretty wafers? That's right - lots and lots of energy, with even more thrown in during the rest of the fabrication process. Check out this paper for a study of the energy that goes into the chemicals used during semiconductor fab, and a more-comprehensive study of not only energy but also raw material and other resource use can be found here. High current means lots of semiconductor volume, so for the time being, there's going to be a significant energy investment in every hybrid that rolls off the line.

It's not just electronics, either. Lightweight structures will probably see broader use as fuel economy increases in importance, but the processing of aluminum is terribly energy-intensive.

The point here is not to poo-poo the idea of hybrids, or the idea of investing in companies contributing to the production of them. But if the primary motivation for mainstream acceptance of hybrid technology is to save energy, then one absolutely must understand the role that energy plays in the production of modern technology. It'd be wise to keep this in mind while pondering the long-term future of personal transportation, and certainly before pronouncing hybrids as the almighty savior.

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