True? Toyo loses $5k per Prius on battery?

Hi BRK,

This was probably an ongoing part of the Parnership for the Next Generation Vehicle (PNGV - look it up on wikipedia), which was started back in the Clinton administration. A guy in the EPA had proved on paper that a Diesel Hybrid could get 80 mpg on the old EPA city test. Gore and Clinton rather than push for CAFE increases, decided to try a cooperative approach with the car makers. There were many meetings and eventually prototype cars were made. They came in around 70 to 80 mpg. But, rather than move to production versions of these cars, GM, Ford and Chrysler abandoned the effort about the time of Cheney energy conference. The national labs, however, kept on with their studies. They got their hands on the first and then second generation Prius cars - the only production hardware available. They tested performance of the systems, and the components, and published all the results. BTW, Toyota was excluded from the PNGV, and it was this exclusion that reportedly sealed the deal that they were going to do the Prius.

 

The "journalist" who wrote that story most likely did his "research" by Googling a 4-year-old message board post. Real research takes time and work, which is why it's so rare.

 

It was done back at the time that the administration was cooperating with the Big 3 to encourage production of high efficiency cars.

Tom

 

I'm a newspaper reporter, and I asked a Toyota spokesman point blank Monday if they make a profit on the Prius and he said yes, although he declined to say how much. (That's not unusual; automakers are reluctant to specify per-vehicle profits. Most of those numbers are ginned up by Wall St. analysts.) Of course, that "yes" actually raises more questions than it answers. Is the per-unit cost of building a Prius today (essentially materials + labor + shipping) less than the MSRP? My guess is the company was telling the truth and the answer is yes. But when you factor in overhead (design, accounting etc.) and fixed costs (factory and equipment), is it still profitable? And what about the billions spent developing the Synergy Drive system (a calculation complicated by the fact that much of those costs were absorbed by the Japanese government)? Amortize those costs across the million-plus Priuses sold to date, and the car is probably a money loser, and will remain so for several years.

 

IMHO, it depends which package that Toyota makes or loses money.

I suspect #2 &#3, Toyota loses money. #4 & #5, even money, #6 to #9 progressively makes more money.

It depends on the mix, Toyota could make money on the Prius.

 

if Toyota was losing money on the Prius, they'd take if off the market soon, or would have by now......

 

Toyota is NOT a charitable corporation... They are a for profit organization. If anyone has had to do any work on the cars after purchase one knows that the replacement parts are very costly. They would not take a $2500 loss on every retail replacement battery out of good will.

CNN again proves how stupid it is.

 

Having worked in a manufacturing based company for a long time, there are a couple of points that are worth repeating:
1) The manufacturing costs of a new type vehicle go down significantly each year. Let's say something like 10% for the first four years. The "profit" question must be put in context of when it was asked or calculated. Was the Prius profitable in the initial years? Probably not. Is the Prius profitable now? Of course, else Toyota would get out of the business or raise the price. The 2001 answer no longer applies in 2008. They would never scaled up production if the profit margin was still negative. It is an expensive car for it's size...as it should be.
2) The NRE (Non-Recurring Engineering) cost are often calculated misleadingly. The common way is to calculate the cost of all the engineers and material as if they were totally devoted to the Prius. This is an very big number....and wrong. The more accurate way is to calculate the cost based on how many NEW engineers and UNIQUE material was bought for the Prius development as compared to a non-hybrid vehicle design. This is a more accurate number and probably has been paid off by now.
3) The advertising budget for the Prius is vastly less than any other Toyota vehicle. Some money saved there.
4) For the Prius to be losing money now would have required both a blunder on long term manufacturing costs and sales projections way below the worst plan. Actual sales have been throught the roof and Toyota blunders in figuring out what auto components cost are not evident.

 

On a per unit basis, not counting R&D Toyota is not loosing money on ANY current Prius. Maybe on the pre 2004 models they were but not since.

Look at that amazing chart from the government about parts costs, then realize that other parts of the Prius cost are similar to the Corolla (such as the engine, body, suspension).

The only reason Toyota is loosing $ right now is that they are building trucks that they are not selling and unlike GM they have a hope of selling them later.

 

If my Prius cost more to make than its sale price I got a bargain didn't I?
If Japan's biggest car manufacturer can afford to subsidise more and more hybrids, they will be making hybrid Camry in Australia in 2010 as will GM-H, as long as they aren't on the road to ruin which I doubt, I got a bargain and Toyota got another Prius out there and a fan to spread the word.

 

They are not losing money due to the manufacturing cost of the battery. The reason they are losing money is because no one is buying new cars these days- plain and simple. Some other big auto company is having trouble as well I've read

High inventory means blow out prices. Economics 101 comes to mind.

That reporter is just whamming out word crap to help sell his AP wire release.

 

Last week Fremont Toyota quoted me a little over $2,500 part cost for a 2009 Prius hybrid traction battery. That's 1/2 of $5000 bro, so $5k is way off.

And, if Toyota charges ~ $2,500 to the customer for a battery, do you think their cost is near $2,500? No way. Their markup on OEM parts is basically hideous, so my guess would be Toyota pays much less than $2,500 per Prius hybrid battery.

 

there is another story going around that Toyota loses money on every Pri sold. imho, that carries as much validity as this story does. subsidizing research and applying it to each car made from the technology is not a true value of profit and loss. the money for the research was made and spent years ago. continuing research is funded thru the profits of ALL cars Toyota sells today.

to apply the cost to develop a technology that will eventually touch EVERY product Toyota sells to the Prius only is a mistake. you cannot say a Prius is losing money because X dollars was spent to develop part of the vehicle. there is constant ongoing research that is a fixed cost and computed into the cost of doing business. to fund that cost, its taken from every revenue source and spent to benefit the company as a whole.

to say that Toyota is losing money because of the development cost of the Pri is ludicrous especially in light of the fact that Toyota has profited Billions of Dollars for each and every year of the Prius development cycle.

that is like taking the cost of developing ABS and then applying to every Prius sold... is that valid?? when is a technology paid for??? when its paid for does it become a profitable technology?? in the event of ABS that would be a complete load of BS.

ABS is a safety feature that is not required but costs more to install. it probably adds a selling point for the vehicle, but does it make it more valuable?? how is that value determined. is there a car that can get ABS as an option? well, if the answer is no, then assigning a value is ridiculous.

we can also look at it this way... Li tech is significantly more expensive. for the same storage capacity, what would Li batts cost? well, they would be far less than even the amount that is lost according to the article, much less the true value.

 

I think the best argument is that in best selling year for toyota hybrids, toyota had 25 billions in profit (2007)...

at the same time, GM made no hybrids and lost billions on their own...

;-)

 

Another someone who is charged with writing an article and uses research from the internet. Real news and real journalism are in short supply these days.

Does Toyota make money selling hybrids? Yes.

Do they make as much a margin on hybrids as non-hybrids? I don't know. I suspect not.

The production on a US plant to produce hybrid vehicles has been halted. Is that because of high production cost or the downturn in the global economy? I suspect the latter.

I can find internet articles to back my claims or dispute them depending on my leanings. Story done. No real research needed.

 

the "margin" cost of the Pri, by now is not much less than any other $25,000 car. part a similarly priced vehicle and sure, the batts cost something, but so does the tranny and gearbox on a regular car and the cost to manufacture in more than the CVT.

when it gets down to it, when manufactured in volume, the actual cost of the vehicle is not all that much different. sure a Pri costs a bit more to manufacture, but lets face it, at $25,000+, it sells for a lot more as well

 

Toyota was profitable on Prius for quite some time. Current financial turmoil crashed all car sales all around the world and this is of course big problem as probably also Prius sales went down considerably. But that does not mean that Prius was bad idea commercially. If Toyota will be smart enough, it will continue expanding hybrid line and if possible also start production of pure electric cars.
Oil prices are currently down due to recession. But again, as oil is limited non renewable energy source and economy growth is based on energy supply, moving car industry from its oil dependence makes a lot of sense. Car industry should modernize and think about its future and not about future of oil companies. Oil companies make profit even now during recession, while car industry is bleeding out fast, some car companies will probably not survive next year. Oil companies will still be there with little less profit. Bad decisions need to be paid.

 

Unfortunately, there is historical precedent for reporters pulling s*** out of their a**, and calling it "news"

I seem to recall a certain reporter at the New York Times who wrote glowing articles of what a success Stalin was in the USSR, the roaring economy in the USSR due to "expert" control of it, how the "Holodomor" or famine in the Ukraine was a fabrication by "wealthy peasants" that never happened.

The reporter was Walter Duranty, and for all those lies, he won a Pulitzer Prize. It's unknown how many died of starvation, anywhere from 2-10 million are the numbers tossed around

So, if you make up s*** and wrap it in sweet-smelling lies, you are a highly respected reporter, your media outlet achieves fame, and you win a Pulitzer.

If you tell it exactly as it is, you're suddenly an "alarmist" or a "crackpot"

 

Lousy journalists. Let's close 'em all down and get news we can trust from the government, advertising, and our favorite websites.

 

I get all my news from FHoP.

Tom