The hybrid Camry will be built in Kentucky
Back at the 1995 Tokyo Motor Show, Toyota unveiled a futuristic car powered by a gasoline-electric engine that sounded part Jetsons, part Star Trek. With this so-called “hybrid” engine under the hood, the concept car was called a “Prius.”
Fast forward to Wednesday’s opening of the 2005 Motor Show, and America’s big three automakers, Ford, General Motors and DaimlerChrysler, were deploying their slinkiest models to drape themselves over concept cars that are powered in some kind of alternative way: by fuel cells, hydrogen, or gasoline-electric engines.Playing catch-up a decade late, the world’s auto giants now find they have to lease or buy technology from Toyota, and often they have to buy parts from Japanese companies where Toyota has a strong influence, either as a buyer or as an investor.
It’s a long article; but, a worthwhile update to the piece we did in early August.
Last month, Ford executives complained that Aisin AW Co. was placing a low priority on orders from Ford. On Wednesday, in the neutral setting of the auto show, officials from both countries met and tried to iron out supply problems.
While GM struggles with its $1.6 billion third-quarter loss and Ford braces for quarterly earnings due Thursday, Toyota is putting some of its record $10.5 billion in profit this year in new fuel-saving technologies that it sees as the wave of the future in an era of high gasoline prices.
Much of Toyota’s buzz in the United States, at least, is over the Prius, a hybrid that is selling this autumn at twice the volumes of last year. High gasoline prices have contributed to high demand and waiting lists for the car.
Over the years, Toyota used some of its profit to invest in two suppliers of specialized batteries for hybrid gas-electric cars.
On Oct. 5, Toyota raised its ownership in one of those battery makers, Panasonic EV Energy, to 60 percent from 40 percent. At the same time, it bought from GM a large holding in Fuji Heavy Industries. This company makes not only Subaru cars, but also a lithium-ion battery that can be used in hybrid cars.
“Forget the cars, the battery is what they are after,” said Kurt Sanger, Japan automotive analyst for Macquarie Securities. “Lithium is perceived to be the next generation of batteries.”
Some analysts said they thought that U.S. car manufacturers were looking for scapegoats.
“When Ford comes along and says that Toyota is manipulating the supply, it’s nonsense,” Sanger, the American analyst based in Tokyo, said. “Toyota developed it all. Toyota does a lot of it inhouse. Someone is pointing a finger at Bill Ford saying, ‘why don’t you make more hybrids?’ So he has to point the finger at someone else.”
When you’re late to the table, you get what’s left. It’s a positive sign that market forces are pushing sensible design. However, you would think that with all the years of diminishing market share, home and abroad, that US companies would have learned something about thinking further out than the next quarter.
As one who works in the media in Detroit, amd having contact with many middle management and up at the “Big 3”, believe me, they don’t even bother thinking about the next quarterly report as they ALL spend all of their afternoons playing the ultimate computer game… their own stock portfolios!
It’s the health care and pension liabilities killing the big 3. Not that I’m against providing them, but when faced with a company almost as large that gets to pocket an extra $10 billion a year, the outcome seems natural. Toyota has been spending billions more on R&D than the American firms, and now it’s catching up. And you’re correct that since the companies are in “survival mode” they don’t think further than the next quarter.
I wonder if the government will bail them out similarly to the airline industry?
American car makers have always been behind the curve when it come to style, safety, reliability and over all desireability. Now once again the American makers are late to the table again with hybrids. I owned only 1 American car and I would never buy another one.
I’ll do my digressing down here [instead of the original post]. One critical area where foreign cars kicked the pants off American cars — back in the 50’s — was reliability and durability. I honestly feel US mfg learned that lesson, well.
My ’94 Dodge pickup is pushing 200K miles and is in fine basic shape. Toyota’s original ad campaigns focused on how many miles their owners put on the critters and it pushed a lot of people to switch. We used to think it was a big deal to go 30K without a valve job or 50K without changing out the clutch!
gquaglia, I realize this will date me, but you really can’t say that American car makers have ALWAYS been behind the curve. There was a time where nearly ever car sold was built here. It was a LONG time ago, but it happened.
What’s with auto companies building cars in Kentucky? No offense to Kentuckians, but Michigan is the only state that should have auto plants.
We’re 51st in unemployment this year. That’s below the District of Columbia.
Ditto on ownership of US made cars.
I have owned a Toyota (Landcruiser, Ech, Corolla and 4Runner) over the years, and have owned just one American car. Never again.
I also just returned from a convention in Rhode Island, and when talk turned to cars the great majority reported horror stories of their Ford/GM ownership.
Does anyone know the replacement cost of the battery set?
What will happen to the resale value of a hybrid car when you are about year from expiration of the electric motor/ battery warranty ?
agile, I’ve wondered the same thing myself. From what I’ve discovered the batteries need replacement every four years. The first replacement is covered by the warranty. After that it costs about $8,000 to replace them. In other words, the resale values will totally suck.
The hybrids may be a splash in the pan. There’s a good economic argument against them. Europe and Asia seems to have taken the small diesel route for fuel efficiency. I’m taking about economics and not environmental responsibility, but which argument will win the day? More could be done in cleaning up diesel emissions. Still the most substantial savings will come from reducing the weight of the vehicle. America needs to switch mindsets toward smaller vehicles. One problem with this is the physical size of the average American. 300 lb people tend not to fit well in MiniCooper size cars.
As the economies of scale kick in, battery pack prices decline as expected. Prius battery set started out at $4500. Has dropped to $3000 and is expected to continue to fall. And that’s without next-gen batteries — expected oem next few years. Not any different from the pattern in everything else techsville.
Optimum performance is expected for 8 years. Then, you get lowered performance; but, not necessarily zero!
What’s an American car worth after 8 years?
I too wish the Big 3 would get their butts in gear. It’s amazing to me that the largest car company on the planet is so lackadasical in it’s technology advancement. They’re still producing push-rod vehicles and act like any car that comes with 4-wheel ABS, disc brakes, and fuel injection is a hi-tech marvel. My old ’87 Toyota Supra had all that, plus electronically adjustable shocks ala the predecessor to the Caddy’s new 2005 suspension tech. They should be stomping everyone’s face in with the sheer economies of scale and market influence they should be enjoying.
It’d be great if Ford comes out with the hybrid Explorer, they’d clean house, seeing as it is one of the top 5 vehicles sold in the U.S.!!
The old slogan “Buy American” is pathetic. Buy American just because it’s American? Never mind if it’s crap quality and no price advantage. That’s embarassing. I’d love for American companies to start building quality products period. Hey, at least we’re the leader in building CPUs (Intel/AMD) and probably sell more pre-built computers (Dell, HP, Compaq, Gateway) than anyone. (not the individual components though…)
If you are buying a hybrid because they are environmentally friendly, then enjoy your purchase. If, however, you are buying a hybrid to save money, then you are making a poor economic decision. The extra investment in buying the hybrid version, especially when you factor in battery replacement, will never be recovered by savings at the pump during the life of the car.
And a word of caution: Consumer Reports state that EPA mileage ratings — which are not known for accuracy — are inflated much higher for hybrids than any other model. One Japanese hybrid had an EPA rating that was 40% higher than what CR achieved. (Sorry I can’t reference the article; I read it in my dentist’s office last month.)
I can understand the appeal of a hybrid in traffic. My old towncar has a mileage indicator in the dash, which I reset after each fill-up. Last week I watched the 24 mpg average I got on 20 miles of freeway drop to 17 when I spent 15 minutes traveling one block on a congested street.
Guys, I’ve been doing the math, too. Look — even if the battery set stays at $3K [unlikely], it has an 8-year warranty before significant drop-off — that’s $375/year. With gasoline at $3/gallon, we’re looking at needing to save just 125 gallons/year to match that expense.
We’re looking at it because unlike Detroit’s stereotypical “consumer”, my wife and I keep our vehicles a long, long time. We buy them carefully. As I noted above, my pickup is 11 years old and has 200K on the clock. My wife’s Volvo is 18 years old and is pushing 225K. ALL her driving is a daily commute at 45 mph max — using 2 gallons of gasoline/day.
If and when the Volvo has something catastrophic break, we’re figuring on a Prius [or Hybrid Civic, whatever]. Replacing the Volvo even with a Subaru would cost the same or more than the Prius. Gasoline consumption according to the dozens of local Prius owners I’ve queried bumps down from 25 mpg [her Volvo] to 40 mpg. That’s a decrease of 4 gallons/week = 200 gallons/year.
We’re ahead from the git-go.
I just bought a Highlander, and I considered the Hybrid version. But I read that going up steep mountains (i.e. to go skiing) at freeway speeds, drains the battery quickly, until you are propelled soley by the gas engine. In the case of the Prius, it could only maintain 50 mph going uphill on the engine alone.
Even if the Highlander has a bigger engine, I found that unacceptable, especially for $40,000.
T.C., at freeway speeds, hybrids ain’t especially using the battery. That’s why their mileage there is lower than in town. Another urban myth — like our local Ford salesmen who were telling people Ford was dropping the Escape — because they had a 3 month waiting list and you don’t get the commish until it goes out the door!
Ed, you’re forgetting the premium to buy a hybrid. In the neighborhood of $3000-4000. But since you keep your cars so long, it’s not as big an issue for you. Hopefully the electric motors will not need replacements.
Yes, my Lexus RX400h cost $6,000 higer than the more conventional RX330. Factor in my tax credits (federal and state) and the fact that I am really getting DOUBLE the mileage over my old Acura MDX, and able to use regular unleaded (my MDX used Premium only), and I figure that the car will pay for the incremental investment in about 2 years. Plus, there is something priceless about knowing that my car is among the cleanest around. There’s also the “cool factor” of having people scratch their head when I back out of my driveway without any engine noise. By the way, Lexus warrants the Hybrid components for 8 full years, so with me keeping cars for about 36-48 months, the battery maintence should not be an issue for me.
A hybrid which weighs ~ 4400 lbs and has a 3.3 liter gas engine cannot be considered an environmentally friendly car, even if it’s driver thinks they’re cooler.
Battery manufacturing and disposal should also be taken into account when environemental impact is considered.