By on June 17, 2008

battery_installation.jpgRemember when we told you Toyota would be dropping $673m on new battery facilities? In addition to expanding next-gen Li-ion production (and next-next-gen development labs), ToMoCo also wants to increase its current-spec NiMH production capacity. And no wonder. Toyota can't keep the NiMH batteries in stock, limiting sales of its hybrid lineup. The AP reports via the San Jose Mercury that Toyota's investments in production capacity won't bear fruit until next year. "Hybrids are selling so well we are doing all we can to increase production," says executive VP for production Takeshi Uchiyamada. "We need new lines." But the ramifications of Toyota's lack of insight (pun kinda intended) aren't limited to lost sales. Uchiyamada acknowledges that white-hot demand for the NiMH packs are preventing him from extending Toyota's production-greening efforts to the production of "green" hybrid cars. (Figure that one out.) As the industry pioneer in hybrid manufacturing, Toyota's battery shortage is clearly a measure of its product's success. On the other hand, as a longtime leader in production efficiency, it's hard to believe Toyota was caught napping by demand for its hybrids. It seems that when it comes to hybrids, Toyota's "just-in-time" ethic translates a little closer to "hurry up and wait." 

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21 Comments on “Toyota Prius Shortage Explained...”


  • avatar
    marc

    It’s really unprecedented, isn’t it? Five years into a product cycle and the mfr still can’t keep up with the demand. Toyota stated a year ago that they would (could?) only produce slightly more Priuses than they had in the current year. And in that year (2007) the Priuses came with deals for the first time. (I got a great lease on mine.) I still dont know if Toyota, due to mateirals, factory space, or whatever, could not build more; or if they just assumed that there was no way the demand could get so high in its last year. But they are selling what they told us they would sell. Remember the Prius was initially designed to sell just 3000 a month, a niche product. That Toyota was able to ramp up production to 15000 a month (and thats just for the US) is remarkable by itself. Lets hope the next gen can accomodate 20-25K units. At the rate things are going, they better figure out how to do that, and fast.

    Can anyone recall the last time a car so late in its generation life had demand that so vastly outsripped its availability?

  • avatar
    SherbornSean

    Marc,
    I might suggest the Jeep Cherokee. When the Grand Cherokee was introduced, the original Cherokee was supposed to be phased out. But Jeep continued to produce the old Cherokee, and for whatever reason, people bought them in higher numbers than before the GC was introduced.

    Those days sure are over.

  • avatar
    Jon Paul

    You mean Toyota doesn’t expect the Japanese government to give them the money to make batteries?

  • avatar
    factotum

    At least they’ve produced a hybrid before asking for a handout, “Jon Paul”

  • avatar
    John Horner

    I remember when there were waiting lists for Diesel Rabbits :).

  • avatar
    Airhen

    I can see Toyota selling more if they improve it’s looks.

  • avatar
    night driver

    Toyota may have a shortage of NIMH batteries partly because it had originally intended to switch to Lithium Ion batteries for the 2009 model year, and had intended to phase out the 2008 Prius early (possibly on par with the 2009 Camry Hybrid, which was introduced for no other apparent reason this spring), along with a planned phaseout of NIMH battery pack production.

    Perhaps the failure of Toyota to get Lithium Ion ready (due to long term battery capacity, cost, fire safety, or whatever) delayed the release of the ’09 Prius and, along with gas prices causing an increase in demand for the ’08 model, allowed Toyota to be caught napping.

    @marc – The Ford Probe was originally engineered as a replacement of the Mustang. However, at the time of its 1989 introduction, gas prices were down to under $1, and the Mustang was still selling really well – people continued to prefer the RWD, V8, and its All-American character (remember, the Probe and Mazda MX-6 were twins under the sheetmetal). Ford decided to release the car as a Probe, and it undersold the old Mustang during every year of its existence before being killed in 1997.

  • avatar
    marc

    Good call on the Cherokee, that one caught them sleeping, huh. For some reason, Detroit loves to hang on to old models when the new one comes out. Oldsmobile Cutlasses, Chevy Malibus (er, Classics…), Ford F150 “Heritage.” In the case of the Cherokee, it’s cuz people actually desired it, in quite large quantities. I see the Probe/Mustang correlation too, as Ford was forced to hang on to the outdated model due to unforeeen demand. But in both cases, the mfrs completely misjudged the timing of killing a popular model.

    I think the difference is that gen2 Prius will be a done deal in 2009, and Toyota is fully prepared for the demand of gen3. There is not going to be any Prius Classic sold alongside the new one. A more apples to apples comparison would be if Ford had had to ramp up prouction of the 2004 Mustang to meet demand before the vastly improved 2005 came out. And that didnt exactly happen.

    But those are definitely 2 good examples of mfrs misjudging demand of aging products.

  • avatar

    I have the feeling Scion could have continued to sell the first-gen xB “Classic” at a respectable rate, for that matter…

  • avatar
    Rday

    Honda will be more than glad to satisfy the needs of Toyota customers when they get their new hybrids out. And they will competitive and probably get better mileage. Maybe the gloom and doom forecasters about Toyota’s fall from grace are on to something.

  • avatar
    marc

    argentla, good point.

    I like the new xB, and contrary to what the doom and gloomers were saying a year ago, it is selling quite well, double digit increases for like the last 7 months. Scion as a whole is selling well in this age of $4.00 gas. However, they should not have called it an xB. It is so differnet from the last model, it should have gotten a new name. It could have been a brand new model, allowing the xB to continue in an updated form. But alas, Toyota will have to make do with o.g. xBs going down as real classics (…as opposed to Chevy Classic…).

    Rday, Honda is just not going to win this one. It sounds like you are gleefully rubbing your hands together waiting for this supposed fall from grace. Sorry to burst your speculative bubble, but the next gen Prius looks to be a game changer. Forget 2% hybrid market penetration. We’ll be taling 10-15% real soon. Once the HSD4 comes around in the new Prius, you’ll start seeing it move over to the Camry, Highlander, updated RX, GS, LS, the promised new Lexus hybrid, a potential Toyota sportscar, probably the Venza, maybe in a RAV4, and maybe in a car smaller and cheaper than the Prius. To Honda… good on ‘em for playin, but this is game, set, match for Toyota.

  • avatar
    menno

    Marc, I own a Prius and have test-driven the Civic Hybrid; I also saw a color correct proportional drawing of the as-yet unnamed Prius competitor at the Honda dealer the other day and it is pretty much a clone of Prius in looks (probably not in HSD, though, unless Honda are willing to swallow their pride enough to move over to a Toyota license after building their own system for over a decade).

    I don’t think it’s game, set, match for Toyota just yet, unless they are in a match against GM, Chrysler, the Germans and many of their Japanese competitors, the Chinese, and the South Koreans.

    Against Honda, I think Honda may well be in a position to win a few games here and there against the champion, even though the champ still wins most of the tournaments against Honda.

    To which I say, good! Because this way, it keeps Toyota’s feet to the fire and improves the hybrid breed. Competition is healthy!

  • avatar
    SherbornSean

    Marc,
    As an owner of 2 Hondas as well as a stockholder, it pains me to agree with you that Toyota has an all-but-insurmountable lead in Hybrids.

    That said, being #2 is not such a bad thing, and Honda has repeatedly shown the ability to catch up over time — the Civic outsells the Corolla in the US (sedan; excluding Matrix) and I think the Odyssey outsells the Sienna.

  • avatar
    Kevin

    Can’t blame Toyota, they obviously figured Ford would pick up the slack what with its heavily-publicized commitment to produce 250,000 hybrids a year by 2010. Oooops!

  • avatar
    hondagirl

    The Prius is the Wii of the automotive world.

  • avatar
    Edward Niedermeyer

    hondagirl: That’s a damn good (if non-sequitor) analogy… except that the Prius doesn’t make my arm freaking fall off after driving for an hour.

  • avatar
    marc

    Edward Niedermeyer, as much as I love my Prius, the lack of a telescoping wheel actually does sometimes make my arm feel like it is going to fall off. Hoping the next gen corrects that….

  • avatar
    jkross22

    marc,

    Some companies are great. Some companies are big. It’s really tough to be both. Toyota his hit some hiccups over the last 24 months as a result of being a big company. Let’s see how they perform against great companies like Honda in the long run. Fortunately for Toyota, there aren’t a lot of great car companies they compete with here in the US.

    And the consumer is worse off for it.

  • avatar
    ronin

    >>”For some reason, Detroit loves to hang on to old models when the new one comes out. ”

    Well, in the case of the Grand Cherokee being the top of the line family Jeep wagon, its entry exactly coincided with the ceasing of production of its predecessor in that niche: the Jeep Grand Wagoneer.

    The GW is arguably the original luxo SUV, having been around in one flavor or another since 1963. 1963-1991; A 28-year platform lifespan that, as things stand now, will never be exceeded by any SUV. (Although it may be exceeded by GM mid-size FWD platforms at this rate…)

    Even in today’s movies & tv shows you can still see in the backround parked in the set’s suburban house driveway a wood-panel-sided GW; it’s become the archetypical family truckster, even 17 years out of production.

    In fact, already off-topic as I am, I nominate this 13mpg highway wonder, with its high torque and relatively low hp, as a retrospective review model for TTAC.

  • avatar
    Dan8000rpm

    Here in Australia the Prius dominates (our government just gave Toyota 35 Million to make hybrids here). But in my Dealership the Civic Hybrid is flying out the door. We have a two month wait for the things. The Civic Hybrid will be number two in the marketplace for a while yet but i sure dont mind. It helps that the Civic undercuts the price of the Prius by 7K here. Thats a big difference.

  • avatar
    RogerB34

    “… sell more if they improve looks.” Weight and CD are top priorities. The orginal Volt wasn’t close to what the producton model will look like.
    Weight was around 3500 lbs and CD to match. Current Prius CD is .26 and that’s pretty good. Most production cars are around .30 and the guzzlers all have CD’s to match. The EV1 had a CD OF .195 and that is the mark for electric cars.
    http://en.wikipedia.org/wiki/Automobile_drag_coefficients


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