You’ve never once proven that costs associated with the Prius were exceptional in comparison to other new vehicle launches. You’ve offered a lot of terse speculation and lengthy expositions of guesswork, but your data has been sorely lacking.

I know that the R&D costs were about $1 billion because I’ve seen sources that confirm it. Here’s one example:

http://money.cnn.com/magazines/fortune/fortune_archive/2006/03/06/8370702/index.htm

If you have trustworthy sources that you can use to prove your position, I’d like to see it. But if you are simply going to continue your argument based upon a hope that expenses associated with the Prius are considerably different from that of other vehicles, I’m going to want to see some evidence of it.

All cars have tooling and marketing costs. You don’t think that a Ford Mustang has marketing costs?

Thank you for re-affirming my prior notion that most people do not care to understand all-in costs for a vehicle. The common belief is that cars just show up because someone dreams them up. It’s silly to think that way and you know it. Volume automakers sink billions so you can go into a showroom and buy that car. And all this investment needs to be paid back. You are asserting that because all cars have tooling and advertising, then it doesn’t matter what car you sell since these costs magically get paid back when you sell cars.

Here’s a word of advice – when you are running your car company, you cannot just set your ad budget to whatever you feel like because you think the costs will take care of itself.

I think you really have a shot at running a failing automaker. You obviously have some notion in your mind that you know what is right – and in light of actual numbers and math you just ignore those things. Then you have fun logic (well things that are good have to make money – ergo we must make good things).

In my prior posts – I showed how the capex spending for Toyota (converted to US dollars) was multiple billion dollars per year. Assuming how many product and powertrain launches they go through per year, you’re talking many billions of spending to pull of each car. These costs don’t go away just because you want them to.

As I mentioned in my first post, Toyota is the most promising company to make this hybrid thing work from an all-in perspective. The industry already knows their variable margin is positive; and they also know it cost them many billions to execute a unique program. The other OEMs are not having such a fun time at it, and at the end of the day the pursuit of hybrid is costing Detroit dearly.

They became so popular that there was even talk of a major film being done around the caveman character.

By “high technology”, I mean it in the same sense that exotic supercars appeal to the enthusiast.

I agree with you about simple cars. I even rant about that on another thread here that cars have become overweight with needless complications.

No, I’m not a hypermiler and I can’t bear to hold anybody up, so I’m not an obstructionist. Just do it when there’s nobody behind me or when they have their own lane to use.

Ford should have spent a little more $$$ to make their hybrid program profitable. However, as it stands, their hybrid program is useless because of the lack of $$$ (and batteries).

2. IMO my Civic is a disappointment. I think the EPA mileage was totally oversold. That said, I think there is a cheap way to improve everyone’s mileage: mpg displays. The avg and instant mpg displays in my car taught me how to drive more efficiently – I’m able to average over 23mpg in my T&C minivan with the 3.8L V6.

Agreed! The correct answer is, of course, “nothing.”

You think that’s special to hybrids, somehow? The yen also causes problems for Corollas built in Japan. This part of the reason why Toyota operates factories here.

Prior to the economic meltdown, Toyota planned to build Prii here, for the same reason. That’s on hold.

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I agree with PCH101…

If the Prius isn’t profitable for Toyota, it’s a real mystery how Toyota as a whole remains so profitable. An article I read not too long ago mentioned Toyota even beat Honda on key economic profitability measures. The Prius alone is 7% of their US sales… an unprofitable Prius would be a significant problem.

Toyota said their unit cost was lower than invoice back in December 2002 and they’ve been relentlessly pursuing cost reduction ever since. They’re making money on it. Not as much, perhaps, as they’d make selling Tundras at MSRP at full volume but enough.

Seriously, developed in yen, produced in yen, bought in dollars and converted back to yen. They likely are taking a loss on each vehicle if it weren’t for the artifically lowered yen. Yen gets stronger and *poof* there goes the profit.

Yet another reason Japan finds their strong yen a big big big problem….

I do think its great if you want a hybrid. I think its great to use less oil. But I’m still a skeptic. 1) people won’t pay extra for “green” if the economy keeps sucking. 2) until I see some sort of comprehensive study that shows that hybrids overall do save oil/energy over a gas-only model, I’ll be skeptical. Something tells me the fuel/energy required to mine the metals and produce the batteries is enormous. What if more fuel is burned making the hybrid components than if you just used fuel without the hybrid part? Is it ok because the end consumer isn’t burning the oil…its the supply chain somewhere that is? Seems like a big waste if the whole point is to reduce oil and save energy. And something tells me it might be the case since we haven’t seen even one automaker come out and advertise that their car, cradle to grave, uses X% less overall oil and energy than a conventional vehicle. We all blast ethanol/E10 because it uses more fuel/energy to make than if we just burned 100% gasoline. Hybrids should be viewed with the same skepicism….

My big thing? meh. Get one if you want one. But if you do, please don’t blab on about how great you are and how you’re “doing your part”. Unless you know its true and can show the rest of us you’re saving energy, just keep your mouth shut and your smug bottled up.

I have worked with Japanese manufacturers for over 15 years. They tend to make products that make money, in general. The Prius may have had a ton of developement costs and sustaining the battery supply/manufacturing may be a narrow margin, but they are making money on them, guarranteed. They are masters at cost savings techniques. They are great at streamlining processes.

Why would the myopic details of the Prius profits be any different than that of the larger Japanese auto manufacturer picture? I don’t see the Prius as the standalone Toyota product that loses money compared to everything else they make…I am sure they applied the same profit/loss techniques, albeit less profit, as the other vehicles they make.

Where I think he’s way wrong is in assigning no significance to dual powertrains. This set-up makes great sense for city cabs and should be industry standard in all limos and luxo-barges. However, slamming it as a vainglorious waste of money for the average commuter car is entirely appropriate.

Redstapler is correct though in pointing out that by far the largest group of idiots are those that buy SUV’s and trucks for light commuter duty.

Shhh, don’t tell all of those high dollar marketing gurus that it is impossible to create or shape consumer demand. Those are the guys who buy advertising and keep you employed!

What about marketing dollars?

All cars have tooling and marketing costs. You don’t think that a Ford Mustang has marketing costs?

The main challenge that Toyota has is that it needs to always sell hybrids at some sort of premium because the cost of the battery doesn’t scale well. Since a lot of the battery cost is in the materials, making more batteries doesn’t necessarily lower their production costs very much.

Otherwise, you’re chasing your tail on this one. I’m sure GM is losing money big time on hybrids because they also get stuck with the battery costs **and** nobody is buying them.

But Toyota is certainly making money on them. They hurdled the development costs a long time ago. You need very fuzzy math and a lot of overreaching to believe otherwise.

Robert,

It’s a loan.

And “bailout” is an officially banned word for 2009. Just thought you’d want to know…

http://www.wdsu.com/education/18387406/detail.html

What about tooling investment and plant investment?

What about marketing dollars?

What about the guys working on the seats inside the car? They were doing R&D but not included in the $1B hybrid research budget.

What about the fact that a hybrid is much more than ‘just a battery?’

$1,000 times 1,000,000 units is … $1B. Where’s the rest of the money coming from to pay off everything?

Anyway, this is Toyota. What should we do about the other OEMs? OldandSlow’s concern was that it’s not profitable for the other guys to try and play the hybrid game… and in an era of epic losses, maybe hybrids aren’t the way to go.