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

[tovli]

CNN reports "
Toyota is still losing money on the Prius because of the cost -- close to $5000 -- of the battery."

Is it true?

(system won't let me post the link...newbie...

edition.cnn.com/2008/TECH/science/12/03/future.car/index dot html )

[qbee42]

No, it's not true. A new battery for a Prius is just a bit over $2,000 U.S.

Tom

[EZW1]

As Qbee pointed out, how can they loose $5k per battery when they charge $2.6k for a new one?

Often when a company is reported to 'loose' money it actually means they didn't hit their projections, but still 'made' money. For example, if a corporation forecasts their profit level at $1million, but at the end of the year they only made $800k, then they say they 'lost' money when in fact they made money... just not as much as they hoped. I suspect this is what this is all about.

[grand total]

Originally Posted by qbee42

No, it's not true. A new battery for a Prius is just a bit over $2,000 U.S.

Tom

That's what it costs to buy a replacement from a dealer, they have their markup as do Toyota themselves. It wouldn't surprise me if the cost to Toyota was under $1k.

[BRK]

I'm not sure how anyone can know the answer to how much a battery costs Toyota. People are making assumptions on Toyota's cost based an how much they charge the consumer. Imagine that the cost really is $5K and they charged you $6K to replace one. The cost / benifit analysis would be a negative that the anti hybrid people could make a legit case with and sway possible customers with. (By the way, the whole cost analysis being the only reason why someone would buy a Hybrid is BS in my opinion) Maybe the price Toyota charges is a materials only cost and that's part of how they are willing to subsidize the growth of this segment, the other parts being letting Ford use their components. The cost (loss) would explain why they they have not hybridized more vehicles like the obvious minivan segment and small SUV.

[spwolf]

Originally Posted by BRK

I'm not sure how anyone can know the answer to how much a battery costs Toyota. People are making assumptions on Toyota's cost based an how much they charge the consumer. Imagine that the cost really is $5K and they charged you $6K to replace one. The cost / benifit analysis would be a negative that the anti hybrid people could make a legit case with and sway possible customers with. (By the way, the whole cost analysis being the only reason why someone would buy a Hybrid is BS in my opinion) Maybe the price Toyota charges is a materials only cost and that's part of how they are willing to subsidize the growth of this segment, the other parts being letting Ford use their components. The cost (loss) would explain why they they have not hybridized more vehicles like the obvious minivan segment and small SUV.

you do realize that toyota and every other manufacturer sells replacement parts at considerable margins?

Toyota sold over 400,000 hybrids this year, which is scheduled to jump to 700,000 in 2009 and 1,000,0000 in 2010...

I kind of doubt that they would be investing to sell 1,000,000 vehicles at loss

:-)

[BRK]

I kind of doubt that they would be investing to sell 1,000,000 vehicles at loss

:-)[/quote]

Honda's was willing to spend $225 million / yr on F1 racing. Who's to say Toyota isn't willing to take a loss on a battery or break even on the Prius thats gets them more free press and green points than Honda will ever see from their F1 investment. The only people who know the answer to the question of cost are people at Toyota. If someone can provide a link to a new aftermarket non toyota battery selling for $2,500 or less, I'll believe that toyota makes a profit on the battery. Otherwise, I think there is a good possibilty that the replacement charge may be an artificial price.

[Rokeby]

BRK,

Welcome to PriusChat.

You make some good points. Toyota is in the hybrid game for the long haul.
Their actions are the result of a comprehensive evaluation of many factors,
some financial, some supply related, some dealing with the anticipated
perceptions of potential buyers, and the automotive press who fairly or not
have a large influence on those perceptions.

Over time the price has been falling which on the surface anyway is the
source of positive perceptions of long term value; replacement cost vs. cost
of typical repairs for a high mileage gas car.

Given the relative infrequency of HV battery replacement as posted here, it
wouldn't surprise me at all to find that Toyota was at break-even or even a
slight $$ loss on a replacement HV battery. In the long run, all things
considered, it would appear to be a forward-looking business practice.

[BRK]

:-)[/quote]

Honda's was willing to spend $225 million / yr on F1 racing.

Sorry, that was the exit cost. The yearly cost was reported to be $400 million US.

[donee]

Hi All,

Here is the link to the CNN BS: http://www.cnn.com/2008/TECH/science...car/index.html . The $5000 cost claim is in the last sentance.

As we have seen with Gasoline, due to the recession, I expect Nickel Prices will go down. The main use of Nickel is stainless steel, and there just wont be so many of the all-stainless kitchens being put in new homes in the next few years.

Looking at the metal prices on the internet, Nickel is at $4.40 a pound right now (http://www.metalprices.com/#tables ) . $2500 (assuming they are break even on the Prius battery at $5000 finished retail cost) of nickel would be 568 pounds, about 5 times the weight of the entire Prius battery sub assembly. So, its the CNN claim appears to be a bit rediculous.

The Prius battery has approximately 80 lbs of nickel, which has a comodity price of $352. Making Prius batteries appears to be a good deal based on that. A few pounds of Plastic, Stamped sheet metal, some inexpensive chemicals (Lye) and the nickel, and voila you get to sell it for $2600!!! Maybe CNN should get into that buisness rather than the news. Oh I forgot, Chevron wont let them.

Seriously, where CNN is probably going astray (on purpose? hmm) is infering the true cost of the Prius battery, from the replacement cost of batteries in the present US hybrids. Which are not at nearly the production volumes or technology maturity of the Prius batteries.