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

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 )

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

Tom

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.

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.

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

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.

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.

[/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.

Hi All,

Here is the link to the CNN BS: http://www.cnn.com/2008/TECH/science/12/03/future.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.

It's not like the Prius is the only battery pack on the market. The Prius battery holds roughly 1.5 KWH. Price some other large NIHM packs and see roughly how much the Prius pack ought to cost.

Here's the first few pages I found Googling "NIMH cost per KWH"

These guys say $4500 for a 7.5 KWH pack. That would be a little under $1000 for a Prius-sized pack:

The Ergosphere: Checking the shelf

This one says maybe $500 per KWH, which would be $750 for the Prius-sized pack:

EV Comparison

These guys list $800 per *usable* KWH, which would be $1200 for the Prius pack:

best lead acid battery? - DIY Electric Car Forums

These guys quote the CARB at $350/KWH, or ~$500 for a Prius-sized pack:

General Motors Commits To 40 Percent Emissions Cut By 2010 : michaeldestries - Green Options

Here's one saying $800/kwh, or $1200 for the Prius-sized pack

IEEE Spectrum: Can Lithium Deliver the Goods?


It seems unlikely to me that Toyota is paying $5000 per battery pack.

We can make some assumptions.
First, those who sell NiMH cells do so at a profit.
Second, much of the cost in the cells is the same regardless of form (cylindrical vs prismatic).
Now, if you purchase a "D" size NiMH cell which has about the same capacity as the Prius cells, in volumes of 100+ they cost in the $5.00 each range.
The Prius uses 168 cells in series. Sooo, 168 X $5.00 is $840. Even if my cost estimate is out by a factor of two, it's still $1680.
As the Prius battery is modular the assembly costs are minimal, compared to the costs of packaging each cell hermetically rather than in groups of 5 as per the Prius system.
Third assumption, Toyota gets a volume discount from Panasonic.

Toyota makes money on every single Prius or Prius battery sold!

The stock Prius battery is a low capacity unit when compared to the LiIon units that PHEV converters are using. The LiIon battery itself doubles the range and you can get the LiIon battery for as little as $5,000 now.

With that being said, Toyota claiming $5,000 as their cost is a bogus marketing ploy. Automobile manufacturers are going to say anything right now to justify their inflated costs and keep the public buying hybrids.

Sources:
Green Energy - Plug-In Hybrid Electric Vehicle (PHEV)
http://www.calcars.org/conversions-factsheet.pdf

Toyota is not saying that. CNN is. Toyota says the replacement retail cost of the present generation Prius battery pack is $2600.

You probably have that right is that its a bogus marketing ploy. CNN is probably acting as the markerting organisation for GM right now, considering this article, and the follow-on interview with Marryanne Keller (did I get that name right?). And GM is probably instigating this not to keep people buying hybrids, but to try to shut down them having to make hybrids. They want to be a conformtable accountant and marketing run company, and do not want to have to inovate. They are doing this to say to Toyota - "See inovation is dangerous, and you will pay the price now".

Where they are coming from is that if they have to inovate, they have to cut the UAW wages to avoid going out of buisness. And if the UAW does not go along, the UAW can destroy GM. And there is a good chance it will.

It's easy to speculate about grand conspiracy theories, and without access to Toyota's books, we can't prove profit on the Prius. Even with access to the books, the accountants might be in on the conspiracy.

Once you take off the tinfoil hat, you have to ask yourself if it makes any sense for Toyota to take a loss on each Prius. I can see where they might have done that at the start, with new technology and low volumes, but now there is no need for it. As the calculations above show, the costs are reasonable given the price of the Prius. The most direct and reasonable assumption is that the Prius is profitable.

Tom

It MUST be true . . . GM keeps saying it . . . and you KNOW what financial experts THAY are . . . . just don't ask 'em where the bailout billions went

Not according to the study done by US Department of Energy. They estimated $900 cost for the Prius battery in 2007 (before Toyota dropped the MSRP to under $2,000).



Source:
Information Bridge: DOE Scientific and Technical Information - Sponsored by OSTI

I would never waste tinfoil to make a hat. I use it on my HDTV indoor antenna of course!

Hi Usb...,

Ooh, that is a good document!

Why would the US government fund a study like this to break down a commercial company's technology and costs. Was it for the big 3?