CARB Warranty Ins-and-Outs (and In-Out-Ins)

I’ve felt that there is an urgent need for an article about CARB warranty complexities. I decided to draft the article myself to kick-off the discussions. Fasten your seatbelts!

If you've been following the Gen2 PriusChat discussions, you know we are beginning to see an increasing number hybrid battery failures. To be honest, I am not even sure it’s fair to use the word “failure”. The first model year Gen2 Prius (2004) is now 10-years old or older. The excellent reliability of the Prius hybrid battery (NiMH) has helped to usher in a whole new era of clean, green automobiles.

Nonetheless, a recent Consumer Reports survey put the Gen2 Prius battery failure rate at 3% for the 2006 model year, and I am wondering if the failure rate could possibly climb to as high as 10% in the next year or two? Longer term, I wonder if the Gen3 battery failure rates will follow the same trends? If so, the HV battery repair business will be hot for years to come.

To date, battery repair costs have not been too bad for US Prius owners. Most of the failed hybrid batteries have been replaced free-of-charge under the standard Toyota warranty (8-yr 100k miles) or CARB-extended warranty (10-yr 150k miles). Furthermore, Toyota has reportedly been generous in sharing battery repair costs with many owners who were just outside of the warranty limits. However, increasing numbers of Prius owners will need to replace their batteries out of their own pockets (typical dealer replacement is usually a bit over $3000 with labor).

One minor disappointment (major if it’s your dead battery) is that Toyota has very strict CARB warranty qualification rules. Even a well-maintained, fully CA-certified Prius, being repaired in a full CARB state may be disqualified by Toyota for CARB warranty coverage. For example, if your Prius has been registered in multiple states including a CARB state, you quickly realize that the verbiage in the Toyota Warranty Manual is nearly useless. In these unclear cases, if your battery fails, you or your dealer’s service representative will quickly be on the phone with Toyota USA asking for a warranty ruling.

Apparently, the CARB regulations allow Toyota to create arcane rules to disqualify the CARB warranty for CA-certified vehicles registered in non-CARB states. By contrast, the FORD and GM hybrid warranties simply say: if your CA-certified vehicle is registered in a CARB-state at the time of repair, you are covered. It’s not so easy with Toyota.

Let’s review Toyota’s rules by looking at some Washington DC Beltway examples. Here we have Maryland (full CARB state); Virginia (non-CARB state); and DC who might be CARB, but it’s definitely not a state.

My Summary of Toyota’s CARB Warranty Rules (with DC Metro Area Examples)

• Vehicle must be registered in a CARB state at the time of repair.

Thankfully the first rule we all agree with, but new owners need to be told, that the CARB extended battery warranty is not valid for cars registered in non-CARB states. The other point here is that the CARB warranty stays with the vehicle if the vehicle is sold to another person (subject to the rules below).

• Vehicle must be CA-Certified.

CA-certification means that your California emissions sticker under the hood needs to show AT-PZEV classification. In one sense, CA-certification is not a problem because it appears almost all US-sold Prii are fully CA-certified. But actually, that’s the whole problem. Rather than use emission sticker differentiation, Toyota chooses to use policy rules to say that some CA-certified Prius are nevertheless disqualified from the CARB warranty, even in CARB states.

• The vehicle must be registered in a CARB state at the time of purchase.

This is where things start to get a little overly strict. In addition to being registered in a CARB state at the time of repair, Toyota mandates the vehicle must have also been registered in a CARB state at the time of purchase. For example, if a Virginia resident registers a new Prius in non-CARB Virginia, then that vehicle is forever disqualified from the Toyota CARB warranty, even if the Virginia resident later relocates to full CARB Maryland...even if the vehicle is CA-certified…even if the Virginia resident went to Maryland to buy the Prius, the initial Virginia registration permanently disqualifies the vehicle from Toyota’s CARB coverage. Even if you always lived in Maryland, Toyota will disqualify your CARB warranty if Toyota believes that your Prius purchase pre-dated Maryland’s 2011 date of joining the CARB alliance.

• The vehicle must have been sold in a CARB state.

For example, if a Maryland owner bought the Prius at a nearby Virginia car dealership, the vehicle is disqualified by Toyota from the CARB warranty. As far as I can tell, this rule is unique to Toyota. This rule probably hurts Virginia Toyota dealers by blocking Maryland Prius buyers from going to Virginia, while on the other hand, many Virginia buyers do go to Maryland to buy cars.

• The vehicle must be normally operated in the CARB state of Registration.

Shades of NSA here, but Toyota is obviously trying to guard against Prius owners registering a Prius in the wrong state just to get CARB warranty coverage. But actually, here in the DC metro area, that’s not so far-fetched. Years ago some Virginia residents registered their cars in Maryland to escape Virginia’s high car taxes (today there’s no escape). Note that FORD and GM rules seem to honor the CARB warranty in a CARB state without a “residency check”.

• Toyota CARB Warranty is disqualified if your Prius is registered in a non-CARB state.

In communication to owners, Toyota stresses that when you move to a non-CARB state, the CA emissions warranty no longer applies. Forever? We do not yet know Toyota’s interpretation. This is the famous PriusChat “In-Out-In” CARB brain teaser. We already said your Prius must be registered in a CARB state at the time of repair, and Toyota also mandates your car must be sold, registered, and operated in a CARB state at the time of purchase. What about the Marylander who moved a Prius to Virginia and then to DC or back to Maryland?

We don’t know Toyota’s answer to the In-Out-In case, nor many other change-of-state cases. The situation is further complicated by the fact that there are many different “flavors” of CARB states: there are three “standard CARB” states (DE, WA, PA), and eight “full CARB” states (CA, MD, RI, VT, MA, ME, CT, NJ) and two “modified CARB” states (OR, NY), and three “ex-CARB” states (NH, NM, AZ). What happens to your Toyota warranty in a PA to CA relocation? Keep in mind, each CARB state has a unique coverage starting date in CARB, and those dates are hard to verify. It would be helpful if Toyota could publish its date criteria for each CARB state.

Here is just one real-life PriusChat case: A resident of Washington DC bought a used Prius from a Toyota dealer in Virginia, whereas the vehicle was originally first-owned in New York, and she’s moving to Maryland soon. Is she disqualified because the car was resold in non-CARB Virginia? or because DC is CARB but not a state? Or is DC former CARB? If the CARB warranty does carry over to Maryland, is it the reduced to the NY’s partial CARB coverage status? or does it go back up to full CARB per Maryland? Do some of these rules depend on model year? My 2006 Prius warranty makes no apparent mention of the rules.

Bottom line is: do not listen to me. If you live in a CARB state and your vehicle flunks one of the above rules, you really need to make your own case with Toyota. Toyota told me that due to the complexity, they prefer to handle these cases one-on-one with the customers. There could be exceptions that we are not aware of. Consider the fact that each model year has a unique Toyota Warranty and Maintenance Guide. Over the years, the CARB warranty wording has changed quite a bit. Your specific model year could have a loophole in the language. Your warranty booklet gives guidance on how to contest the initial ruling from Toyota if you don’t agree with it. As I mentioned earlier, Toyota has also been very accommodating to some owners, probably including CARB state residents who have had their otherwise valid CARB warranties disqualified by Toyota warranty policy.

>>Please give me any comments or corrections. I suspect, as more hybrid batteries are replaced, we may soon start to learn more about Toyota and other manufacturer’s rules.

2015 EDIT: We now have a few answers to some of the questions psoed above...Toyota did tell me that the "In-Out-In" case is covered by CARB. In other words, only 2 states matter: the state the Prius was orig bought/registered and what state you live in now must both be CARB. Another development is that the dealers apparently have access to the data base to be able to advise you of CARB status of the vehicle.

Related posts:
The 2014 list of CARB States in the US | PriusChat
Traction Battery Survey. | PriusChat
Hybrid Battery Survey-Gen2 Prius 2004-2009 | PriusChat
(see Post #108 for summary of results and Consumer Reports survey summary)

 

Yes CR reported each model year.
>>>In the OP I added links to prior Gen2 Battery survey and CR results (see my Post 108 summary and Post 118 discusses CR sample sizes).

In UART's current Gen2 "Traction Battery Survey" he is trying to cancel out over-reporting bias on PriusChat by segregating those who come to the site just due to recent battery issues. He is still at >10% failed but I know sample size is small <pls vote if you have a Gen2>.

Well, re: PriusChat surveys, I at least come the conclusion that a significant portion of our Gen2 readership is interested in Battery issues, hence part of my justification for posting about this topic lately, warranties, surveys, etc. I would like to next do a Gen2 model year survey to see if 2006 is a weak battery year (which was actually what I was trying get at in the older survey). Looks like Gen3 holding up much better so far, but we'll give them a few years to catch up!

 

...I have now been advised that the IN-OUT-IN case is "IN CARB" (CARB warranty applies if you return to a CARB state)

So basically, if you originally buy and register your car in a CARB state, move out, and Return to a CARB state - Toyota honors the CARB warranty.

We need a real life test case, but that is my understanding.