What Rough Problem Of The Toyota Prius Is Slouching Toward Tokyo Waiting To be Born?

Implications: The Toyota Prius has turned out to be an exceptionally long lived reliable car. Why is this a problem?

Analysis: When the Toyota Prius first went into mass production in 1999 the cost of the raw materials to construct its nickel metal hydride, NiMH, battery pack was less than $1000.00. Today the same raw materials cost between 5 and 10 times as much, so that the battery on the Prius is far and away the most expensive component of the car. The battery is also the stealth component of the scrap value of the car, and the reason that Toyota desperately wants to keep Priuses out of the scrap chain in the US, where 90% of the Priuses have been and continue to be sold.

The battery is also why Toyota is in no rush to increase the current Prius production volume, and, in fact, may never do so. 

It seems that the cost of the NiMH battery in the Prius has not been considered in setting its selling price for the last five years because of, and during which, the prices for nickel, cobalt, and the rare earth metals used in its construction (for the battery, that is) have skyrocketed.

Ironically, it is the car's and the battery's overall superior quality and longevity that have submerged this problem. Almost no battery packs have been scrapped or returned; they came with an eight year or 100,000 mile warranty, and so, only the oldest ones are going off warranty. Priuses tend to be one owner cars since used ones often sell for more than new ones. The incentive therefore to trade in a depreciating piece of iron is reduced dramatically (Detroit, take note!).

This situation might have gone on forever had not the conservative mentality of Toyota's marketing department not placed a wrench into the gears of this phenomenon. Those fools decided that Prius owners wanted something new, just as Japanese Walkman owners always are assumed to want, so they announced after reading some popular science magazines that the, by now, very expensive NiMH would soon be replaced by the much better lithium-ion battery, which would give the next generation Prius more power and more range even though it would be lighter in weight. 
 
Interestingly enough the other big car maker, GM, which by the mid 2000s realized its mistake in pulling the all electric EV1 from the market in 1997 thus leaving the field open to Toyota and its hybrid, started making its own hybrid power trains and putting them into cars along with the very good NiMH batteries the development of which had been in fact done to lighten the EV1, which was first meant to use lead acid batteries.

Watching Toyota's announcements carefully and having as little understanding of the very long lead times for battery development as Toyota's chief engineer GM's old and redoubtable Bob Lutz declared that GM would have a razzle dazzle lithium-ion battery powered next generation car in 2010, the Chevrolet Volt.

Today six months after Toyota's CEO contradicted the statement of his chief engineer and said that the next generation Prius with a lithium battery would not be ready in 2009 GM has announced that the 2010 delivery of the first Volt would depend on the lithium batteries being delivered on time. Big surprise, huh.

So, now what? As far as I can find out Toyota's dealers do not have a program for recycling Prius batteries. The two that I asked said that they had never received back a car with a defective battery, and that the company had not addressed the issue.

A Toyota Prius is unique in that its scrap value can never be zero so long as it has its NiMH battery pack intact. That battery pack is more valuable than all of the rest of the scrap value of the car put together and multiplied by as much as ten.

Anyone who has totaled or scrapped a Prius so far has undoubtedly been cheated out of the true scrap value either by clueless insurance adjusters or clueless or duplicitous scrap dealers.

The marketing geniuses at toyota clearly do not understand that the selling point of the Prius is NOT PERFORMANCE NOR FUEL SAVINGS; it is ONLY environmental friendliness. They should have said that the Prius would be delivered with a lithium battery pack only when and if such a power source is proved to be SAFE, RELIABLE, AND COST EFFECTIVE.

In fact the uncontrollable, by the car companies, cost of NiMH battery packs may well be why Toyota is not increasing Prius production volumes. GM is also worried sick about the cost of lithium batteries. If they are forced to go with the lithium cobalt ion system, which is far and away the best with regard to performance, it will be because no other system is reliable enough, but only after the tendency of lithium cobalt ion batteries to overheat is eliminated by further engineering developments. Unfortunately this battery will use some 30 pounds of cobalt, which today costs more than $1,500.00. Still a $2,500.00 battery (don't forget fabrication costs) is less of a balance sheet bother than a $8,000.00 - $10,000.00 NiMH battery, isn't it?

Actually it's the cost of cobalt, not the possibility of fires, that has GM spooked about the lithium cobalt system. Both Toyota and GM pretend that the NiMH battery is just a stopgap. GM has actually let the only American assembler of such batteries, Cobasys, drift down towards bankruptcy, because it, GM, doesn't care.

Toyota, interestingly enough, makes the NIMH batteries itself in a former j/v with Panasonic (Matsushita), which it, Toyota, recently bought. The same Toyota operation is supposed to be engineering and making its lithium technology batteries. GM has two contracts out for lithium technology batteries. each to a combination of a battery developer, SAFT of France, and LG of Korea, and an experienced lead acid battery mass producer, JCI is one. GM clearly does not want to generate battery development overhead.

A big difference between Toyota and GM is that the Japanese government has a special agency just to watch over and, in certain situations, such as this one, build inventories of strategic and critical metals such as nickel, cobalt, and lithium. GM doesn't even have a staff position any longer in its purchasing department to do this and the US government is still thinking about it.

Toyota cannot afford to lose money giving away strategic metals; neither can GM, so I think that we will see batteries shortly being leased, and both GM and Toyota setting up task forces to retrieve the existing batteries when they reach the end of their service lives for whatever reason.

I also think that the only future is the one with most hybrids being constructed with NiMH batteries and only high priced or high performance cars with, handmade to ensure safety, lithium cobalt ion batteries.

Listen carefully now to spokesman for Toyota and GM for battery doubletalk preceded by sheer nonsense. Nostradamus' descendants do not work for either company. 

'The check's in the mail,' and 'I'll still respect you in the morning' now seem to resonate with 'we'll have a lithium battery in mass production soon.'