Last post on Jul 28, 2013 at 8:39 AM
You are in the Toyota Prius
What is this discussion about?
Toyota Prius, Hybrid Cars
Oct 30, 2003 (11:44 pm)
W/R/T Virginia's tax credits: The tax advantages of purchasing a Prius or other hybrid here may not be as generous as those of other states, but the value of driving in the HOV lanes is incalculable for residents of Hampton Roads and Northern Virginia (the two areas of the state with HOV restrictions) whose commutes would benefit from using them. Right now I can't afford a new Prius anyway (and am not sure if I would choose one if I could, for various reasons, most of which revolve around my perception that Toyota has done a good job at producing a very clean, very efficient, well, Toyota, whose driving experience would likely be somewhat too bland for my twenty-five grand); given car-buying preferences here in Hampton Roads and the fact that the 2003 Prius was offered at invoice plus a $399 "processing fee" by the middle of the last model year, I would expect it to be discounted somewhat locally by the end of the year anyway, unless Priuses are approved for California's HOV lanes and the entire U.S. allocation gets sucked up by traffic-frazzled Angelenos. If the provision allowing HOV use in Virginia here is extended for another two years and saves a driver twenty minutes each way to and from work (easy to do in Northern Virginia, and not impossible on many commutes down here), then that driver has realized a substantial benefit, albeit one on which only he can really place a price.
W/R/T the cost of developing the Prius: The $1 billion - $2 billion cost of developing a completely new car is for developing a platform from the ground up, perhaps reusing engines but with entirely new frames, suspensions and the like. The original Prius was built on a platform shared with the Echo, Yaris, Vitz, Scion xA and Scion xB, if I'm not mistaken; and the continued presence of a torsion beam axle in the back leads me to believe that the 2004 Prius rides on a heavily reengineered version of the same platform, rather than on entirely new underpinnings. I don't know this for sure, but if it's true, it would substantially reduce the cost of developing the new Prius from that $1 billion figure. Motive power, even the complex and advanced system in the new Prius, is far from being the only expense involved in automotive development.
#2349 of 7508 Virginia HOV Provision
Oct 31, 2003 (3:06 am)
I completely agree that the ability to use HOV lanes in the Washington DC area is invaluable. Unfortunately, the HOV provision is currently set to expire in mid-2004. It is possible that this expiration date will be extended and the decision is currently before the legislature. The problem is that our HOV lanes are already becoming saturated and a key topic in local political races is whether or not to have HOV users pay a toll. I just got a phone call yesterday, from a representative of a political candidate, asking my opinion on that very question. Of course I strongly oppose the measure.
After 3 years of selling the Prius, dealers must surely know this. However many seem to be playing dumb. On two recent occasions dealers insisted the expiration date had already been extended to 2005, but when I confronted their evidence they admited they might have been misinformed and would speak to their manager. Don't believe the hype people. Your HOV privaledges are likely to dissapear this coming July. Enjoy it while you can.
The Virginia Department of Transportation Reports the following information on their website:
There is no guarantee that HOV exemptions for inherently low-emission vehicles or hybrids will continue. Exemptions to rules pertaining to travel on HOV lanes are being scrutinized, and as more ILEVs and hybrids enter the HOV lanes, there becomes an increased need to examine their exempt status.
The HOV Task Force Report released in August made this recommendation: "Do not extend the exemption for vehicles with clean special fuel license plates set to expire on July 1, 2006." The Federal Highway Administration has advised Virginia that its exemption for hybrid vehicles is in violation of current Federal statute, but Congress is considering legislation that would permit states to allow hybrid vehicles to use HOV lanes. There may have more information soon as various hybrid/HOV bills wind their way through Congress.
Oct 31, 2003 (7:18 am)
Your observation about the massive amount of R&D spending by Toyota is a good one. Please bear with me and I will provide a full explaination for you.
First of all, when you read about the amount of money spent on R&D for a new technology, such as Toyota's hybrid drive system, I can see how you might be confused when the Toyota executives make statements like, "Toyota has largely recovered its initial long-term investment in the first-generation Prius."
In any macro-economic model, especially one in the automobile industry, your question as to how Prius sales would recoup the 2 billion plus spent on research is considered an apples to oranges comparison. In other words, profit return on R&D for new technology falls into a related but completely separate economic model than that for the profit return on the products derived from that technology. Let me explain.
The billions spent on research for hybrid technology was a gamble by Toyota to establish themselves at the forefront of a new drive system that would one day become mainstream. I think most readers would agree their gamble is going to pay off insofar as they have the most efficient and powerful system to date.
In general terms, Toyota's plan to get back their R&D investment is as follows. First, they wanted to establish a patented technology that would far surpass similar research efforts by their competetors. So far they have met this goal. Now they want to do two things. First, they want to dominate the hybrid market by providing the greatest selection and quality across their production line. As you know, Toyota/Lexus already plans to release hybrid versions of at least 4 other models besides the Prius. Their second objective and most lucrative strategy is to license their superior hybrid technology to competitors. Nissan is an example of one manufacturer that is already signing on. These licensing fees will return a profit to Toyota on every one of those vehicles sold with their patented hybrid system. It is these licensing fees that will mean billions to Toyota in the future, above and beyond their profits from their own line of vehicles.
Manufacturer profit is determined by a much simpler economic model. Take the cost of production, advertising, invoice finance support, dealer holdback return, customer incentives and distribution (there are some other unmentioned costs of course). Then subtract this figure from the invoice cost and other fees paid by dealers and you get the profit referred to by the Toyota executives. As you correctly stated, this profit is comparably small to the R&D money spent if you just consider a single line of cars like the Prius. I'm sure you can now see why that profit is tabulated in a seperate economic model for Toyota from the R&D model.
I have done my best to shed light on this confusing issue. I hope it helps.
On another note, you are indeed correct about the 2004 Ford Escape hybrid not being sold just yet, but Ford did indeed announce they will be selling the car at a loss. I was not aware that the Honda Insight was still selling at a loss. Thanks for the clarification.
Oct 31, 2003 (7:45 am)
no, the Prius does NOT qualify for solo occupancy in the CA HOV lanes.
currently, the only state where the Prius can ride
solo in the HOV lanes is in VA, and only if they
have the special fuels license plate from VA.
of course, if you have the prerequisite number of
people in your Prius, you can always ride in the
HOV lanes, but...
Oct 31, 2003 (7:47 am)
just a reminder, the Ford Escape is built off of
the classic Prius' design (using parts from the same
company that the classic Prius got parts from, which
is partially owned by Toyota).
Nissan has also licensed hybrid technology from
those deals have to count as recouping some of
the costs of hybrid development...
#2353 of 7508 Power House
Oct 31, 2003 (7:53 am)
From time to time I have pondered a system close to that used by this car to power a home. Any Engineers/Hackers care to look at the specs and speculate.?
#2354 of 7508 Prius System in a House
Oct 31, 2003 (8:26 am)
Maybe I don't understand your needs for a home power system but the Prius system is mainly engineered to provide torque for moving the car, not electricity. The sophistication (and expense) of the system is centered around regenerative braking (using the engine as a generator to recharge the batteries during deceleration) and providing varying levels of shaft horsepower/torque for widely varying acceleration needs. The electricity storage aspect is mainly just to provide a small reservoir to generate and store electricity to load level from low-demand periods to high-demand periods.
I would think a house power system would have completely different needs and would be characterized by relatively steady-state electricity demand with no need for shaft torque.
There are quite a few home generator/battery storage systems out there engineered specfically for the needs of a house generation system. Some systems even provide for co-generation in conjunction with the power utility. I would think any of these system would work better and be a LOT cheaper.
Thirty years from now, I could see scrounging junkyards for 2004's Prius powertrains to canabalize parts to put together a system though.
Oct 31, 2003 (12:03 pm)
There are hybrid power systems for homes, usually used by people who live off of the grid. These systems can consist of solar panels, a fossil fuel generator, maybe a windmill, and some batteries. Check out homepower.com
If you are attached to the grid, there is really no need for batteries even if you have solar panels. Many power companies allow you to spin your meter backward if you produce more power than you use. Batteries are a pain to deal with.
The Prius system is designed for an auto application with quick and strong current needs. The closest thing in your home is when your AC kicks on, or maybe when you turn on a vacuum cleaner. Maybe the battery research Toyota sponsors will one day be useful in other applications.
Oct 31, 2003 (12:29 pm)
I've seen the fuel cell powered "e-Plane" that is
being developed by NASA et. al. http://www.aviationtomorrow.com/
The current design is using the "classic" Prius/Panasonic
battery pack as the electric battery storage unit.
Best designed battery pack they could find, and at a reasonable
cost. (Used packs are great.)
Thanks to the WPI Fly-In event (where the plane
was displayed) people, they let us have a hybrid gathering
there too. Got to see the first 2004 Prius in New England
(10/11/2003) there! pics at http://www2.kluge.net/2004
#2357 of 7508 Toyota finances a bit speculative, inscrutable and irrelevant
Oct 31, 2003 (12:58 pm)
Unless one of you economists that continues to lecture about Toyota's financials is a member of their board of directors, I tend to believe that your commentary is well-meaning but basically pretty speculative.
I feel that way since Toyota is a Japanese company and not subject to quite the same SEC reporting requirements as companies based here. So when they say we spent X on development or 'are now profitable' it is most likely based on their rules of disclosure and accounting to which most of us have even less insight.
For example, when they said that they spent $2 billion on development, was that all of their money, was it pooled with others, was it a partial grant from the government, blah, blah, blah. Does that include capital expenses? How do they depreciate? Did they share the expenses with other product lines...
I think we should focus on the Prius. The Toyota finances are inscrutable and in the end irrelevant. IMHO What matters is our finances. Is is a good deal for us at the price we can negotiate.