Thursday, August 6, 2009

Battery Bottleneck Limits Prius Output

Booming demand for the hybrid has factories scrambling to produce the car's nickel-metal hydride battery.

2010 Toyota Prius (© Toyota Motor Sales, U.S.A.)Click to enlarge picture

Limited supplies of battery packs are slowing down production of the Toyota Prius.

Battery bottlenecks are hurting efforts to boost output of the Toyota Prius to meet booming demand, and the problem will likely persist into next year, a Toyota official says.

"The new Prius model has been excessively popular, inconveniencing some of our customers, and the factories are working overtime at full capacity," Takahiko Ijichi, Toyota senior managing director, said Tuesday at the company's quarterly earnings announcement. "Unfortunately, the batteries are not catching up with demand. Production of the batteries needs to be increased in order for our production to go up."

Toyota Motor Corp. has annual Prius capacity of 500,000 cars. Panasonic EV Energy Co., which makes the nickel-metal hydride batteries for the gasoline-electric hybrid car, can't churn out more than that right now, Ijichi said.

The third-generation Prius hybrid is a bright spot in an otherwise gloomy year for the world's biggest automaker. The car is facing months-long waiting lists at dealerships and is easily outselling Honda's rival Insight hybrid in the United States.

The success of the Prius in Japan is one reason Toyota says it will post its first domestic sales increase in five years.

"The new Prius model is selling quite well," Ijichi said.

Last summer Toyota said it would build the Prius at its Tupelo, Miss., factory in late 2010, scrubbing a plan to make the next-generation Highlander crossover there. But amid record losses, Toyota put the plant's opening on indefinite hold.

Ijichi said Toyota won't invest to expand Prius production until it is assured of an adequate battery supply.

Battery production will increase — but gradually. Panasonic EV Energy, or PEVE, plans to boost capacity in stages to around 1 million batteries by the summer of 2010, Ijichi said.

Despite cutthroat pricing to compete with the Insight, the Prius still enjoys healthy margins, Ijichi said.

That's because production costs fell 30 percent from the previous generation of the hybrid.

Said Ijichi: "In terms of the Toyota lineup, I'd say it's probably in the midlevel of profit."

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