Hybrid Battery Shortage Explained: Poor Planning
With gasoline topping $4 a gallon, hybrids are so hot that the auto industry can’t produce enough to satisfy demand. Carmakers point to a shortage of battery packs, but the real story has little to do with a shortage of materials. Car companies—including Toyota, which owns about 80 percent of the hybrid market—did not create contingency plans for the possibility that gas prices and hybrid demand would dramatically rise.
Auto battery expert Menahem Anderman, founder of Advanced Automotive Batteries, told HybridCars.com that the real shortage is a “shortage of planning.”
Anderman explained that batteries are produced under contract with the automakers at specified quantities and prices. Changes in battery orders have a major effect on pricing, so carmakers and battery suppliers carefully consider the production quantities when entering into a contract. Because batteries are the most expensive component of the hybrid system, carmakers keep their financial commitments to battery suppliers at low levels to save money on each unit.
“A year ago, our [vehicle] supplies were at record level in Prius,” Bob Carter, head of Toyota’s U.S operations told the trade journal Automotive News. “Now we’re in catch-up mode.” Toyota can’t ramp up battery production fast enough to build enough Priuses to meet demand, Carter said. Waiting lists for Prius are growing to six months and longer. “We’re pushing for every bit of production we can get,” Carter said. “We’re working very closely with our suppliers to increase that capacity.”
Auto industry analysts reported that Toyota is preparing production for the 2009 model year of the Prius, which also adversely affects Prius production quantities this year. Toyota also indicated that the battery in the next generation Prius will be different than the current version, yet another reason the company is cautious not to overproduce the current model.