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.


  • Stan Smart

    What?!? We’re too STUPID to actually manufacture batteries in the USA???

    What are we waiting for?

  • Unions Suck

    I blame the unions.

  • Unions Rule

    Newsday.com
    Toyota promises plug-in hybrid vehicle by 2010

    Toyota is introducing a plug-in hybrid with next-generation lithium-ion batteries in Japan, the U.S. and Europe by 2010, under a widespread strategy to be green outlined Wednesday.

    The ecological gas-electric vehicles, which can be recharged from a home electrical outlet, will target leasing customers, Toyota Motor Corp. said. Such plug-in hybrids can run longer as an electric vehicle than regular hybrids, and are cleaner.

    Lithium-ion batteries, now common in laptops, produce more power and are smaller than nickel-metal hydride batteries used in hybrids now.

    The joint venture that Toyota set up with Matsushita Electric Industrial Co., which makes Panasonic products, will begin producing lithium-ion batteries in 2009 and move into full-scale production in 2010, Toyota said.

    Toyota also said it’s setting up a battery research department later this month to develop an innovative battery that can outperform even that lithium-ion battery.

  • ADVILL

    A brand new facility is just opening to produce huge amounts of li-ph auto batts by Valence Tech…..the european airline industry is at the moment taking advantage of this.

  • Dom

    And how exactly were car companies supposed to plan for this rapid escalation of gas prices?? Did somebody know it was coming?? Oh I forgot, they own crystal balls into which they gaze and see the future then plan accordingly. Not.

  • Need2Change

    Interesting photos of the differences in batteries in various hybrid vehicles.

    I don’t believe the story. May 2008 sales of Priuses is down 30 percent from May 2007 sales (when they weren’t selling that well).

    It’s difficult to believe that Toyota planned to reduce purchase of batteries by 30% while thousands of Priuses sit battery-less at the factory.

    I believe they wanted to create a shortage to increase profits. Toyota increased the MSRP of Priuses last month and now dealers are getting thousands above that price.

  • Jim Johnson

    Did you hear congress proposed to impeach Bush on Monday?

    http://www.35articles.com/

  • Anonymous

    You won’t hear about it because none of it would stick, and would only put light on the obstructionist stance of the Democrat Party.

  • Stephanie

    Last year Ford only made 25k Escape Hybrids and promised more this year since their sales were up 10% and they were turning away customers. What do they do this year, oh yeah, only make 25k Escape Hybrids again, turn away more customers and blame it on batteries!

  • MilwaukeeT

    I agree about the unions… except don’t the Japanese, Koreans, Germans, Swedes, etc also have unions? Much stronger, more controlling unions than we do?!? Much stricter labor laws, etc.

    Hmmmmm…… How about the weather? Let’s blame the weather! After all we could NEVER blame geniuses running GM or Ford for ANYTHING…

  • sean

    Milwaukee,
    You’re right. If the “Product Guru” of GM said in 2003 that hybrid cars are a PR stunt from Toyota, what can we expect?

  • totustuus

    Impeach Bush? Is there an awareness that Dick Cheny would then become President? Isn’t there a saying about out of the frying pan, and into the fire?

  • Tom Bradshaw

    I think it is the consumers fault that auto manufacters are afraid to build a lot of hybrid cars. Only a year ago most consumers were happy with the MPG they are getting from larger sportier cars and SUVs. Now many people want the econo box battery powered cars with 4 cylinder engines and with the plug in features. All manufacters have stock holders to satisfy and are profit driven. If they can’t make money they are not going to take any chances in with drastic changes.

    You can’t blame Bush, Congress, America, Japan, and Koreans. It is not the weather, biodiesel fuel, enthanol, and China. Just make up your mind America and they will build them. What would consumers buy if fuel went down in price by a dollar next month? I bet I know!

  • NoOneImportant

    “Dell said on Tuesday the PC industry was experiencing a shortage of laptop batteries partly because of a recent fire at a major supplier, but the company was working with other suppliers to limit any price increases.

    Dell, the world’s second-largest PC maker after Hewlett-Packard, also said prices of its separately sold batteries used as replacements or for surplus power had gone up because of the shortage caused partly by the March 3 fire at LG Chem’s Ochang plant. “

    http://news.zdnet.com/2100-9584_22-6235632.html

  • reginab

    I think the Shocks of all the scrambling to go green made the shortage a reality. It’s a nice thing to find a good car without so much dependency on fuel.

  • sarasongbird–82

    LOL the batteries being produced are destroying the environment. They have to clear something like 6 city blocks to build the joint and not kill anything while making them. It’s a big bad deal folks. Can’t get something for nothing.