Blog Post

How Toyota's Prius Troubles Will Shape the Green Car Market

Not too long ago, Toyota (s TM) reigned as the seemingly untouchable hybrid leader. That dominance — in terms of both market share (50 percent of hybrids sold in the U.S.) and mindshare (no alt-fuel vehicle on the market is better known or more widely recognized than the Toyota Prius) — means that as the Prius image takes a beating, other models across the spectrum of green cars will also get bruised.

Mike Omotoso, senior manager for J.D. Power and Associates’ global powertrain unit, told me the firm plans to lower its hybrid and electric vehicle forecast for 2010, although it has yet to determine how big the hit will be. For the first two months of this year, the hybrid share of light vehicle sales hovered at around just 2.3 percent, compared to 2.8 percent for all of 2009 and 2.4 percent in 2008, according to Omotoso. That’s due to a number of factors — including high unemployment, a weak economy and the biggie: gas prices. But the Prius and its technical troubles loom too large to ignore.

Prior to 2009, the Prius’ share of U.S. hybrid sales had slipped below 50 percent only once since 2005 — in 2006, when it dropped to 42 percent. But even that offers a sign of Toyota’s dominance in the hybrid space. Omotoso explained that 2006 marked “the first year for the Camry hybrid and the first full year for the Highlander hybrid. So other Toyota models cannibalized Prius sales.”

Regulators are only beginning to look into the most recent incidents. But initial reports suggest the problems may not have been linked to a floor mat that pinned down the gas pedal in other Priuses and prompted Toyota to issue a recall last year for 2004-2009 models of the hybrid. Last month, when problems surfaced with the regenerative braking system of some 2010 Prius models, Toyota attributed them to a software glitch.

Regardless of what investigators and Toyota may turn up if they check out the cars involved in this week’s incidents more closely, however, one thing’s already clear: Videos that zipped around the web and TV news shows this week of a visibly shaken driver, and quotes from the 911 call he made during the 23 minutes that his 2008 Prius hurdled at high speeds down a Southern California highway before a highway patrol officer helped him stop, aren’t helping to repair the reputation of either Toyota or advanced vehicles.

Given the Prius’ status as the poster child for hybrids, Omotoso explained, “consumers might think that if the Prius has a problem then all hybrids might be dangerous.” That concern creates one more obstacle for new vehicle technologies to penetrate the mainstream, as some car buyers may forgo experimenting with the next generation of green cars — among them plug-in hybrids and all-electric vehicles from General Motors’ (s GM) Chevy Volt and Nissan’s (s NSANY) LEAF to BYD Auto’s e6, Coda Automotive’s Coda Sedan and Fisker Automotive’s Nina — rolling out over the next few years.

That perception problem is a hurdle that many car makers can’t really afford in this nascent market. Plug-in vehicle developers are competing for a niche that’s likely to remain quite small for years to come. Nearly a decade after the Prius debut, hybrids still hold a single-digit sliver of the pie. And despite optimistic projections from investors like Warren Buffett, who has said he expects all cars will run on electricity by 2030, other forecasts suggest significantly slower adoption, mainly due to high price tags.

Lux Research forecasts that even if oil costs $200 a barrel in 2020, just 4 percent of vehicles sold globally will be all-electric or plug-in hybrid because of the high costs of the battery technology. According to Lux, plug-in hybrids could sell 3 million units per year by 2020 if the price of oil reaches those heights, while hybrids can be expected to sell that many by 2020 regardless of oil prices.

In addition to presenting a challenge to companies vying to win over consumers to advanced vehicles, Toyota’s ongoing troubles also highlight a need for the government, the auto industry and even drivers to collect and manage (or in the case of drivers, to file), vehicle safety data and complaints in a more open and timely manner. Noting in prepared testimony that regulators and Toyota had received complaints of unintended acceleration in Toyota models seven years ago, Consumers Union is issuing that challenge — to increase transparency of vehicle safety data — in a hearing this morning on the National Highway Traffic Safety Administration’s oversight operations. As much as technology may be part of the problem with Toyota’s vehicles, it could also be part of the solution — helping identify problems before too many drivers are put in the situation of having to call 911 from behind the wheel of an out-of-control car.

11 Responses to “How Toyota's Prius Troubles Will Shape the Green Car Market”

  1. Folks so fear Toyota/hybrids, that when Toyota just offered GM-like incentives – sales went up 50%.

    All anti-lock brake, ESC stability systems, throttle-by-wire (~ all new car models) potentially face/expose these problems.

    Gas can exceed $4/gallon any month, like 21 months ago, and the same pundits will expand how hybrids were always the only real choice.

  2. Ilan Ben Menachem

    Toyota is going for everyone car user day by day becoz its going reasonable. there are so many part of solution, need to increase transparency of vehicle safety data.

  3. Consumers – quite reasonably – are always looking for a break. Rather than blindly responding to fearmongering.

    The Toyota flap might hamper sales to the unconvinced. But, services evaluating phone traffic for Toyota report that the media tales of problems with the Prius consistently result in a spike in inquiries from potential consumers figuring they could then wheedle a better deal from Toyota.

  4. Video: Toyota demonstrates safe hybrid vehicle stopping techniques
    03/12/2010, 3:27 AM By Mark Kleis

    Toyota now has produced a high quality video that clearly demonstrates how to stop any Toyota hybrid vehicle in the event of unintended acceleration, following their distribution of a low budget video, apparently created by a Toyota car salesman earlier this week.

    This new video demonstrates how a Toyota hybrid – any model – should function under normal conditions if the vehicle is accelerating out of control.

    This video demonstrates that the recent incident in San Diego was either the result of abnormal function of the vehicle’s computer, or complete operator error on the part of the driver, James Sikes.

    Haven’t found that software glitch, Toyota? Keep trying,0,2595172.story

    David M. Cummings, executive vice president of the Santa Barbara-based Kelly Technology Group, spent nine years as a consultant for the Jet Propulsion Laboratory, where he worked on the Mars Pathfinder spacecraft.

    Washington Post

    Playing the blame game with runaway Toyotas
    Thursday, March 11, 2010 A20
    Frank Ahrens quotes an auto industry consultant who claims the problem with runaway Toyotas almost always lies with drivers who step on the wrong pedal [“Why it’s so hard for Toyota to find out what’s wrong,” Sunday Business, March 7]. I find this assertion infuriating. I know exactly where my foot was on the two occasions that my 2004 Prius accelerated out of control on the Beltway last year — firmly on the brake until the accelerator popped back up from its unnaturally depressed position. The dealership blamed “floor mats,” but I was using small carpet squares that didn’t reach the pedal.

    The condescending assumption that drivers don’t know what they are talking about when they report problems like this is why I must now mentally rehearse how to put my car into neutral every time I venture out on the highway.