Toyota Warns Of Rare Operating Loss

Automaker Toyota has announced its first operating loss since 1938. The company cited a severe drop in demand for its cars, especially in the U.S., which accounts for one-third of its vehicle sales. New York Times senior correspondent Micheline Maynard offers her insight.

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As we just heard, the success of Toyota as well as the Detroit Three depends in part on batteries. Car companies need stronger more efficient batteries that won't also jack up a car's price, and that's the problem. Now a group of 14 companies is asking for a billion dollars in federal money, and its name says it all: the National Alliance for Advance Transportation Battery Cell Manufacturer. NPR's Yuki Noguchi reports.

YUKI NOGUCHI: For a little battery history, Jeff Chamberlain pulls this one out of the way back machine.

Mr. JEFF CHAMBERLAIN (Manager, Argonne National Laboratory): Do you remember that? The first cell phones, where - I remember my father carrying around the satchel for the battery. So things have advanced in the last 20 years immensely, and now we have cell phones that last a couple of hours that have a tiny little battery in it.

NOGUCHI: But batteries still aren't small, cheap and safe enough yet to power an all-electric car, and that's what Chamberlain is working on as a manager at the Argonne National Laboratory.

Mr. CHAMBERLAIN: There is a move right now to make a different format of cell, and that format is much bigger than what's in your cell phone and much bigger that what's in your laptop. It's a bigger cell. And so, it contains more energy.

NOGUCHI: Today Asia, and particularly China, has dominated that movement. Chamberlain's division at Argonne is advising the group of 14 companies to try to catch up. The alliance includes Johnson Controls, which makes auto parts among other things, and chemical giant 3M. They hope pulling resources and sharing the costs of building a manufacturing plant will speed up the mass production of the lithium-ion batteries needed to power electric cars like the Chevy Volt. By Chamberlain's owned admission, this isn't an easy job.

Mr. CHAMBERLAIN: There are a lot of challenges, but the first and primary challenge is building a battery that is not so large that it doesn't make sense.

NOGUCHI: Today's technology is still either too clunky or doesn't pack enough punch to power a vehicle long enough distances to make practical sense. Toyota's popular Prius uses a nickel-metal hydride, but that's a gas electric hybrid. The EB1, GM's electric car experiment from a decade ago, was too heavy.

Mr. CHAMBERLAIN: Another key issue is safety.

NOGUCHI: Right. Remember how faulty cell phone and laptop batteries exploded? While those were a tiny minority of cases, battery-powered cars won't get many takers if consumers have safety concerns. Finally, one of the main challenges is cost. A battery to power a car right now runs about $8,000. That cost needs to get down to a several hundred dollars for it to be an affordable car. Ralph Broad is a consultant and an adviser to the new alliance. He says getting cost down means mass production.

Mr. RALPH BROAD (Consultant and Adviser, National Alliance for Advanced Transportation Battery Cell Manufacture): It costs, you know, significant amount of money to put up a plant, and so far nobody in the U.S. has - is in a position really to invest several hundred million dollars that it takes to build the plant.

NOGUCHI: Mike Tracy is an engineer and a consultant for the auto industry who is not working with the alliance. He says there's no doubt electricity-powered cars are the future, but the technology needs to make vast improvements from where it is today.

Mr. MIKE TRACY (Engineer and Auto Consultant, Detroit): There is nothing simple about the advances that everybody is looking for in battery technology, which is why the scope of the dollar amounts are so large that everybody is after.

NOGUCHI: The batteries will have other uses in the military transportation and energy industries.

Mr. TRACY: You're literally talking about one of the most important developments of the century if this gets pulled off. Question is, which country is going to get there, and which country is going to gain this strategic advantage in the world by having that technology and leveraging it.

NOGUCHI: But with so many industries asking Washington for money, it's not clear whether, how, or when the money the alliance wants to invest in this new technology will come through. Yuki Noguchi, NPR News.

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Toyota Braces For First Operating Loss In 70 Years

Toyota Motor Corp. warned Monday that it expects to post its first operating loss in 70 years — an estimated $1.7 billion — during the fiscal year that ends in March.

The world's largest automaker blamed eroding profits on the battered global economy, low demand for cars and the weak dollar. It was the first projected loss since Toyota began reporting such figures in 1941. The company last projected an operated loss in an internal calculation for the year ending March 1938, a year after Toyota was founded.

"The tough times are hitting us far faster, wider and deeper than expected," Toyota President Katsuaki Watanabe said at a news conference at the company's office in Nagoya, Japan. "This is an unprecedented crisis requiring urgent action."

Sinking sales in the U.S. in the wake of the financial crisis have dealt a heavy blow to Japanese automakers. But Watanabe said that emerging markets, which had held up in the beginning, were also slowing.

For 2008, Toyota estimated that at 8.96 million vehicles, groupwide global sales — which include sales at units Daihatsu and Hino Motors Ltd. — will be down 4 percent from last year.

For the business year ending March 31, Toyota lowered its vehicle sales forecast to 7.5 million vehicles from 8.2 million. It sold nearly 9 million vehicles last business year.

Unlike previous years, Toyota did not disclose its sales and production forecasts for the coming calendar year, saying it was impossible to predict where the bottom for the global vehicle market lay.

"We need to be prepared for the tough conditions to continue, and maybe even worsen," Watanabe said.

The U.S. auto industry has also suffered because of the downturn in the global economy. Last week, President Bush said he would lend General Motors Corp. and Chrysler LLC up to $17.4 billion to keep them from bankruptcy.

From NPR staff and wire reports

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