Hybrid Lovers Read This and Lament 3191

Hold on there Daniel!

The battery industry is well able to come up with aftermarket replacement batteries for these cars. They aren't doing so now because there's no demand for them - because the warranties are all still in effect.

The dollar values of these battery packs are funny money, they are accounting fictions. Since the automakers pays for the warranty replacement of the battery, the automakers can price them however they want.

Consider for a moment this scenario. Honda could have figured out even before commencing manufacture that the battery pack will fail at least 1 time under warranty. We also know that Honda is probably losing $2,000 on every new hybrid they manufacture.

So Honda decided to engage in a bit of creative accounting. In order to minimize the loss on each car that they manufacture, they understate the actual cost of the battey pack by $2000. Thus while the real dollar amount they are losing on every new car is $4,000, because the battery pack is underestimated, the loss looks less than it is really.

Now, they have to get the money for these understated batteries somewhere. That's where the overinflated $8000 warranty battery comes in. Because it's a warranty, Honda can argue next year to it's stockholders that they didn't know warranty costs on the hybrids would be so high, thus their profits are down. In the meantime the $8000 warranty batteries are actually subsidizing the cost of the new batteries.

You have to buttume that Honda's and Toyota's stockholders will tolerate some loss on hybrids, as a skunkworks market. But they won't tolerate it for very long, and they won't tolerate it if it's pretty mbuttive. If the loss gets to high the investors will force those companies to jettison hybrid production. So if Honda's managers want to continue building and losing money on hybrids, they are going to have to do some creative accounting tricks to hide some of the losses on these cars. Pushing the loss out of the manufacturing cost bucket and into the warranty claims bucket is one of these tricks.

Why are you thinking that these cars batteries are going to be replaced by NiMH? My guess is the aftermarket battery industry will come out with a lead acid gel cell conventional technology retrofit battery for these cars, that will cost a quarter of the NiMH. Obviously the fuel mileage will suffer but not a lot, and the battery industry is under no obligation to manufacture a part that will retain the existing mileage. All that would probably need to be done is a reprogrammed battery computer to be installed that will properly maintain charge on a lead acid pack.

Ted