Prius Recall Only a Bump in Road to Electrification

PRTM analyst Oliver Hazimeh doesn't see recent spate of recalls as hurting the move towards vehicle electrification.

Published: 10-Feb-2010

The anticipated recall of Toyota’s Prius is causing some observers to question whether the prospects for the entire hybrid electric vehicle (HEV) and electric vehicle (EV) markets are fundamentally hurt.

We don’t believe so. While a recall presents a short-term bump in the road regarding consumer perception of HEVs and EVs–there is no question that longer term, the fundamental drivers for increased power-train electrification are alive and well.

This immediate problem affecting the 2010 Prius relates to software that manages the regenerative and conventional braking system. This technology has been successfully and robustly used for more than 10 years in other Prius models, as well as in non-Toyota models.

(Technical Note: The regenerative braking problem reflects a problem not with the mechanical brakes but with the system interface between hybrid regenerative software controls and the traditional ABS breaking system. Automotive electronics have been increasing significantly during the past years, and the advent of hybrid power-trains added new electronic control systems that need to be managed. Current lessons will not only help Toyota but the industry as a whole. As we continue the transition from a mechanical to more electronically controlled vehicles, the required engineering processes, skills and tools need to adapt accordingly. That is why many OEMs are beginning to rebuild their internal electronics and system engineering capabilities after many years of outsourcing. Customers should find assurance that other industries, such as the aerospace industry, have made a similar transition and today’s modern planes have replaced mechanical aircraft controls with full electronic controls).
Toyota has earned a stellar reputation for quality over decades. While the current recall issues are reflective of the company’s rapid growth, Toyota will likely address not only the specific vehicle problem, but will also ensure that it is systemically addressed at all levels of the organization.

The Electrification Tipping Point

PRTM believes that the worldwide tipping point in HEV, PHEV and EV acceptance, whereby these vehicles become a major part of the automotive power-train portfolio, will likely occur in the next few years. The Prius recall, which is under more public scrutiny due to other recent Toyota quality issues, will not fundamentally alter the underlying drivers for electrification of power-trains. Just a few drivers for this shift include the following:

Certainly, any automotive recall is unfortunate for any auto maker and certainly for the consumer. However, we have every expectation that Toyota will effectively address the problem. We are also confident that the adoption tipping point gets closer every day, and that our estimates of 10 percent of PHEV/EV adoption and as much as 20 percent Mild/Full-HEV adoption by 2020 are still right on track.

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