Pressing matters - Toyota wasn’t alone in receiving government assistance

The automotive press was abuzz earlier this month as corporations flung around statements related to the development of hybrid vehicles, suggesting Toyota may have received an unfair advantage by receiving government funding for research and development. However, Toyota isn’t the only automaker to receive government assistance. More than a decade ago, American tax dollars supported an auto industry initiative to develop a marked advance focused on developing a marketable, 80-mpg family car.

This conflict flared up recently after Business Week magazine published a quote from Jim Press, former president of Toyota’s U.S. division: “The Japanese government paid for 100 percent of the development of the battery and hybrid system that went into the Toyota Prius.” In September 2007, Press left Toyota to become Chrysler’s vice chairman and president.

While Press’s statement may not sound earth shaking, the news rocked Detroit. The impression left is that Toyota received an unfair advantage (i.e., government support), when some captains of the American car industry have long justified their delay, both on and off the record, in developing hybrids by claiming that such complex vehicles can’t make money due to huge development costs. They may be right. Even if the Japanese government did help pay for the development of the Prius, that doesn’t necessarily make it profitable. (Jim Press is shown here at  the 2001 New York International Auto Show with first-generation Prius prepped for the transit authority.)

There is some dispute about the veracity or the details of Press’s claim. Toyota has refuted it. Chrysler has clarified the statements in a media-focused blog with “He said the Japanese government strongly supported R & D (research and development) investment in battery development, and the Prius and other Japanese models benefited from that investment in industry.” Yet, in testimony in 2007, Press told Congress that the Japanese government did not pay for any Prius research and development.

Whatever the truth may be, all the attention this story has generated may have left a false impression in readers’ minds. It implies that if only the U.S. government supported Detroit the way the Japanese government does Toyota, Detroit might not have lost the race to develop efficient, advanced hybrid cars.

A quick history lesson debunks this myth:

From 1993 to 2000, the United States did spend about $1.2 billion helping the American auto industry develop hybrids just like the Prius. The program was called the Partnership for a New Generation of Vehicles (PNGV). It was a joint effort between the Department of Energy, national laboratories, universities, and the Big 3 U.S. automakers (through a research consortium called USCAR). The goal was for each of the automakers to build a prototype family sedan that could achieve 80 mpg and cost no more than a similar conventional car.

Chrysler, Ford, and GM each produced prototypes that got at least 70 mpg: the Chrysler ESX3, Ford Prodigy, and General Motors Precept. All three were diesel-electric hybrids. But none of the companies have built such cars, as the original program mandate had envisioned, after PNGV was replaced by the fuel-cell focused FreedomCAR initiative in 2003.

According to a 2002 article in Issues magazine by Daniel Sperling, founding director of the Institute of Transportation Studies at the University of California at Davis and a member of the California’s Air Resources Board (commonly known as CARB), the PNGV had one other lasting effect: The prospect of the world’s richest country teaming with some of the world’s (then) largest automakers spurred Japan and Europe to develop similar task forces: the European Car of Tomorrow Task Force and the Japan Clean Air Program.

And unlike the U.S. companies, the fruits of Toyota’s participation in those efforts are visible on our roads every day.

—Eric Evarts

Discuss Hybrids and alternative fuel vehicles in the CR forums.

Comments

[John Horvath]

When did it become the governments job to fund private industry research. The government gets involved in too many aspects of our lives already. In this case, don't we pay enought for cars as it is...why add our tax dollars to it. We shouldn't be worrying about what other governments do or don't do in their own contry. If we don't like it, don't let them build factories here.

[Cale]

"When did it become the governments job to fund private industry research. The government gets involved in too many aspects of our lives already."

I have to disagree with John's comments in the strongest way. It has always been the government's job to do the work of the people it represents. If our representatives act to help the development of clean and fuel-efficient vehicles for the benefit of all citizens, then I think the government is acting in a most responsible way.

"In this case, don't we pay enought for cars as it is...why add our tax dollars to it."

Because it might help save jobs in this country and as we have a government of representation, jobs are very important.

"We shouldn't be worrying about what other governments do or don't do in their own contry."

It has always been a bone of contention with US industries that some foreign competitors benefit unfairly from foreign government support. If the Japanese government helps Japanese automakers sell hybrid cars at a cost that domestic automakers can't match, then jobs at domestic automakers will be lost. Employment in the US is critical to the health of our economy.

"If we don't like it, don't let them build factories here."

Denying the opportunities for foreign investment is very bad policy. Companies that build car-manufacturing plants in this country are employing people. See the comments above regarding the importance of jobs.

In the case of domestic complaints about unfair government assistance, it serves the domestic automakers current agenda to complain that their lack of competitive hybrid offerings is due to unfair trade. It frees them from taking responsibility for the situation.

[Granny]

The government should help in the development of American auto makers Autos. Its our tax dollar at work, but the dollars should not be included in the price of the car. Foreign auto makers should not have the right to continue to build more factories, continue to take away from our American industries, and moving our workers from American auto companies to foreign auto builders. If the Japanese auto builder had not gotten such a strong hold on factories here in the US. Our domestic auto makers would not have lost so many jobs. Yes they are employing Americans workers, but the BIG BUCKS are going back to Japan and there parent companies. Comsumer Report.org, so called an American magazine puts dowm our domestic auto makers all the time, they have to be being paid BIG BUCKS under the table to put out these reports, it all about Japanese vehicles. Our American auto builder have been around for over 100 years, and have helped fight for the freedom that we have to day, building the equipment we needed to fight wars, especially WWII against a country that is taking our business, and industries away. The american people should be ashamed of there self for buying these foriegn autos, when our domestic Autos are just as good if not better.

[ed]

Americans should be ashamed of buying inferior domestic products out of patriotism. If we REALLY want to help American auto makers we will buy whatever cars are the best. Buy buying American just for the sake of buying American we actually hurt out auto industry because they no longer have to compete with BETTER auto manufacturers. America was founded on the idea of competition. Personally i think we Americans are smart enough to compete with ANYONE but the fact of the matter is that Toyota has not taken the lead in this industry by selling hybrid cars. It has taken the lead through making BETTER cars across the board. Only recently have hybrids become a factor. If you really dont think we can do better than we have the rest of the world, Japan, Europe, whoever, then buy American products out of blind, stupid, patriotism. However, if you really care about the American economy you should buy the best from WHOEVER makes them. Heres a lesson for you by the way. The top selling American sedan, the Ford Fusion- a good car- is made in Mexico. The top Japanese and Korean sedans are -Camery and Sonata- are made right here in the good ol' US of A employing Americas. Quit complaining about a little competition and do something to improve the product. Really Americans don't complain about tough competition.

[Joe]

"It has always been the government's job to do the work of the people it represents. "

The idea we've been working under for years is that our Gov't assumes high risk R&D with long term payoff. We have NSF, DOE and NIH. Our R&D capabilities in the US are second to none. If the Gov't didn't do this R&D, we'd be a back-water technology country.

Where we fall down is manufacturing our ideas. It's hard work and apparently leading in fuel efficiency R&D too hard for The Big Three.

[Jeff]

Buying a PRIUS TODAY. Rented one for an hour yesterday to test drive. My american 4X4 with a Honda V6 has been problematic in all areas but the ones made and designed by the Japanese. Stopped by my former American SUV dealer Friday last, and he didn't even have any hybrids to show me!! We (US) gotta get out of the auto business FORMALLY, not just by how me market and sell and service cars. I tried to buy US-I at least can cut down on imported gas. Sorry Detroit, I really tried. Kanichiwa (Hello) Toyo.

[Gary M]

It makes a little more sence to me now that I know the Japanese goverment were probably the ones who payed for the development of the fuel cell for thier hybreds. Its probably safe to assume that they spent more than 1.2 billion on developing that cell. If so don't you think the Japanese goverment has reaked the benefits of that R & D with thier companys doing so well home and abroad.
From my understanding when Ford started building the Escape Hybred the fuel cell came from Japan and the company making the cell would only sell 10 cells per production hour.With the Escape being one of the first Hybred SUV's on the market at that time seems to me some one or should I say goverment might have been buying thier countrys company's more time to get thier products out on the market.
I work at Louisville Assembly Plant were the Explorer is made. When we first started building the Explorer it ws 2 shifts 10hrs a day and 8hrs on Sat. Our line speed at that time was 90 units per hr. that adds up to over 10,000 units per week. We were able to do that because we were not handcuffed by a Japanese company like the Ford Escape Hybred was. But the Japanese Goverment did handcuff us on exports of the Explorer to Japan. I was told in our first couple of years of building the Explorer that we were only able to export 20 per month to Japan. Do you think our goverment would ever do that to a new model of a Toyota our Nissan. DON'T THINK SO!