Chrysler's Jim Press And Toyota Differ on Prius Narrative

Posted by: David Kiley on April 2, 2008

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Did former Toyota executive James Press rat out his old company? Or was he just pointing out how smart the Japanese were to back gas-electric hybrid technology, which has been a boon to the company’s fortunes and image, especially in the U.S.

Chrysler LLC vice chairman Press said Wednesday that he was not intending to speak negatively about Toyota when he told BusinessWeek that the Japanese automaker benefited from government investment in its gas-electric hybrid technology.

Press was responding to a statement made by Toyota, where the Chrysler executive worked for 37 years and served as a board member before leaving last year, denying Press’s assertion made in an interview with BusinessWeek on March 20 that the Japanese government had subsidized “100% of the research and development costs” of the automaker’s gas-electric hybrid system that was launched in the 1997 Prius and now powers all of Toyota’s hybrid vehicles.

In a wide-ranging interview with Businessweek editors and two correspondents that also included Chrysler LLC CEO Robert Nardelli and vice chairman Tom Lasorda, Press said on-the-record, “The Japanese government paid for 100% of the development of the battery and hybrid system that went into the Toyota Prius.” He did not specify the forms those investments took. But the statement contradicted those made by Press when he was a Toyota employee.

Toyota refutes Press’s claim. “I can say 100 per cent that Toyota received absolutely no support - no money, no grants - from the Japanese government for the development of the Prius,” said Toyota’s Tokyo-based spokesman Paul Nolasco.

In a statement by Press released through a spokesperson, he doesn’t refute what he said to BusinessWeek on March 20. “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.” He cited this “investment” as an example of cooperation for the U.S. government and industry. “Instead of being at odds with each other over CAFE [Corporate Average Fuel Economy] and other policies that put U.S. companies at a disadvantage, the two should work together to find technological improvements that help give U.S. companies a competitive advantage,” said Press.

Press, through a spokesperson, would not clarify what he meant by “support” or “investment.” The Japanese government, for example, has long supported technology initiatives to lower tailpipe emissions and increase fuel economy to lessen smog in its crowded cities through consumer tax incentives. Japan’s “Green Taxation” system, for example, gives consumers a tax credits to purchase low-emission vehicles to offset a portion of sales tax paid on a new car, a system similar to consumer tax incentives in the U.S. to buy hybrids and electric vehicles.

In the interview with Businessweek, Press was clearly talking about direct subsidy by the Japanese government, not consumer tax credits. I stand by my account of the story, as does BusinessWeek.

Press’s assertion to BusinessWeek, said Toyota’s U.S. spokesman Mike Michels, contradicts statements Press gave to media while he was an executive at Toyota. Michels acknowledged that the question of Japanese government incentives has been asked from time to time by reporters because U.S. automakers have long alleged that such subsidies gave Toyota an unfair cost advantage over U.S. automakers in developing the Prius.

Press, noted Michels, also told the House Committee on Energy and Commerce last year that Toyota received no R&D subsidy for its hybrid technology. In a hearing, titled, “Climate Change and Energy Security: Perspectives from the Automobile Industry,” on March 14, 2007, Press testified: “The development of the program itself was about a 7-year project when we got into production. The concept of a hybrid, though, goes all the way back to the 1900s. It’s technology we’ve been working on for a very long time.”

Because there is disagreement in Congress and in the federal government over the levels of financial support that should be given to automakers and consumers to advance low-emission and high-fuel-economy vehicles, Press was specifically asked by Rep. Michael Burgess (R-TX) if research and development for the Prius was funded by the Japanese government. Press’s response: “No, sir.”

In the interview with BusinessWeek, Press explained that Toyota’s gas-electric hybrid system was originally developed for the Japanese market, and funded by government investment. The U.S. was a secondary market for the car, but one that proved more successful than Japan where hybrids have been slower to catch on.

Why is this question of direct investment by the Japanese government such a big issue?

There has been enormous tension between U.S. automakers and Toyota over gas-electric technology. The U.S. auto industry has spent billions of its own money, as well as government grants, pursuing electric cars that run on batteries, as well as those that run on hydrogen fuel cells.

U.S. automakers dismissed gas-electric hybrid systems in the 1990s, writing them off as too expensive and inefficient. Toyota, though, pressed the technology, turning the Prius into a sales and public relations phenomenon. Toyota is the world-wide leader in hybrid vehicle sales and, on the back of the Prius, is widely viewed by the public as the “greenest” car company in the industry. U.S. auto executives have long maintained the only reason Toyota was able to bring its hybrid vehicles to market without losing billions was because of government subsidies.

A large part of Toyota’s Prius narrative has been that it developed the system entirely on its own, and that it had no unfair advantage over Detroit. Press’s remarks to BusinessWeek, while not detailing what forms those subsidies took, contradicted that.

Reader Comments

Noz

April 2, 2008 8:57 PM

Good Great Bleeding Grief! Yet another tempest in a tea cup, or more to the point a saké cup! This kind of reminds me of the usual US gov't/Boeing lashups (often denied) vs those of AirBus which are obvious and more or less open in terms of whatever comes their way.

I have to admit I have a problem with Jim Press, a far larger one with Bill Press of the super-far left crackpots. Related?

So, in the ende, who really gives a damn? That the official position of the US gov't sap-suckers is that the Failing Three are slacking off is true enough in both assertions and facts. But that there can be some kind of 'cooperation for the mutual good' between shifty/largely ignorant bureaucrats and legitimate profit-generating (with some huge exceptions) businesses is largely a myth. The recent stem-cell thing bears this out rather nicely. Bushie was correct, perhaps for the wrong reasons, but none the less, private industry came up with the goods while the government was still ordering the furnishings for their plush offices. No rush really, nor would there be a financial crunch with politics being what they are/are not.

The fact is that Toyota has snookered the rest of the industry with the Prius--now the Camry and Highlander as well. Toyota has beaten the sox off the competition, even my team at HONDA. They chose another route to the same goal and came up short in terms of hype and sales. So be it. They now have what I believe to be a huge lead in clean diesel engines, another mid-stream solution of sorts. And shame on Mercedes and its German buddies with their complicated high-cost maintenance-intensive system. Oh so typical of MB. Reinventing door latches with each and every model. then paying a fortune in warranty repairs.

James

April 3, 2008 1:11 AM

I don't understand why Toyota would take exception to Press' original assertion. Smart governments support its industries and local companies and God knows Japan, through MITI, supports its companies.

It makes no difference where the money came from; Toyota did the heavy lifting regardless.

However, the question must be asked, where was the gov't support for Nissan or any other Japanese car companies? Perhaps they didn't think hybrid technology was worth it?

Falcone

April 3, 2008 12:29 PM

Given the revelations today that Press' testimony to Congress was that Toyota did NOT receive any Japanese government support for its hybrid program, his interview statements are either a lie, or open him up to perjury charges. Either way, NOT GOOD for Chrysler or Toyota.

John Marino

April 5, 2008 8:57 AM

Unfortunately, I worked for a Japanese company when they bought my former company. Pleasant and polite people, but if you are not Japanese, you are not a part of their team. Very biased. I knew that the Japanese goverment subsidized many companies. After watching their management, they could not survive on their own. My belief from first hand experience. Toyota was smart enough to hire many good Americans to direct their success here. This country is being chipped away at by these types of government/company collusions. I won't support them, but fools seem to. When their kids are destitute, they can blame themselves.

Yoshinogawa132-53

April 5, 2008 9:19 PM

If Press has such a scoop, he should provide some facts, not just assertions. We want to know. Lack of facts leaves the argument at a tit-for-tat level. BusinessWeek says above that the US auto industry got grants to pursue electric car technology (running on batteries and hydrogen fuel cells). Press has 37 years with Toyota but no facts. Why? The Japanese are said to be good on details, but this didn't rub off on Press. We need to press him for more clarity. Perhaps Chrysler has an agenda (this is not prejudice...I drive a Chrysler product, which btw could certainly use improvement in the detail department). Sour grapes, anyone?...a question from a Canadian observer.

bye-bye-JimPress

April 6, 2008 11:24 PM

Jim Press has lost his cool, credibility, and even his halo if he ever had one. Projection: Jim Press will be "re-assigned" or transferred or left the company for another business venture. Nardelli is an axe man--he's not know as Mr NiceGuy. This means one thing: Press gets the axe, soon. Bye Bye Jim Press.

jerry mahon

May 1, 2008 12:47 PM

someone or some new auto company should pursue only the developement of a viable all-electric automobile.at least with a 150 mile range and easy quick charge.NO US AUTOMAKER OR ANY OIL COMPANY WANTS THIS TECHNOLOGY TO SUCCED.THEY WILL LIE OR DELAY ANY SUCH REALITY OF SUCH AN AUTO.THEY SHUT DDOWN ALL RESEARCH IN THE 1990'S.

Charlene Blake

May 24, 2008 2:34 PM

Maybe Jim Press's conscience got the better of him at the time he left Toyota. After all, for many years while Mr. Press was still at Toyota, TMC told Toyota owners that they were to blame for the accumulation of thick engine oil sludge in their low-mileage Toyota vehicles. The owners were accused (and still are) of being neglectful in maintenance, and the company assumed no blame for the problem.

It is truly amazing how much Toyota continues to do to its loyal customers. Brake failures, door lock problems (Sienna's sliding doors cannot be opened by occupants!), emissions control component failures, excessive oil consumption, SLUDGE...and more!

While Jim Press was at Toyota, customers were left holding the sludge bag. Implementing the "Customer Support Program for Engine Oil Gelation" didn't result in relief for owners as loopholes allowed dealerships to deny coverage behind the scenes.

What has been done to Toyota owners is NOT fair! How do you suppose Chysler owners will feel with this legacy of Mr. Press's work? Maybe just burying all that baggage will be enough?

Lying apparently isn't something foreign to some CEO's at Toyota. No, the buying public has been deceived for far too long. Perhaps the Chrysler owners will wise up and ask some tough questions of Mr. Press.

Chrysler, too, has a history of blaming the owners for inherent vehicle problems. Remember the Chrysler ABS brake fiasco? Mr. Press may well feel right at home. After all, class action lawsuits are common to both automakers.

Toyota and Chrysler are keeping our dependence on foreign oil at an all time high. Disappearing oil and engine oil sludge continues in both Toyota and Chrysler vehicles.

Let's see what Mr. Press plans to do about it at Chrysler now. There has been no resolution at Toyota to date.

Phyllis

December 4, 2008 9:49 AM

Why are you still putting out machines that are antiquated. We did subsidize Buggy whips. Autos should not be combustion engines at this late date but if they are, they should be getting 70 to 90 miles to the gallon. Instead we are buying heated seats and GPS systems and all the bells and whistles. This industry should go down just like the horse and buggy did. There are better things.

DClearman

December 11, 2008 12:34 PM

There are currently systems being installed on automobiles by small companies in San Antonio and Corpus Christi Texas as well as others across the Country that utilize hydrogen cells that at least double gas mileage. The leap from small after market to original equipment manufacturers cannot be that large. Why do not the GM, Chrysler, Ford get very busy utilizing that available technololgy? They could zoom past the foreign companies in sales as well as go a long way to help the U.S. become energy indepentant.

Robin P

May 15, 2009 2:42 PM

Jim Press is a notorious liar. This is the same guy who last week bragged about having the Government as a partner in his company, saying that they have nothing to worry about now. He should be worried about taxpayers wondering what his stupid #ss is doing with all their money. His latest creation is the list of Chrysler Dealers he is running out of Business. To be on the list you have to: 1. Not owe Chrysler any money. 2. Not be beholden to the Chrysler Brass. 3. It also seems that if you've never kissed Chrysler #ss your automatic for the list. I am amazed that the same people who killed the company are picking the dealers they don't want anymore. I was hoping the Bankruptcy Judge would put an end to their idiocy. Even Edmunds says closing dealers doesn't save Chrysler any money. It just grants more monopolistic terms to the dealers that "play ball". If I sound pissed, its because I'm an employee of a company on the list. By the way we are the 76th largest CJ dealer in the country as of yesterday.

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