TOKYO -- Just a year ago, Toyota Motor Corp. executives envisioned building the Toyota Prius hybrid, the No. 10 best-selling car in the United States, in North America as early as 2015.
But don't hold your breath. Changing circumstances have pushed North American production of the Prius further into the future -- even though the nameplate still sells more than 100,000 units a year. Typically, that is enough to justify adding a car to the North American manufacturing mix.
A change of heart in Japan may keep Prius production there longer.
President Akio Toyoda has pledged to preserve Toyota's vehicle output in Japan at a minimum of 3 million units a year. Keeping the high-tech hybrid close to home is a cornerstone of the plan.
At the same time, he has frozen worldwide plant construction with the goal of maxing out Toyota's capacity. Burned by the rampant buildup of overcapacity before the global financial crisis, Toyoda wants to squeeze every drop from existing factories, in part to hold the line on spending.
Next, throw in the yen. It has made a radical reversal from its levels of the past four years, which had slashed profits on exports from Japan. Sure, Toyota still wants to build cars where they are sold to alleviate foreign-exchange risks. But the yen's settling to a more export-conducive level takes the urgency out of offshoring the Japan-made Prius.
In recent weeks, Jim Lentz, CEO of Toyota's North America region, and Bill Fay, Toyota Division general manager, have downplayed the idea of bringing Prius production to North America anytime soon. It's not in the short-term plan, they said, but longer term it makes sense.
But the reality is that Toyota has no room to build the Prius in North America, even if it wanted to move some production there. Toyota once planned to make the Prius at its newest plant in Blue Springs, Miss. But that plant is now filled with Corolla production.
Toyota recently said it would build a dedicated line in Kentucky to produce the (comparatively) low-volume Lexus ES sedan. But it is getting so stingy with outlays that it opted to consign production of an upcoming compact car to Mazda Motor Corp., which will build the car for Toyota at a factory in Mexico it aims to open next year.
The final deal breaker seems to be that local suppliers aren't ready to ship the specialized hybrid's components, especially the expensive batteries. When you are making more than 100,000 hybrids, you don't want to be sending batteries from Japan.
Now, consider the fact that Toyota is migrating to lithium ion batteries -- and the rumors that the next-generation Prius would be getting those advanced battery packs.
Initial demand for that nascent technology probably won't warrant multiple factories worldwide. Indeed, Toyota likes to keep supply of key parts close at hand so it can oversee cost and quality. Sourcing lithium batteries overseas won't be a top priority for a while.
Add those factors together, and the signs point to a new reality. Sales tallies may call for North American production. But a made-in-America Prius is still a work in progress.
