0:05

A

0:07

note to listeners, this episode contains

0:09

descriptions of violence. Please

0:11

take care while listening.

0:15

September nineteen ninety six,

0:18

Toyota City Japan. Toyota's

0:21

sixty three year old president, Hirosh Ocuda

0:24

looks up from his desk. The company's

0:27

research chief has just entered his office.

0:29

Miss Dawada, thank

0:31

you for coming. Please. sit.

0:35

Okada lets Akihirowada sit,

0:37

and then he promptly drops

0:39

the bomb. I've decided

0:42

that the Prius will launch in December nineteen

0:44

ninety Karen. Wat a staring

0:47

at Okuda's long face The

0:49

engineers creating the Prius think current

0:51

deadline of late nineteen ninety eight is

0:53

already too aggressive. Now

0:55

Okudu wants to launch the world's first

0:57

mass produced hybrid a whole

1:00

year earlier. It's done.

1:02

Wars gently pushes back. Nineteen

1:05

ninety seven may be too soon. The

1:07

team's struggling with the batteries. They're only getting

1:09

half the power they should. And

1:11

even when that's fixed, they have

1:13

to shrink the batteries to fit in a compact

1:15

car. Okudas

1:16

unmoved. The Kyoto

1:19

protocol to reduce global carbon emissions

1:21

will be adopted in December nineteen ninety

1:23

Karen. For maximum impact, we

1:25

must launch the Prius before the protocols

1:28

adopted. Suarez

1:30

says nothing.

1:31

He knows Okudas

1:33

a man in a hurry. For

1:35

years, Okudas dreamed about taking

1:37

charge, ending Toyota's cautious

1:40

culture and making it the

1:42

world's number one automaker. But

1:44

he was born with the wrong surname.

1:48

Twice, he got passed over for the

1:50

top job to clear the way for members of

1:52

the Toyota family. The

1:54

family owns just two percent of Toyota's

1:56

stock but exerts control

1:58

through a mix of tradition

1:59

and nepotism.

2:02

Okada resigned himself to never

2:04

being the boss.

2:06

But then, fate intervene. In

2:08

nineteen ninety five, Toyota

2:10

president Toyota had

2:13

a stroke. and with no other

2:15

Toyota ready to step up,

2:17

Okada finally got his chance

2:20

Lowe in life. Ocada

2:23

knows he's too old to take Toyota

2:25

to the top himself. So

2:27

he wants to do all he can

2:29

as fast as he can. to

2:31

transform the business. And

2:33

the Prius is critical to

2:35

his master plan. He

2:37

believes the car can Toyota

2:39

as an industry leader and

2:41

enliven its dull image.

2:44

It's

2:44

also a chance to out innovate

2:47

Honda. Toyota might be

2:49

twice as big, but Honda keeps

2:51

landing blows. In

2:53

Japan, Honda draws young

2:55

drivers and makes Toyota look

2:57

old and stodgy. In America,

3:00

the Accord remains ahead of Toyota's

3:02

Camry and Lexus trails

3:04

Acura. And in the compact SUV

3:07

category, the Honda CRV

3:10

now outsells the Toyota RAV

3:12

four that it mimics.

3:14

All of this infuriates Toyota.

3:17

If

3:17

Toyota can't beat Honda, how

3:20

can it possibly defeat General Motors?

3:24

Okada looks at Wars. and

3:26

breaks the silence. I know

3:28

this new deadline will be hard on the team, but

3:31

all of Toyota is behind them now.

3:33

Their budget is unlimited. Whatever

3:35

they need is theirs. In

3:38

Marshall ninety seven, Okuda

3:40

announces the Prius will

3:42

launch in Japan that year.

3:45

The announcement shocks the Prius

3:47

team who only learn about their new

3:49

deadline in the next day's newspapers

3:52

It also stuns the auto industry.

3:55

Fearful of falling behind, Honda

3:58

fast tracks the development of its

3:59

own hybrid.

4:01

There's no turning back now for

4:03

Toyota and Okudas gambling

4:06

big. The Prius's

4:08

batteries are far from ready

4:11

and Honda now closing in.

4:14

If Toyota can't find a fix soon,

4:16

the Prius might break down

4:18

before it even reaches the showrooms. but

4:22

Okoda's push for automotive glory

4:25

will also set Toyota on

4:27

a path that

4:28

will end in tragedy.

4:35

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DBS

5:57

From wondering, I'm David Brown, and this

5:59

is Business Wars

6:17

On

6:25

the last episode, Honda opened

6:27

the first Japanese car plant in

6:29

America. Toyota turbocharged

6:31

a former GM plant in

6:33

Fremont, California. and

6:35

the two Japanese rivals entered the

6:37

luxury car market. Now,

6:41

out to shut Honda aside

6:43

and become the world's biggest

6:46

automaker. This

6:48

is episode four, a

6:51

fight for the future.

7:01

SUMMER, nineteen ninety seven. Susoto,

7:04

Japan, fifty miles west of

7:06

Yokohama. Inside

7:08

Toyota's technical center, technicians

7:11

wearing cover alts appear under the hood of

7:13

a prototype Prius. The

7:15

Prius is weeks away from entering production,

7:17

but its batteries are still

7:19

causing headaches. Yesterday,

7:22

they overheated on a test drive

7:24

leaving a team member stranded in the

7:26

mountains. But before the

7:28

technicians can adjust the cooling system,

7:31

there's an interruption.

7:35

The technicians look up in almost

7:37

gas standing next

7:39

to their boss. is Toyota

7:41

president, Hiroshi Okuda.

7:44

Okuda stalks over to the Prius.

7:47

So this is the car I've staked

7:49

Toyota's reputation on. Okta

7:52

calls to the team boss. Mister

7:54

Lewy, I'd like to take the Prius

7:57

for a drive. One of the

7:59

technicians whispers

7:59

to mister Fuji. You

8:01

must put him off. We can't let him drive

8:03

it in this condition. Mister

8:06

maintains his smile. What

8:08

choice is there? How can I tell him no?

8:11

Mister Fuji hands over the keys.

8:14

Okta opens the driver's door and

8:17

pauses. Mister

8:18

Fuji, join me for the ride.

8:20

That way

8:20

you can answer any questions I have.

8:24

Moments later, Okuda drives

8:27

away with mister Fujie in the passenger's

8:29

seat, looking worried. The

8:32

technicians wait for the rescue

8:34

call, but it

8:35

never comes. Instead,

8:38

the Prius returns unscaled.

8:42

Okuda exits the

8:44

car grinning from ear to

8:46

ear. Very impressive.

8:48

You

8:49

know, one day everyone will drive

8:51

cars just like this. Soon

8:54

after, the team tames

8:56

the batteries And in December nineteen

8:58

ninety seven, the world's

9:00

first mass produced hybrid goes

9:02

on sale in Japan. The

9:05

Prius cost Toyota around

9:07

one billion dollars to develop,

9:09

and it's a game changer. it

9:12

combines the practicality of a gasoline

9:14

engine with an electric motor

9:16

that worked together to get double

9:18

the fuel economy and half

9:20

the emissions of a regular car.

9:22

And unlike all electric

9:24

vehicles, it doesn't need to be

9:26

plugged in because the energy generated

9:28

by braking charges the batteries.

9:31

But it costs eighteen

9:33

thousand dollars, several

9:35

thousand more than the larger Toyota

9:37

Corolla, And even with

9:39

that high price tag,

9:41

Toyota actually loses

9:43

money on every prerequisite sells.

9:46

Not that Toyota It's

9:49

doing this for the bragging rights.

9:52

Toyota is now the leader in

9:54

green car tech and it's signal

9:56

to the rest of the auto industry that

9:58

it's no longer playing it

10:00

safe. And Okuda's

10:02

new aggressive Toyota is

10:05

just warming up. The

10:07

company's racing to open factories all

10:09

over the world. Its ultimate

10:12

goal to out the

10:14

world's biggest automaker, General

10:17

Motors. Toyota's

10:19

traditional approach of every new

10:21

car model having a unique design and

10:23

set of custom made parts

10:25

is

10:25

also history. Instead,

10:27

Toyota now creates

10:29

platforms where the same structure

10:31

and components are used to create a

10:33

whole new range of different cars.

10:36

This approach massively reduces

10:39

costs and slashes the

10:41

time needed to develop a new car

10:43

from years to

10:44

months. In

10:45

January nineteen ninety nine,

10:48

Toyota uses its new platform

10:50

approach to wage war on Honda

10:52

in Japan by launching a new

10:54

subcompact called the Toyota

10:56

Vitz. It's

10:58

roaming cheap, looks cute

11:00

and sells fast. Then

11:04

within eight months, Toyota

11:06

releases two more models built on the

11:08

Vitz platform. Together,

11:10

Toyota's three new subcompacts drain

11:13

sales from Honda's three door

11:15

hatchback the Lowe. And

11:17

it lifts Toyota's share of the Japanese

11:19

market above forty

11:21

percent. But in

11:23

America, Honda about to

11:25

strike back and

11:26

it's put a target on

11:28

the Prius.

11:37

It's January nineteen ninety nine.

11:39

And at the Detroit Auto Show, Honda's

11:41

news conference is underway. As

11:44

music plays, a two door coupe

11:46

emerges through a cloud of dry ice.

11:48

It's the color of Mountain Dew

11:50

and called the d v.

11:53

and it's Honda's answer to the Prius.

11:55

As the stage rotates,

11:58

Honda Executive Vice President Tom

12:00

Elliott introduces the

12:02

new vehicle to the journalists in the

12:04

audience. No other vehicle

12:06

can match the VV's combination of

12:08

high mileage low emissions,

12:10

and good performance. It's

12:12

a shot at the Prius.

12:14

Honda's hybrid squeezes twenty five

12:16

more miles out of every gallon of

12:18

gas. It also produces a third less

12:20

carbon dioxide than the Prius.

12:22

Our technology uses an electric

12:24

motor to provide extra power to

12:27

the gas engine to maximize

12:29

fuel economy. A journalist

12:31

raises a hand. It sounds

12:34

like the electric motorist assist the

12:36

engine. Does that mean there's no all

12:38

electric drive mode? Yes.

12:40

Our goal was to deliver the most

12:42

fuel efficient vehicle possible. We've

12:44

now done that without the need for an

12:46

all electric and it'll go

12:48

on sale in Japan and America this

12:51

year. Honda just thrown

12:53

down the gauntlet. Toyota's

12:55

still dithering about whether to bring

12:57

the Prius to the US so

13:00

Honda sees the chance to get

13:02

ahead and become the first

13:04

carmaker to launch a hybrid outside

13:07

Japan.

13:08

In November nineteen ninety

13:10

nine, the V V goes on sale. But

13:12

by then, it's no longer called the V

13:15

V. is now known as

13:17

the Insight. Price

13:19

to just under nineteen thousand dollars,

13:21

it's about two grand more than a

13:23

Honda Civic. And like

13:25

the Prius, Honda's taking a

13:27

hit on every sail in

13:29

the hope of becoming the front runner in

13:31

cleaner car technology.

13:33

But Honda lacks Toyota's

13:35

deep pockets. So

13:37

to limit the losses, Honda

13:39

caps production to a few thousand a

13:41

year and spends little on ads.

13:44

Demand, quickly outstrips supply.

13:48

And that, gives Toyota an

13:50

opening. In July

13:52

two thousand, the Prius reaches the

13:55

US and immediately pulls ahead of

13:57

the inside. Toyota

13:58

spent the year before

13:59

the launch building a list of nearly forty

14:02

thousand potential buyers, but

14:04

with only one thousand Prius

14:06

is being made each month. It's

14:08

an instant sellout. Soon,

14:11

there's a year long waiting list for

14:13

a Prius. Even so,

14:15

the Prius remains a niche

14:17

vehicle. Toyota

14:19

hopes to sell twelve thousand a year in

14:21

America, but Americans

14:23

buy more than three times that mini

14:25

Toyota Camrys every

14:27

month. The

14:29

question now how can

14:32

Toyota catapult its hybrid

14:34

into the mainstream?

14:40

December

14:40

two thousand, San Francisco.

14:43

In a small meeting room, Toyota

14:45

chief engineer, Satoshi Ogiso,

14:48

fires

14:48

another question at the Prius owners

14:50

who gathered for his focus group.

14:52

How does the Prius feel to

14:55

drive? Do you enjoy driving it?

14:57

He wants the next generation of Prius

14:59

to deliver for American drivers.

15:01

So he's flown in from Japan

15:03

to find out what Americans

15:05

want. One of the

15:07

Prius owners replies to Ogisso's

15:09

question. Honestly, the

15:11

ride's not great. It's Honda

15:15

I

15:15

second that. I mean, I

15:18

love my Prius. No question.

15:20

But yeah,

15:20

it lurches rather than glides.

15:23

Ogeso

15:23

nods.

15:25

Okay? Would this stop you from buying

15:27

another Prius? The woman

15:29

looks shocked.

15:30

Oh, no. I mean, it's

15:33

like the interior space. Right?

15:35

Sure. It'd be nice if the Prius had

15:36

more, but I bought a Prius to

15:39

stop being part of the problem. The

15:41

problem? Of global

15:43

warming. I know

15:44

the Prius won't solve everything. but

15:46

it's better than doing nothing.

15:48

Ogeso sees everyone else

15:51

nodding along. Okay.

15:52

Would anyone trade in

15:54

their Prius for a gasoline car that had

15:56

more space in a better ride?

15:59

no way

15:59

Everyone

16:02

shakes their head. Ogesoz

16:05

surprised to him and his

16:07

Japanese colleagues. America

16:09

comes across like a country that couldn't care

16:11

less if the world burns. he

16:13

never imagined Americans would settle for

16:15

jerky drives and limited space

16:17

to help the planet. And

16:19

that makes him wonder how popular

16:22

the Prius might become

16:24

if people who wanna go

16:26

green didn't have to give up the comforts

16:28

they expect from small cars.

16:30

So On

16:32

returning to Toyota City, Ogiso

16:35

decides to make the second generation

16:37

Prius bigger, prettier,

16:40

better equipped and more

16:42

fuel efficient. But

16:44

while Toyota plots to take the

16:47

Prius mainstream, Honda's

16:49

hatching a different plan. Instead

16:51

of

16:51

trying to get America to embrace the

16:53

insight, it's going

16:54

to put its hybrid technology into a

16:56

car that mainstream America already

16:59

loves.

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19:13

It's spring two

19:15

thousand two, and Honda's

19:18

latest salvo in the hybrid wars is

19:20

entering showrooms across

19:22

America. and it looks

19:24

real familiar. After watching

19:26

the Prius outsell the insight three

19:28

to one, Honda's switching

19:31

tactics, It's giving up on getting people

19:33

to buy an unfamiliar eco

19:35

car. Instead, it's putting

19:37

its hybrid tech into one of its

19:39

most popular vehicles. the Civic.

19:42

And to explain the new Civic

19:44

Hybrid, Honda runs ads

19:46

showing a student in a school science

19:48

contest explaining the

19:50

tech. It's a

19:53

Civic. Not just any

19:55

Civic, a gasoline electric

19:57

hybrid Civic.

19:57

Where does the cord go? You

19:59

never

19:59

have to plug it in. How did

20:02

you get this into the gym?

20:04

The gasoline electric Civic hybrid

20:07

from Honda. did your parents help you

20:08

with this?

20:10

But Honda's

20:11

new Greener's Civic

20:13

cost three thousand six hundred dollars more

20:16

than a regular Lowe, so there's

20:18

no stampede to the showrooms.

20:21

But as the months pass, Civic

20:24

hybrid sales Creeper. By

20:27

spring two thousand three, Honda's

20:29

cutting into Toyota's lead in

20:31

the hybrid race. But then,

20:34

just as Honda's closing

20:36

in, the second generation Prius

20:39

lands. It's bigger, more

20:41

powerful, and even less gas

20:43

hungry than the original. And this

20:45

time, Toyota's got

20:47

the perfect sales pitch Instead

20:49

of talking tech like

20:52

Honda, Toyota is selling the

20:54

Prius as a mobile fashion

20:56

statement A way to let everyone know you've joined

20:58

the war against climate change,

21:00

and Hollywood joins

21:03

the cause.

21:05

March twenty

21:09

third two thousand three, Hollywood.

21:11

Outside the Kodak Theater,

21:14

photographers are crowded around the red

21:16

carpet. It's Oscar Knight, and

21:18

the big screen's biggest stars are

21:20

arriving for the movie industry's annual

21:22

celebration. most in shiny

21:24

black stretch limos. The paparazzi

21:27

ready their cameras for the next

21:29

arrival, but they're suddenly confused

21:32

when a Prius pulls up.

21:34

Roxy ready their cameras for the next

21:37

arrival. But they're suddenly confused

21:39

when a Prius pulls up. The

21:42

photographers lower their cameras.

21:44

What kind of a lister shows up at the

21:46

Academy Awards in a Toyota.

21:49

But then, Harrison Ford and Calista

21:52

Lockhart get out of the Prius. Indiana

21:55

Jones and Ali McBeale.

21:58

and that's a money shot if there ever was

21:59

one. And it totally

22:02

steals the show. The

22:04

paparazzo see jostle for position snapping

22:06

photos and shouting for attention. And

22:08

as the smiling stars are bathed in

22:10

the light of camera flashes,

22:13

the Toyota hybrid they came in on,

22:16

photobombs every shot. Soon,

22:19

Hollywood stars are falling all over

22:21

themselves to be photographed, get

22:23

into or out of Aphria, and car

22:25

buyers follow their

22:28

lead. In two thousand

22:29

three, Toyota sells twenty

22:32

five thousand Priuses in America.

22:34

In two thousand

22:34

five, it sells more than one

22:37

hundred thousand. Honda

22:39

is left Honda. with annual sales

22:42

of just twenty five thousand

22:44

Civic hybrids. The

22:46

Prius is no longer just

22:48

a car. It's a

22:50

cultural icon, the yen to the

22:52

gas chugging humber's yang. The

22:54

Prius is so pervasive that

22:56

it even gets a cameo on the cartoon

22:58

show south park as the Toyota

23:01

Pious. You know, the emissions

23:03

from a vehicle like yours causes

23:05

irreparable damage to the ozone.

23:06

I do

23:08

of the hybrid, it's much better

23:10

for the environment. Thanks.

23:14

Jack, when we go home, all you ever do since

23:16

you got cars drive around and show it off.

23:18

By

23:19

two thousand

23:20

six, Toyota's sold one

23:23

point five million hybrids,

23:25

six times as many as Honda.

23:27

Unable to keep up in

23:29

the hybrid battle Honda discontinues

23:32

the insight and the accord hybrid.

23:35

Instead, it looks further

23:37

into the fuel future. And

23:39

what it sees is hydrogen.

23:42

In two thousand eight,

23:44

it launches the FCX Clarity,

23:47

its first hydrogen powered

23:50

car. but with hydrogen fueling stations

23:52

rare. It doesn't go very

23:54

far. But Honda bets that

23:56

by starting now, it'll be

23:58

ahead of the pack hydrogen finally becomes

24:01

the fuel of the future. But

24:04

while Honda waits for the future

24:06

to arrive, Toyota is

24:08

racking up sales. Okada

24:10

moved from being Toyota's president to

24:12

its chairman in nineteen ninety nine

24:15

but his successors continued his

24:18

all out push to conquer the auto

24:20

industry. Now Toyota

24:23

opening factories at blistering speed.

24:26

Every year, the company adds enough

24:28

capacity to build another half million

24:30

cars. That's like adding the entire

24:33

manufacturing capacity of Subaru

24:35

year after year. And

24:38

Toyota's relentless cost cutting drive

24:40

is uncovering additional savings

24:42

worth around two billion dollars

24:45

every year. Toyota's

24:47

Lexus has overtaken Honda's Accurate

24:49

to become America's leading

24:51

luxury car brand. The Toyota

24:53

Camry is now America's best

24:56

selling car. And as Toyota

24:59

rises, General Motors bleeds

25:02

out. In two thousand seven, Okuda's

25:04

dream to route every other automaker

25:07

comes

25:07

true. Toyota

25:09

blasts past General

25:11

Motors to become the world's number

25:13

one carmaker. It is

25:15

a moment of true glory

25:18

for Toyota. But underneath

25:19

the sheen of success, there's

25:23

corrosion.

25:27

Hey.

25:27

Just got out of the meeting with the feds

25:29

and it's good news. They agreed we

25:31

only have to recall formats from o seven

25:33

and o eight Camrys and Lexus ES

25:36

three fifties. That's it. Yeah.

25:38

I talked about recalling the throttle pedal

25:40

assembly, but we pushed to keep

25:42

the focus on the formats being

25:44

a problem. Oh, nice. That'll be a

25:46

big saving. For

25:48

sure. I'll get the recall paperwork to

25:50

you in the next few hours.

25:55

In

25:55

September two thousand seven, Toyota

25:57

recalls fifty five thousand

25:59

all weather floor mats after reaching

26:01

an agreement with Nitsa, the

26:04

US vehicle safety agency.

26:06

The recall followed a fatal crash

26:08

involving a two thousand seven Camry.

26:11

The crash was suspected to have

26:13

happened after the unsecured mat

26:15

slipped forward and trapped the throttle

26:17

pedal that the car

26:19

kept accelerating. but few people noticed

26:21

the recall, and Toyota

26:23

sales continue to boom. And

26:25

with Toyota cleaning up,

26:28

Honda's looking to its rival

26:30

for inspiration.

26:32

Soichiiro Honda

26:34

founded Honda Motor as a place

26:36

where engineers would call the shots. But

26:39

Honda shareholders have watched

26:41

Toyota hyper speed growth within

26:43

the. In just

26:45

seven years, Toyota sales

26:47

have grown eighty percent.

26:49

Honda stockholders now want

26:52

similar returns and they're

26:54

pushing the company to be more Marshall Toyota.

26:56

So now Honda's reigning

26:58

in its free wheeling engineering

27:01

culture. Honda's

27:03

executives are pushing to prioritize

27:06

savings over innovation, opening

27:08

more factories to increase capacity.

27:10

and eliminating funding for experimental

27:12

research projects. But Toyota

27:14

isn't just saving money in its

27:17

back advisories. It's also saving

27:19

with some help from its lobbyists

27:21

on Capitol Hill.

27:26

July two

27:31

thousand nine at an orientation meeting of

27:33

top executives in Toyota's offices

27:35

in Washington DC.

27:36

We also wanna share with you some of the

27:38

good news we've had here in DC. What with you

27:41

having been out of Toyota for the past two

27:43

years and being new to the US

27:45

operation? Uh-huh. Now

27:47

as the slide shows narrowing the

27:49

scope of recalls was a win for

27:52

us. Narrowing? For

27:53

instance, we got Nitsa. That's the

27:56

federal vehicle SAFETY AGENCY. WE GOT

27:58

HIM TO KEEP A two thousand and seven

27:59

RECALL TO ALL WEATHER FLORMATS.

28:02

NOW IF THE AGENCY H FORCES

28:04

US TO RECALL a throttle pedal assembly as

28:07

well. That would have cost us a hundred

28:09

million dollars or more. And, you

28:11

know, we've

28:11

had even bigger wins too.

28:14

The

28:16

low key two thousand seven recall

28:19

of floor mats came after

28:21

numerous claims of Toyota

28:23

vehicles suddenly accelerating out of

28:25

control. But even after the

28:27

recall,

28:27

complaints about unintended acceleration

28:31

in Toyota's keep coming. Toyota's

28:33

growth

28:33

might be accelerating ever

28:35

faster, but cracks are

28:37

appearing in its once sterling

28:39

reputation for safety and reliability. Surveys

28:42

by

28:42

consumer reports magazine note that

28:45

its subscribers think Toyota

28:47

Wars, as good as they used to

28:49

be. An auto insurer State Farm

28:51

is noticing more and more

28:54

accidents involving Toyota. but

28:56

none of this attracts much attention

29:00

until

29:04

August twenty

29:04

sixth two thousand nine, San

29:06

Diego, California.

29:10

Alexa's

29:10

ES3 fifty shoots down the

29:12

freeway, at more than a

29:14

hundred miles an hour, switching lanes and cutting up the

29:16

rush hour traffic. There's no

29:19

maniac behind the

29:21

wheel. in the driver's seat is an off

29:23

duty California highway patrol officer,

29:25

Mark Sailor. With him

29:27

in the car are his wife, his

29:30

brother-in-law, and his thirteen year old daughter.

29:32

And right now, he's fighting to

29:34

save them all because

29:36

the accelerator stuck.

29:38

With the

29:40

speedometer rising higher and higher and the

29:42

end of the freeway approaching fast,

29:46

Sailer's brother-in-law makes a desperate call to

29:48

9110911 emergency.

29:50

What are you reporting? Yeah. We're the we're

29:52

the what I'm sorry. Your

29:54

cellphone cutting out. We're

29:56

going north one twenty five -- Mhmm. --

29:58

and our star is

29:59

stuck. I'm sorry? Our star

30:02

is stuck. We're at one twenty

30:04

five or eight. k.

30:06

Northbound one

30:06

twenty five. Where are you passing? We are

30:09

passing up. We'll be passing towards

30:11

We're we're going to a hundred and twenty Mission

30:14

Gorge. we're we're in trouble. We

30:16

can't we just don't brake. Okay.

30:18

Of course. And freeway hot miles.

30:20

Okay. And you don't have the ability to, like,

30:22

turn the vehicle off or anything? pushing

30:24

Karen intersection. We're approaching the intersection. Okay.

30:28

We're approaching the intersection. Hold on.

30:30

Free. Free. Free. Lowe?

30:38

At break

30:40

deck speed, the

30:42

shoots across the busy intersection, smacks

30:45

into another vehicle, careens

30:47

through a fence, and flips over

30:49

the embankment before tumbling into a

30:51

riverbed and catching fire. All

30:53

four of the family die.

30:58

The tragedy makes national headlines

31:00

It also brings attention

31:03

to dozens of other allegations of

31:05

unintended acceleration in

31:07

Toyota's and Lexuses a litany

31:10

of terrifying crashes that

31:12

have left dozens of people

31:14

dead or injured. And

31:16

now that these cases are in the public eye,

31:19

the ugly truth is going

31:21

to come out.

31:26

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dealing. October

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two thousand and nine, two

32:02

months after the fatal crash in San

32:05

Diego. Hey,

32:06

you heard switch to the

32:08

new pedals being canceled. Yeah. I

32:10

got told this morning. It's

32:12

weird. Right? I mean, Europe's already using it

32:14

and the plants are ready to go.

32:16

Mhmm. And

32:19

wasn't it supposed to stop that sticking pedal

32:21

thing? Yep. They tell

32:24

you not put anything in writing too? Yeah.

32:26

I told them that's a breach of procedure

32:28

and asked who ordered this? You

32:30

did. What they say?

32:33

the top. Eat Japan.

32:35

I don't know. They wouldn't

32:37

they wouldn't say, but it

32:40

stinks. Yep. but

32:42

I got a feeling that the less

32:44

we know, the

32:46

better.

32:48

December two thousand nine, Toyota

32:50

City, Japan. In

32:53

Toyota's offices, Nitsa acting

32:56

administrator Ron Medford is meeting

32:58

with Toyota's highest ranking safety

33:00

officials, and he's struggling to keep

33:02

his cool. We're

33:04

talking

33:04

about potentially lethal problems with

33:07

your vehicles. Where's the sense of

33:09

urgency? The Toyota

33:10

officials Lowe startled. They thought

33:12

this was a

33:12

routine visit from the US vehicle

33:15

safety regulator, not a meeting

33:17

that actually matters. Mister

33:19

Medford, we take this very seriously.

33:21

We've recalled nearly four million vehicles so

33:23

that we can replace the floor mats

33:25

in accelerated pedals. you're only replacing

33:27

those pedals because we pushed you into it.

33:30

We acted as soon as our engineers

33:32

assess the problem. Now let me

33:33

be clear. US law

33:36

requires Toyota to notify Nitsa of

33:38

safety issues within five business

33:40

days, and it doesn't feel like that's

33:42

been happening. In the future, we

33:43

expect prompt action when you

33:46

learn about safety problems. We

33:48

understand. We will

33:49

try harder. But

33:52

there's already another

33:54

safety problem, and known

33:57

about it for a year. The

34:00

problem appeared in late two

34:02

thousand eight when Toyota drivers

34:04

in Europe reported unintended acceleration

34:06

after their gas pedal got stuck or released

34:10

slowly. Toyota found this

34:12

sticky pedal issue was because

34:14

of a flaw in the pedals made by a

34:16

US supplier. In

34:18

spring two thousand nine, the

34:20

supplier switched to a new pedal design that

34:22

solved the problem. But while

34:24

Europe got the

34:26

new pedals, Toyota continued with the old ones in

34:28

America and didn't tell Nitsa

34:30

about the problem. Toyota

34:33

planned to quietly add the new pedals to new cars in

34:35

North America from late two thousand nine. But

34:38

then, Toyota's other unintended

34:41

acceleration problem hit

34:44

the So Toyota

34:44

tried to hide

34:45

the sticky pedal problem by

34:48

canceling the introduction of the fix in

34:50

the US and telling its

34:52

employees to put nothing in

34:54

writing about that cancellation.

34:56

But the

34:57

cover up fails.

34:59

they yours In early

35:00

January twenty ten, claims of

35:03

sticky pedal problems in the

35:05

US forced Toyota to fess

35:07

up. The news Spark's

35:10

outrage, not just at the

35:12

failure to disclose the problem,

35:14

but at how Toyota fixed the issue

35:16

in Europe, while leaving

35:18

it unaddressed in North

35:20

America. Nitsa orders Toyota

35:22

to issue yet another recall and

35:24

tells it to stop selling eight models until the

35:27

fix is implemented, and a

35:30

criminal investigation

35:32

is launched. Toyota

35:34

sales crash. The company

35:36

that rose to the top on the back

35:38

of its reputation for safety

35:42

and reliability now has a reputation that's

35:44

been shattered.

35:50

February twenty fourth twenty

35:53

ten, Washington DC.

35:56

Toyota president, Akyo Toyoda, enters

35:59

the committee room and heads towards the witness

36:02

table. Ahead, he sees

36:04

the panel of congressmen and women who

36:06

are waiting to lay into him before

36:09

the cameras. It's barely a year since

36:11

the fifty three year old grandson of

36:13

Toyota founder, Keetchiro Toyota took

36:16

the helm of the world's

36:18

largest carmaker. He's the first

36:20

Toyota to run the business since

36:22

nineteen ninety five, and he's

36:24

inherited a

36:26

firestorm. Toyota's reputation hangs by a

36:28

thread. What he says

36:30

today could decide Toyota's

36:34

future. The

36:36

committee comes to order. Toyota takes

36:38

a deep breath, repositions

36:41

his thin rimmed glasses,

36:44

and delivers his opening statement.

36:46

Toyota has, for

36:47

the past few years, been

36:50

expanding its

36:52

business rapidly,

36:53

Quite frankly, I fear the

36:55

pace at which we

36:57

have grown may have

36:59

been too quick. we

37:01

pursued, growth over

37:03

the speed, at which we

37:05

are able to deliver our people

37:07

and our organization I

37:10

regret that this

37:12

has resulted in the safety

37:14

issue described in the

37:17

recalls we faced today. And I

37:19

am deeply sorry for

37:22

any accident that Toyota

37:24

drivers

37:24

have experienced. It's

37:26

a jaw

37:27

dropping moment. Toyota's laying

37:30

the blame on his company's ferocious

37:33

pursuit of growth Toyota

37:36

expanded so quickly that its

37:38

systems couldn't keep up, and

37:40

it cut costs so much that

37:43

the pressure began to overwhelm the pursuit of

37:46

quality. Toyota went all out to

37:48

become number

37:50

one. and some people may have paid for that with

37:53

their lives. Toyota promises

37:55

that from now on, Toyota

37:58

will once more put safety and quality before

38:02

growth. He also pledges a major

38:04

overhaul of the company's safety and

38:06

recall systems. After

38:08

the hearings,

38:09

Toyota will admit to

38:11

misleading consumers by concealing

38:14

information and making

38:16

deceptive statements. It

38:18

also

38:18

agrees to pay the justice department a one

38:20

point two billion dollar fine and

38:23

to have an independent monitor fact

38:25

check its safety statements for

38:27

three years.

38:28

Toyota also

38:30

pays more than a billion dollars to

38:32

settle multiple lawsuits from customers

38:35

and victims families, and that's on

38:37

top of the two billion dollars it spent, recalling more than

38:40

eight million

38:42

vehicles worldwide. but

38:45

the

38:45

sales hit is short lived. The promises of

38:47

change and a

38:47

program of discounts and zero

38:50

interest car

38:52

loans Soon lure customers back into the showrooms.

38:54

By twenty twelve, Toyota's

38:58

US sales are

39:01

growing once

39:02

again. But as Toyota

39:05

rebounds, Honda stumbles.

39:08

While rivals move fast to grab US market share on

39:10

the back of Toyota's woes, Honda

39:13

is slow off the mark

39:15

and misses out. By

39:18

then, Honda's attempts to mimic Toyota's growth

39:21

strategy are also backfiring.

39:24

It rushed

39:26

to expand its manufacturing capacity, but then the global

39:28

credit crunch hammered demand

39:30

for new cars. saddled

39:33

with expensive excess capacity.

39:36

Honda ends up shutting facilities.

39:38

Its bet on hydrogen

39:41

cars also disappoints after world governments don't invest in

39:43

the infrastructure needed to make hydrogen a

39:46

viable replacement

39:48

for gasoline. Instead of

39:50

hydrogen, everyone's looking to

39:52

go electric now. But

39:54

that's a problem for Toyota too.

39:57

In wake of Tesla's success, consumers

39:59

and the auto industry now see plug

40:02

in electric vehicles as

40:04

the future. that's put Priya's sales on a downward

40:06

trajectory. Toyota

40:08

may have been the ultimate winner

40:09

of the gasoline age,

40:13

But as electric vehicles take

40:15

over the industry, there's no

40:17

guarantee Toyota will wind up

40:19

in first place. and the

40:21

stakes are rising. Every big automaker is racing

40:23

to stay ahead of Tesla.

40:26

And Toyota

40:28

and Honda are no

40:30

exception. Toyota

40:32

planning to crush the competition under the

40:34

wheels of dozens of new electric models.

40:37

Honda's teaming up with

40:39

GM, Sony and LG, to keep

40:41

up with its

40:44

bigger rival. Unlike when the two companies led the way

40:46

on hybrid technology, this

40:48

time, they're starting from behind.

40:51

Honda, it's Tesla

40:53

and China's BYD that are blazing

40:55

the trail. But Toyota and

40:58

Honda have been late to the

41:00

party before. When they rose

41:02

up from the ashes of a war torn

41:04

Japan, they were decades

41:06

behind. The world underestimated

41:10

them then. And perhaps, it's

41:12

about to do the

41:14

same again.

41:20

Hey, Prime members. You can binge every episode of Business

41:22

Wars, ad free on Amazon

41:24

Music. Download the Amazon

41:27

Music app today. or you can listen ad free with

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41:32

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41:34

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slash survey.

41:38

From wondering, this

41:42

is episode four of Toyota versus

41:44

Honda Honda business

41:46

Wars A quick note

41:48

about recreations you've been hearing. In most

41:50

cases, we can't know exactly what was

41:52

said. Those scenes are but they're

41:54

based on historical research. Now if you'd like to read more

41:56

about the race to build hybrid and electric cars,

41:59

we recommend car wars by John

42:01

Wars for more information

42:04

about story behind the recall, we recommend Reuters twenty ten

42:06

special report titled Inside

42:09

Toyota's Epic Breakdown. I'm your

42:12

host David Brown. Tristan Donovan

42:14

wrote this story. Voice acting by

42:16

Michelle Phillips and Art

42:18

Butler. Karen Lowe is our senior producer

42:20

and editor. edited and produced by Emily Frost. Sound

42:22

designed by Kyle Randall. Our

42:24

producer is Dave Schilling, our

42:26

managing producer Karen Tanya

42:28

Thigden and Matt Gannon.

42:30

Our executive producers are Jenny Producer

42:32

Beckman and Marshall Lewy,

42:34

created by

42:36

Ernon Lopez, for

42:40

wondering.