Exclusive: Toyota Explains Its Position on Electric Cars
It appears that every automaker in the world has caught electric car fever, save one: Toyota, the one best known for green cars.
While General Motors and Nissan will both introduce plug-in cars next year, and Ford will follow in 2011, Toyota does not plan to bring an all-electric car to market until 2012. Yesterday, The New York Times declared, “Toyota has fallen behind in the race for the all-electric car.” San Francisco Mayor Gavin Newsom, an electric car advocate, said earlier this year that Prius-style hybrids are “yesterday’s technology.” And Toyota competitors are touting plug-in cars they claim will get the equivalent of 200 or 300 miles to the gallon—putting the Prius’s 50 mpg to shame.
One might expect this criticism to spark Toyota to accelerate its plans for electric cars or a plug-in hybrid. But Toyota’s planners are showing more steely concentration than a Buckingham Palace guard taunted by tourists.
“Our hair is never on fire. We’re not looking around at the latest PR articles, and saying oh my gosh, we have to change our plans because somebody said this or that,” explained Doug Coleman, US-based Prius product manager at Toyota. “We’re pacing ourselves in a way that we think that we can be competitive in a few years time for a market that makes sense for both us and the customer.” Jana Hartline, Toyota’s environmental communication manager, added, “Our outlook has never been to be the first to market. We want to be the best to market.”
While GM, Ford, and Nissan—and newcomers like Tesla, Fisker, and Coda—busily generate buzz for their grid-connected vehicles, Toyota has been nearly silent about electric cars. In an exclusive interview with HybridCars.com, we asked Coleman and Hartline to explain Toyota’s position on plug-in hybrids and electric cars.
Turn Down the Noise
To understand Toyota’s approach to plug-in cars, imagine that Toyota’s product planners are listening to three radio broadcasts at the same time. The first program blasts a frenzied chorus of voices from the automotive press, political circles, electric car and clean energy enthusiast groups, and the blogosphere—clamoring for electric cars NOW. This broadcast is the loudest, but Toyota mutters and hits mute (much like you and I would were we listening to Terry Jacks singing “Seasons in the Sun,” circa 1973).
“It’s very easy to construct a story that says Toyota is falling behind by looking for people who are advocates for a certain technology,” said Coleman. “We’re listening to all perspectives, but we’re making our own judgments based upon our own data and our own forecasts.” Depending on your view, Toyota is either turning a deaf ear to early influencers, or putting the pressure of an unrepresentative group in proper perspective. “In terms of the overall population—300 million people in the US—there’s a very small portion of the population that wants to leapfrog [to electric cars] and says hybrid is yesterday’s technology,” said Coleman.
Cautious About the Technology
The second radio broadcast features voices of the competition, engineers, and battery companies—many of whom are saying the critical battery technology for plug-in hybrids and electric cars is completely ready for prime time. Toyota planners don’t mute this channel, but it’s dropped down to a hush.
“One of the key challenges with electric vehicles is obviously battery cost,” Hartline said. “That is, bringing a vehicle to market that provides the utility that people need, including durability and range, at a price point that will work for the customer.” Automotive News recently reported that costs for the battery and other specialized components for the Chevy Volt plug-in hybrid are running much higher than anticipated—forcing the sticker price from the high $20,000 range to beyond $40,000. General Motors is betting the farm that, at some uncertain point in the future, it will be able to reduce those costs as it ramps up production.
Toyota is not yet ready to make the same bet on plug-ins. “If we had a technology that was ready today—if we had the battery at a performance and quality and durability and price point that we could put into a car and mass manufacture it for some market and both sustain our business and provide value to the customer—we’d do it,” said Coleman. “We’re trying to get to that point in the future.”
Some might argue that Toyota already proved plug-in readiness with the hundreds of RAV4 EVs it produced a decade ago. But the company would argue that Toyota had difficulty selling that vehicle, even in EV-friendly California, and it would be even more challenging to make a vehicle with RAV4’s technical specs a success throughout the country. Popular media coverage at the time talks about how Toyota was caught unawares by demand for the product, and hand-assembled the last demanded Rav4 EVs from spare parts.
All About Customers
The final speaker carries the voice of customers. Toyota cranks this one up to 11. “Too often the conversation gets caught up in what’s the technology trajectory, and people forget to ask ‘what’s the human trajectory?’” said Coleman. “What does the customer really want? How big are the markets for these products? How big are the sub-markets, because you have to start parsing it into—some want midsize vehicles, some want minivans, etc.—and even tastes and preferences and style.” Toyota says it doesn’t subscribe to a one-size-fits-all philosophy when it comes to electric cars. “It’s not one plug-in, the first to market, that’s going to satisfy 100 percent of the plug-in market demand,” Coleman said.
Hartline emphasized the importance of Toyota’s demonstration project that will place 500 plug-in Priuses in fleets globally later this year. About 150 of those vehicles will be evaluated in the United States. “We really want to understand what people expect from charging. Are they going to be charging three or four times during the day, or are they only going to charge at night? How are they going to be using that vehicle? How are they going to be maximizing, or maybe not maximizing, those electric miles on the plug-in?” she pondered. “That’s going to help us define who the proper customer is for that vehicle. Because honestly, it might not be the right car for every person.”
As the brand manager for Prius, Coleman also has spent a lot of time talking to Prius owners, because he believes the same demographic will be the first to buy a plug-in car. “They’re not crazy with money. Even the people who are most passionate look for value. Or at least want to be able to see where they can get all their needs met,” he said. “It’s not just the pure technology.” Coleman said he would be “shocked” if Prius owners all jumped at plug-in hybrids. Some are going to love plugging in and others will never ever want to plug in.
For Toyota and all the car companies considering electric cars, it comes down to a judgment call on a few key questions: Is the technology ready for mass production? What’s the potential size of the market? Can plug-in cars meet customer expectations?
As the clear leader in the hybrid space—and with a ton of profit still to be made from current generation gas-electric technology—it will be tough for Toyota to answer those questions without some bias.
Coleman believes one of two things is going on. “Either competitors’ technology is significantly better and more proven to those companies. And they’re able to launch [plug-in cars] earlier than us. Or the technologies are roughly comparable, and those companies are willing to take greater risks with potential quality issues.”
He’s not sure which one is correct. “They may be ahead of us. But we’re progressing at a rate with as much urgency as we can without compromising quality.”