In Praise of Toyota's Boring Hybrids
All global automakers are making big promises for so-called “game-changing” high-mpg cars, but Toyota apparently doesn’t want to change the game more than it already has. This opens up the company to accusations of dragging its heels on new technologies (especially from high-tech early adopters). But it also could be one of the main reasons that Toyota is standing alone in praising new fuel efficiency standards that could go all the way to 62 MPG for 2017 – 2025 vehicles.
The Alliance of Automobile Manufacturers, which consists of Detroit Three automakers, Volkswagen, and seven other companies (as well as Toyota), continues to bellyache that new fuel-efficient technologies cost too much, don’t provide enough saving for consumers, reduce vehicle choice and compromise safety. But Toyota breaks ranks.
What’s Toyota’s view? “Whatever goal [the Obama administration] establishes, Toyota will be prepared to meet,” said Jim Colon, Toyota vice president. “If it’s 62 miles a gallon, we’ll be able to achieve that.” Speaking last week at the Washington auto show, Colon said the new rules “excite” Toyota, and the company is already going in that direction.
Lithium Litmus Test
Colon’s confidence suggests that Toyota believes that its hybrid technology can be rolled out to millions of cars, and provide a handsome profit. Meanwhile, resistance from the Detroit Three indicates a lack of faith in the ability to dramatically increase fuel efficiency via whiz-bang technology—such as G.M.’s extended-range electric vehicles (as revolutionary as it is)—that might not be profitable for many years.
Toyota has been slow to adopt technology that is less than fully proven. The company has been hesitant to take the leap to electric cars, and is reluctant to make the switch from nickel metal hydride to lithium ion batteries for its hybrids. Yet, the company is testing the waters. It will release a plug-in version of the Toyota Prius, an all-electric RAV4 crossover SUV, and a subcompact EV—all in 2012. These plug-in vehicles will use lithium ion batteries, and in the near future, the company will also very slowly begin deploying lithium batteries in humdrum hybrids sold in Japan.
“When it is necessary for the size of the vehicle to use compact batteries, we will use lithium ion,” a Toyota spokesperson said. But Shinzo Kobuki, senior managing director in charge of Toyota’s battery technology, told Automotive News that Toyota could be using nickel-metal technology for most of its hybrids for as long as another decade. Mercedes, Hyundai, Nissan and Honda all use lithium ion batteries in their conventional hybrids—but these companies sell these hybrids in very low numbers, while Toyota could annually sell 1 million hybrids globally in the next year or two.
Steak or Sizzle
Toyota’s encouragement of high fuel-efficiency standards and its adherence to more proven cost-effective high-mpg strategies point to the same strategy—reducing the price of its hybrids and rolling them out in high volume.
In this way, Toyota hybrids become less “cutting-edge” and more friendly, accessible and affordable. This mainstreaming is already in play in Japan, where Toyota sold more than 315,000 units of the third-generation Prius last year. For that model generation, Toyota cut production costs by 30 percent, and slashed the price of the entry-level version by 12 percent, according to Bloomberg.
In December, Toyota Executive Vice President Atsushi Niimi said the company expects to further cut the cost of the fourth-generation Prius hybrid system by half.
At the same time, it will roll out a dozen or more new hybrids in the U.S. in the next two years—including the wagon-like Prius V, which adds size and versatility to standard Prius, and the subcompact Prius C designed to beat the current 50-mpg Prius on mileage and price. Nothing boring about that.