It seems that Toyota is still trying to figure out its next generation plug-in hybrid strategy. I guess my 2nd generation Prius will retain its value over the next 2-3 years...
[source:
Wall Street Journal]
Toyota U.S. Hybrid Delay
Could Help Rivals Close Gap
Lithium-Ion Worries Will Scale Back Plans For Slew of New Models
By NORIHIKO SHIROUZU August 9, 2007
Toyota Motor Corp., which exploited the green image of its gasoline-electric Toyota Prius to propel a U.S. sales surge, has decided to delay by as long as two years the launches of new high-mileage hybrids using lithium-ion battery technology. The slowdown could offer General Motors Corp. and other rivals a chance to close the gap in the race to define future clean-vehicle technology.
Until recently, Toyota was preparing to unleash an aggressive hybrid-product blitz, rolling out a dozen new and redesigned hybrids using new lithium-ion battery technology in the U.S. between 2008 and 2010. Its current hybrids use nickel-metal-hydride batteries. But problems with the lithium-ion technology have forced Toyota to back away from that timetable, people familiar with the company's strategy say.
That marketing push -- critical to Toyota's goal of selling 600,000 hybrids a year in the U.S. by early next decade -- is now on hold, according to Toyota executives knowledgeable about the company's hybrid-product plans for the U.S. market.
Moreover, Toyota postponed plans for hybrid versions of its big and fuel-thirsty Tundra pickup and Sequoia sport-utility vehicle, though the executives added there is a chance Toyota would revive big-truck hybrids and come out with them by 2013 or 2014. GM and Chrysler LLC plan to launch hybrid large SUVs next year, using a system developed jointly by GM, DaimlerChrysler AG and BMW AG.
Toyota hit the brakes on the newer-technology hybrids because of problems with the safety of lithium-ion-battery technology, which the auto maker was counting on to make hybrids even more fuel-efficient and affordable. Because they pack more electricity in the same space and weight, those batteries are expected to allow auto makers to halve the size of the current hybrid-propulsion system using nickel-metal-hydride batteries. That would also make the hybrids substantially cheaper and capable of achieving about 25 to 30 kilometers a liter in normal operation.
Toyota had bet on batteries based on lithium-cobalt-oxide technology. But such batteries have shown a tendency to overheat, catch fire or explode in some cases. Similar concerns have bedeviled laptop-computer makers using lithium-ion batteries made by Japan's Sony Corp.
The batteries Toyota is trying to develop use particles of lithium cobalt oxide. The technology risks a phenomenon called "thermal runaway," when it suffers an electrical short in the system, which could be caused by physical damage to the system in an accident. Experts say lithium-ion batteries in general tend to perform poorly in extreme low or high temperatures.
![[Prius sales in the US]](http://online.wsj.com/public/resources/images/AI-AK414_TOYOTA_20070808153313.gif)
Tomomi Imai, a Toyota spokesman in Tokyo, declined to comment. But, according to Toyota executives, Sony's experience with lithium-ion batteries for laptops sounded an alarm because the chemistry of the Sony batteries was similar to batteries Toyota was trying to use for future hybrids.
Toyota had planned to use lithium-ion batteries starting with the next-generation Prius, originally scheduled for launch in late 2008. But because of safety concerns, Toyota has decided not to use those batteries in the new Prius, say Toyota executives familiar with the company's plans. The company will use instead the conventional nickel-metal-hydride batteries it has been using in the Prius since its launch in the mid-1990s. The next-generation Prius, using conventional batteries, is now expected to launch in early 2009, a delay of about six months.
The first Toyota hybrid that uses lithium-ion battery technology won't arrive in the U.S. until early 2011 when a derivative of the Prius, a wagon, comes out, company executives say. The Prius wagon had originally been scheduled to hit the market in early 2010, which means it could be delayed by at least a year.
By that time, GM has said it wants to have started production of lithium-ion hybrids. Tony Posawatz, GM's vehicle-line director for the Chevrolet Volt and related hybrid vehicles, said the first of GM's lithium-ion hybrids will be the Saturn VUE Green Line plug-in hybrid, which individuals knowledgeable about GM's product plans say could hit dealer showrooms as early as late 2009. GM also plans to launch by 2010 a plug-in hybrid car called the Volt, based on a design GM unveiled earlier this year at the Detroit Auto Show. GM has selected two supplier groups that are expected to deliver battery packs for testing later this year, Mr. Posawatz said.
Mr. Posawatz, in an interview, expressed confidence that GM's lithium-ion hybrid strategy is on track toward a 2010 launch date, though he said the company isn't ready to commit to that date. Still, GM appears to have a chance to beat Toyota to market with a lithium-ion, extended-range hybrid by more than a year.
Behind GM's confidence in being able to deliver lithium-ion hybrids faster than Toyota is suppliers like A123 Systems, a Watertown, Massachusetts, start-up. A123 has come up with a different kind of lithium-ion battery, based on iron phosphates, that it says is more chemically stable and less likely to overheat and catch on fire. The company is one of a handful of likely candidates to supply lithium-ion batteries to GM. Another possible supplier of such batteries is Compact Power, a unit of South Korean chemical company LG Chem Ltd., which also has come up with batteries with a chemistry that is different from the kind Toyota is pursuing.
"Toyota certainly is a very, very credible and capable company. We view them as just a top-drawer competitor," Mr. Posawatz says. "But we also recognize technology is evolving so fast that the amount of capability any individual company and their partners and supply base can muster is limited."
Lithium-ion hybrids -- including so-called plug-in hybrids that recharge batteries by plugging into the electric grid and that run for 32 to 64 kilometers on electricity alone -- won't likely be high-volume models soon, given their relatively high cost.
Still, if GM can field a plug-in hybrid ahead of Toyota, it could burnish the Detroit auto maker's image as a technology leader. For nearly two decades, GM and its brands have suffered in the U.S. from a reputation for old technology and poor fuel economy -- an image GM executives say is now undeserved.
A senior Toyota executive said the timing for the launch of Toyota's first lithium-ion-battery hybrid model is being decided as part of a medium-term hybrid-product plan, which he said is -- while close to being finalized -- "still very, very fluid in some aspects." The final plan is due before the end of this year. The executive noted that the Prius derivative, most likely Toyota's first lithium-ion hybrid, will hit the market in early 2011 but that there is a force within Toyota's engineering and product-development division that is insisting on launching the model by the end of 2010. In that case, it could be a horse race between Toyota and General Motors.
Delays to the next-generation Toyota hybrids also offer an opportunity for rivals that have bet on clean diesel as a response to demands for more-efficient cars.
Honda Motor Co., for example, is pursuing a multipronged approach to alternative technologies, including a bet on a newly developed diesel engine. As Toyota grapples with lithium-ion technology, John Mendel, a senior Honda executive in the U.S., said the delays will likely provide Honda and others "a big break to build up awareness of an alternative to hybrids, like diesels, that has tremendous benefits in efficiency."
"We think diesel has a real opportunity," Mr. Mendel added.
Honda remains favorable to the long-term potential of lithium-ion technology, said company President Takeo Fukui. But Mr. Fukui said he is skeptical the technology can be made reliable enough for vehicles in the next few years. Mr. Fukui said he and his wife recently bought an electrically assisted hybrid bicycle for 100,000 yen ($842) in Japan, but its lithium-ion battery failed after only six months. The couple had to dish out 40,000 yen to replace it because it wasn't covered by the bike's warranty. "That wouldn't cut in the auto industry," Mr. Fukui said.
By 2009, Honda plans to launch in the U.S. a subcompact hybrid with improved nickel-metal-hydride batteries. A hybrid version of the Civic now costs about $4,000 more than a comparably equipped gasoline-engine Civic model. With the new subcompact, Mr. Fukui says Honda is trying to cut the hybrid premium to less than $2,000 -- about what a consumer pays for a satellite-based navigation system as optional added equipment.
European auto makers, including Volkswagen AG, BMW and the Mercedes-Benz unit of Daimler AG, also plan to field modern diesel engines in U.S. models starting next year. In long-distance highway driving, modern European diesels can often outperform a gasoline-electric hybrid. The challenge for diesel is meeting tough U.S. clean-air rules. European auto makers say they now have the technology to do that, although it will be costly at first.
Toyota doesn't have diesel engines that meet air-quality standards in all 50 U.S. states. Fearful of being left behind if diesels gain in popularity, Toyota last year bought a 5.9% stake in Isuzu Motors Ltd. to gain access to the latter's clean-diesel technology.
Toyota's move to slow hybrid launches comes as the company's president, Katsuaki Watanabe, is starting to decelerate the company's breakneck expansion pace, which vaulted it past GM to be the world's No. 1 auto maker by vehicle sales volume this year.
Mr. Watanabe has expressed concern that Toyota's rapid expansion has strained the company's human and technical resources and undermined the quality of Toyota vehicles.
Last year, Mr. Watanabe told The Wall Street Journal that the company would slow the overall pace of product development by as many as six months to shore up vehicle quality and reliability after a string of recalls and other quality gaffes in recent years. But delays are turning out to be longer when it comes to more technologically complicated hybrid vehicles.
According to a tentative, medium-term hybrid-product plan reviewed by The Wall Street Journal, in addition to the next-generation Prius, Toyota will likely have to delay other new hybrid models as well, by more than one year in most cases and as many as two years in others.
"The delays show the company has been too focused on one type of technology," said Masaki Taketani, a senior analyst at CSM Worldwide, an auto-industry research firm in Michigan. "Toyota would be in big trouble if other types of lithium-ion batteries, or a new breed of clean-burning diesel engines, gained steam as a better fuel-saving proposition to the American consumer."
Toyota still outstrips GM by other measures, such as market capitalization and profitability. Toyota earlier this month reported quarterly net income of $4.1 billion, nearly five times GM's result for the same period. Toyota's financial resources give it a huge advantage in the competition to develop more-fuel-efficient vehicles.
Toyota executives stress that they have only delayed, not abandoned, plans to use longer-range lithium-ion batteries in hybrid vehicles.
Aside from the new lithium-ion Prius wagon, Toyota also plans to launch in the 2011-12 time frame as many as nine other lithium-ion-battery hybrids. Among them are a new wagon-style crossover with three rows of seating based on the Japan-only model called the Wish; a wagon derivative of the Camry; a sporty coupe code named FT-HS, which was shown at the Detroit Auto Show earlier this year as a concept car; and possibly a hybrid version of the redesigned Corolla.
Toyota, according to the knowledgeable executives, is also mulling developing a lithium-ion-battery hybrid version of the RAV4 crossover SUV and the Estima minivan hybrid, currently sold only in Japan, launching them sometime in 2012. But those projects are still "very fluid," one of the executives says.
Etruk
Of course the single aspect of the hybrid version of the Highlander that intrigues us the most is the powertrain, and from our standpoint Toyota has done a good job of integrating their battery technology into this seven-seat CUV. $3 per gallon gasoline has placed fuel economy at the top of everybody's mind right now, and the 2008 Highlander Hybrid has upped the ante, if only slightly. Using the EPA's new fuel economy calculations, the 08 model achieves 27mpg in the city and 25mpg on the highway. Those numbers are exactly the same for 07, but the new EPA numbers are stiffer, and account for aggressive driving and the use of air conditioners. What's impressive is that Toyota managed better fuel economy on a larger CUV that weighs 300lb more than the 
In our limited time driving the Highlander Hybrid, we were impressed with the vehicle's roominess, its smooth ride, and Toyota's attention to detail. The 
