Sunday, June 7, 2009

Future of 'green' cars begins with the hybrid

Toyota Motor Corp.'s newest Prius hybrid, with tens of thousands of orders in before it hit dealerships nationwide in May, seems a sure-fire winner in the race to dominate the eco-car market.

Also in the running is Honda Motor Co.'s gas-electric Insight, introduced earlier this year.

But with full-electric vehicles coming up fast in the development lane and minivehicle makers scrambling to improve fuel efficiency, will hybrids fulfill their promise in the global market for "green" cars?

"We have come closer to the price range our customers are willing to pay," Akio Toyoda, Toyota's incoming president, said at the unveiling of the company's third-generation Prius hybrid on May 18.

A basic Prius model starts at 2.05 million yen, tax included--about 300,000 yen less than the previous model.

The revamped Prius boasts a 1.8-liter engine, up from the 1.5-liter displacement of the previous model. The new Prius gets 38 kilometers to the liter, a 7-percent improvement, and offers better safety features.

Toyota's efforts to roll out more affordable hybrids have paid off. It received 80,000 prelaunch orders for the new Prius--an unprecedented number for a new model.

That lifted total orders for Toyota vehicles by 20 percent in April over the same month a year earlier to their highest level in four years.

The latest Prius model represents one-fifth of the Toyota's total domestic production, pushing it closer to the carmaker's mainstay Corolla.

Price has been the biggest obstacle to Prius sales since its introduction in 1997, when it whetted appetites for the world's first mass-produced hybrid.

Reportedly, hybrids cost hundreds of thousands of yen more to produce than the average gas-powered car. To make the new Prius more affordable, Toyota trimmed costs from its hybrid system.

Toyota's future hybrids will likely come with a lower sticker price. A smaller hybrid is in the works, aimed at offering more than 40 km per liter. The model, due in 2011, will sell for 1.7 million yen or so.

Toyota is confident it can lead the race in the global eco-car market with hybrids alone, ruling out the need to add electric vehicles or other types to its lineup.

"If we can achieve our targets for the smaller hybrid in fuel economy and price competitiveness, we won't need other types of eco-friendly vehicles," said a senior Toyota official.

Toyota pushed its innovative "21st century" car development into full gear in the early 1990s under company chairman Eiji Toyoda.

"Developing a commercial electric vehicle at that time posed a slew of challenges," the official said. "That is the case even today."

In fact, Toyota has a long history of research into electric vehicles, which greatly interested the company's late founder, Kiichiro Toyoda.

Toyota conducted a test run of a prototype electric vehicle in around 1941. It even sold a few units.

In recent years, however, testing showed that an electric minivehicle would only be able to travel 150 km or so at most between charges, even using a next-generation lithium-ion battery. The bigger the vehicle, the higher the retail price, because more batteries are needed.

Moreover, a battery pack's ability to hold a charge and its durability vary by temperature and driving conditions, the automaker points out.

For example, the distance covered on one battery charge would be significantly reduced when a hybrid is caught in a traffic jam on a hot summer day requiring air conditioning.

Honda too sees the hybrid as becoming the mainstream green vehicle.

Amid sharply dwindling revenues due to the global recession, the carmaker has frozen development of a next-generation diesel car that it initially hoped to introduce at the end of this year. And Honda has no plans to market a fully electric model.

Honda is now firmly focused on hybrids, after years of jockeying to come up with the next-generation green car, whether electric or hybrid vehicle. It has managed to considerably reduce the cost to produce hybrids.

From next year, Honda plans to introduce both a small hybrid and a hybrid sports car, aiming to raise the share of hybrids to 10 percent of its worldwide unit sales by about 2015.

According to Nomura Research Institute, the global market for hybrids will expand to an estimated 12 million vehicles in 2020, up from 700,000 vehicles in 2007. That represents about 17 percent of all units sold worldwide.

Hybrids, however, are not the only bright sign for the auto industry.

U.S. President Barack Obama has pledged to ensure 1 million plug-in hybrid electric vehicles are on the road across America by 2015.

Plug-in vehicles, which are closer to electric vehicles than hybrids, are recharged using ordinary household sockets.

With that policy, the United States, whose market clout steers the direction of next-generation vehicles, could produce big changes in the eco-friendly vehicle market.

Other automakers, lagging behind Toyota and Honda in hybrids, are scrambling to speed their plans to develop electric vehicles.

Nissan Motor Co. CEO Carlos Ghosn says he is skeptical of the single-minded focus on hybrids his company's rivals have displayed. Electric vehicles will greatly alter the green vehicle market, Ghosn says.

Because of a shortage of funds in the late 1990s, Nissan was unable to invest enough in hybrid development. Instead, Nissan pinned its hopes on a planned electric vehicle due out in 2010 or later.

Nissan would not be able to lead technological innovations, Ghosn says, if it were to pursue hybrid strategies similar to its competitors.

Mitsubishi Motors Corp. said Friday it will roll out its new i MiEV electric vehicle in July, with a sales target of 1,400 units for the current fiscal year.

The company says its breakeven point is 30,000 units a year, which it hopes to reach by 2013 by broadening the market for electric cars through an OEM supply deal with PSA Peugeot Citroen in France and other means.

The battle between hybrids and electric cars is not only intensifying competition for the next-generation earth-friendly automotive technology. It is also sparking concerns for automakers whose future plans remain reliant on gas-fueled minivehicles.

To survive, makers such as Suzuki Motor Corp. will have to substantially improve the fuel efficiency of their offerings.

According to Suzuki Chairman Osamu Suzuki, "The presence of minivehicles will be called into question" when more green cars hit the road.

His company's WagonR is currently Japan's best-selling minivehicle. But the WagonR's top mileage is 23.5 km per liter, only about 60 percent of the Prius's 38 km per liter of gasoline.

"We won't be able to survive unless we succeed in raising the fuel efficiency (of our products)," Suzuki said.

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