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A bet: Toyota will beat GM to the plugin electric hybrid

Posted by: Adam Aston on July 26, 2007

Here’s my bet: Toyota, not GM, will commercialize the first plug-in hybrid. That may sound obvious to those watching hybrids. But there’s lately been reason to think GM might make a bold leap ahead in this space.

Last January, General Motors introduce its boldest, potentially most achievable push into green cars to date. With typical auto-show fanfare, music pounding, lights flashing, GM crowed it would roll out the Chevy Volt sometime around 2010 as the first-to-market true plug-in hybrid gas-electric vehicle, or PHEV. The buzz this created was considerable. A big US automaker bidding to take the lead in hybrids!?

PHEVs have a lot to offer over plain gas engine cars, and even compared to today’s hybrids. PHEVs can charge up overnight from a regular outlet, and have enough batteries on board that their range and power will let them run off electric charge for most trips, for longer trips, the gas engine is there as a backup. The advantages makes them a sort of holy grail for green car advocates: they promise to largely eliminate tailpipe emissions, and reduce overall emissions (since its easier to scrub pollutants out of a power plant smokestacks), and — most important of all — they promise to be more efficient overall, going further on each BTU of energy used to propel them.

Watching the announcement, I remember thinking, “Good for GM, this is a big step. But the folks at Toyota must be having conniptions.” In the last couple of years, Univ of California researchers were already hacking Toyota Prisuses, turning them into plug-ins. Rumors were rampant on the net that in Japan, Prisuses came with plugs already, but that the option had been removed in the US so as not to confuse US consumers (who, the argument went, were still wary of electric cars after the failure of GM’s electric car). The big problem facing both the university hackers as well as engineers at GM and Toyota alike was the cost and weight of the batteries it would take to give PHEVs sufficient range.

Back to GM's announcement. It was surprising at the time, not least of all because GM's credibility as a green car leader has been strained. Not long ago, company R&D and c-level execs were openly disdainful hybrids. They had some reason: hybrid electric vehicles are complicated, and relatively costly. Yet at the same time, GM was pushing its alternative, hydrogen fuel cell vehicles which are far /more/ expensive, far /more/ complex and -- guess what -- rely on the very electric subsystems that today's hybrid gas electric vehicles are running on.

Today, with over 1 million hybrids on the roads (mostly in Japan and the US, of that 750,000 are Priuses), and a growing number of hybrid models, Toyota has gained enormous real-world know-how in how electrically propelled vehicles work, what fails most often, service issues and so on. In short, Toyota was developing the real world know-how to build, sell and service electric vehicles, while GM was talking down the technology and aiming for an even more impossible-to-develop business model. Right....

The dissonance of GM's green messaging hit me again with Toyota's announcement that it is now formally testing PHEVs in the US, at UC Irvine and UC Berkeley. While Toyota has said it had been developing PHEVs for some while, the news moves its efforts into the daylight. Toyota's go-quietly strategy is consistent its recent habits. As the company gets closer to eclipsing GM as the world's No 1 vehicle maker, Toyota has become increasingly subdued in playing up its growth and technology plans.

Few details of Toyota's PHEVs were announced, but Toyota did say its prototypes will be powered by nickel metal hybrid batteries, not more advanced, lighter lithium-ion powerpacks found in most cell phones, laptops and the like. To date, automakers have consistently said that lighter, more power packing lithium-ion batteries likely drive tomorrow's PHEVs. Yet the cost advantages of nickel metal batteries are so great that Toyota, and others, may yet find a way to make due: mostly likely by cutting vehicle weight and boosting the efficiency of the car's electrical systems, the very sort of technical improvement Toyota is likely to have gained having designed, built and run hybrids for the past 10 years.

For the next battle royal, watch to see how the utility sector, together with allies in the coal and nuclear sectors, square off against big oil to push electric cars as the best low carbon transportation option. It's going to get interesting.

Reader Comments

Susan Wise

July 26, 2007 10:13 AM

Recent initiatives from large automakers definitely show that the hybrid car industry is moving forward and cleaner, more fuel-efficient solutions are becoming a reality. Have you been hearing any talk about clean diesel and how that would compare both cost-wise and efficiency-wise to hybrid technologies?

Adam Aston

August 8, 2007 8:27 PM

There's been a burst of progress in clean diesel technology over the past two years. In fact, while hybrid development is centered in Japan, automakers in Tokyo, Detroit and Europe are all highly experienced with diesels. With so many R&D labs focusing on the problem, innovation should be rapid. The US has missed out on much of the latest progress because emissions regulations here have been stricter than in Europe and elsewhere, keeping sales of diesel passenger cars low. But next year is likely to see the beginning of boom of clean, high-mileage in the US. In fact, some pundits predict diesels have the potential to unthrone hybrids as the lowest cost path to higher effiency vehicles in the US. Check out Ian Rowley's latest ruminations on diesel advances in Japan here, at BW's auto blog:

Susan Wise

August 9, 2007 4:11 PM

Thanks for passing along Ian Rowly's thoughts on diesel. I also thought David Welch's post from 7/5, "Diesel Gets a Witness," was pretty insightful. I agree with David that it's about time car companies step forward to "make a case for diesel." And diesels could potentially unthrone hybrids, as you mention, but perhaps an even more long-term solution is a diesel-hybrid, leveraging both technologies. I know Honda is planning a diesel hybrid that could get up to 65 miles per gallon. On a side note, after starting to follow your blog I began working on behalf of a company called GEO2 Technologies that is developing new filters for enabling low-cost clean diesel. Just yesterday we were talking about the differences you mention between the U.S. market and markets overseas in regions such as Japan and Europe. The U.S. is quite far behind, but starting to get on the bandwagon. If you're curious about the latest advancements, take a quick look at GEO2's Web site: -Susan

john phillips

August 20, 2008 9:44 PM

I am of the opinion that Japan will produce a viable electric car long before the Americans. The Americans have never been any good at innovations. Up to the present they have been leaders in mass production, especially in the generation of BS.but methinks that could change in the coming years. However we must wait and see?

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BusinessWeek correspondents John Carey and Mark Scott, cover the green scene, keeping on top of the business aspects of energy, the environment and climate change, as well as the technologies, policies, markets and people that are shaping how the earth's resources will be used in the century ahead.

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