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Toyota Refines Battery Chemistry to Boost Next Prius Efficiency

August 28, 2013

Toyota Refines Battery Chemistry to Boost Next Prius Efficiency

A man examines a lithium-ion battery for Toyota Motor Corp.'s Prius plug-in hybrid vehicle in Tokyo. Photographer: Kiyoshi Ota/Bloomberg

Toyota Motor Corp. (7203), which dominates the hybrid-vehicle market with its Prius, said the company’s next generation of batteries will be more efficient and improve mileage.

Toyota’s future hybrids will have batteries with higher energy density and power, Satoshi Ogiso, chief engineer for the Prius line, hybrid vehicles and plug-in hybrids, told reporters yesterday. He didn’t give details about when the carmaker’s next hybrids will arrive or specifics about mileage.

“The current Prius has been America’s fuel economy king for many years,” Ogiso told reporters at a briefing in Ypsilanti, Michigan. Toyota is “very motivated” to continue improving its Prius mileage after boosting fuel economy by about 10 percent with second- and third-generation models.

The Toyota City, Japan-based company has mulled over the future of its Prius line and potential changes, such as a departure from the hybrids’ aerodynamic wedge shape, to boost demand. The carmaker is facing increasing competition from Ford Motor Co. (F:US) hybrids and Tesla Motors Inc. (TSLA:US)’s fully electric cars after years of dominating the green-car market.

Upcoming hybrid powertrains from Toyota will get “significantly improved” fuel economy in a more compact, lighter and lower-cost package, Ogiso said. The company has accelerated research, development and production capacity for nickel-metal hydride and lithium-ion solid state and lithium-air battery technologies, he said.

5 Million Hybrids

Toyota has delivered more than 5 million hybrid Toyota and Lexus models globally since offering the first Prius in Japan in late 1997 and the U.S. three years later. Hybrids account for 16 percent of the company’s sales, compared with less than 3 percent at Ford and 2 percent at Honda Motor Co.

Toyota has wavered on whether it will meet a goal of selling 250,000 Prius vehicles in the U.S. this year. Jim Lentz, chief executive officer of Toyota’s North American operations, said in June the company was “on target” after suggesting in April that it may need to lower its forecast.

While U.S. demand for hybrids has fluctuated based on economic conditions, consumers will increasingly factor in environmental concerns over the long term, said Kazuo Ohara, chief executive officer of Toyota’s U.S. sales unit.

“Longer term, hybrids have a potential to grow,” Ohara told Bloomberg in an interview yesterday. “Maybe Prius has bigger potential than gas-based products.”

Ford has sold 53,014 electrified vehicles in the U.S. this year through July, almost five times its deliveries a year earlier. The Dearborn, Michigan-based carmaker lowered the mileage rating for its C-Max hybrid car this month and said it will make one-time payments to customers because of the change.

Long Bridge

Tesla’s U.S. sales may have totaled 10,401 vehicles in the first seven months of this year, according to an estimate by Autodata Corp. The researcher didn’t track Palo Alto, California-based Tesla’s deliveries last year.

Toyota sees a role for purely electric cars, albeit a much smaller one than what hybrids now play for Toyota, said Bob Carter, senior vice president of the carmaker’s U.S. sales unit. The company’s “core technology for 15 years and for the next foreseeable future” is hybrids, he told reporters.

There has been debate in the industry about whether hybrid technology is a “bridge” to other technologies, Carter said.

“If it is a bridge, it’s a very, very long bridge -- 50, 60, 70 years out,” he said.

Restyled Model

More a technical curiosity than a sales success in its early days, the original Prius’s nickel-metal hydride battery pack and motor were exotic for a mass-market car. An exterior design modified from Toyota’s Yaris sedan detracted from its appeal.

Toyota restyled the Prius in late 2003 with a raked hood and windshield that flowed seamlessly into the roof line. The new look, coupled with oil prices that rose for six straight years starting in 2002, cleared the way for sales success.

In 2004, the first full year the second-generation car was available, worldwide Prius sales jumped to 125,742, almost triple the 43,162 delivered in 2003. Sales expanded through 2010, until Japan’s earthquake and tsunami in 2011 temporarily slowed production of Prius models.

Sales growth in the U.S. and Japan accelerated further last year with the creation of a “family” of Prius vehicles that comprises the main hatchback, v wagon, c subcompact and a plug-in model.

Japan Production

Toyota has said that by the end of the decade, the Prius may surpass the Camry and Corolla models to become the carmaker’s top-selling vehicle line.

Prius production has been limited to Japan, where Prime Minister Shinzo Abe’s efforts to weaken the yen are boosting the value of exports and bolstering Toyota’s earnings.

“With the advent of the new Prime Minister Abe and his policies, the yen is actually landing at a spot where, from a global economic standpoint, it should be,” said Mark Hogan, who in March was appointed to Toyota’s board as the first American outside director. “Toyota is certainly a beneficiary” of a weak yen, “but it’s more important that the Japanese economy get going again.”

Toyota raised its profit forecast this month for the fiscal year ending March to a six-year high of 1.48 trillion yen ($15 billion). Net income in its most recent quarter almost doubled to 562.2 billion yen, 27 percent higher than the average of four analyst estimates compiled by Bloomberg.

Bigger Profit

The next version of the Prius has to retain a lead in fuel efficiency among mass-market vehicles as its appearance evolves, Chris Hostetter, Toyota’s U.S. group vice president for strategic planning, told Bloomberg News in October. The car will need better driving “dynamics,” reflecting President Akio Toyoda’s directive that the company build more exciting vehicles, he said.

Hostetter said in November that the next Prius could come as early as the 2015 model year.

To contact the reporters on this story: Craig Trudell in Ann Arbor, Michigan, at ctrudell1@bloomberg.net; Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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