Lifestyle

GM and Toyota's Race to Build Electric Cars


Toyota is being cautious with the technology, but GM is full-speed-ahead for a 2010 launch of its Volt. To the victor will go the spoils

To hear Toyota Motor (TM) managers tell it, plug-in hybrids, electric cars, and the lithium ion batteries that will make them work aren't quite ready for showrooms, and they're cautious about following some rivals to market in 2010. But rival General Motors (GM) says the company will have its ballyhooed Chevrolet Volt, and its lithium ion batteries, ready for sale as promised (BusinessWeek.com, 9/16/08) in 2010.

If GM pulls it off, the struggling automaker will stage a real coup. The Volt would have better fuel economy than Toyota's Prius (BusinessWeek.com, 6/6/08) and prove that American knowhow can finally trump Japanese technological prowess. If GM fails, Toyota is right again, and the Japanese juggernaut keeps the green mantle and important bragging rights as the industry's technology leader.

Their two differing views are more than just posturing for the motoring press. The two companies are shaping their strategies for developing and selling more advanced hybrids and electric cars. Depending on who is right, an era of highly efficient and emission-free cars might be just around the corner or will have to wait until deeper into next decade. "This is a brave new world," says one senior GM engineer working on the Volt. "There's no question we're taking some risks."

The MPG Math

Assuming the technology works, the Volt and plug-in hybrids will be a big step forward from the 46-mile-per-gallon Prius. The Volt will go 40 miles on electric drive before a 1.4-liter four-cylinder engine kicks in to charge the battery. So an owner who only goes 40 miles a day may rarely use gasoline. One who goes, say, 50 miles a day would use roughly a quarter of a gallon of gas daily before going home to recharge the car's lithium ion battery by plugging it in. Do the math. That's 200 mpg for that trip.

Plug-in hybrids aren't quite that efficient, but the concept is similar. They have more battery power and can run on electric drive longer than today's Prius, whose gasoline motor kicks in once the car hits 15 or 20 mph. Toyota's plug-in Prius demonstration car goes 10 miles just on electric drive right now.

But Toyota says it's not eager to get the car to showrooms too quickly. At a media event in Portland, Ore., on Sept. 23, Toyota executives said that plug-in hybrids, extended-range electric cars like the Volt, and electric cars like the one that Nissan (NSANY) plans to sell in 2010 still have many challenges to overcome. The tallest hurdle is the lithium ion batteries. Toyota will sell a plug-in hybrid version of its popular Prius in 2010, but only in batches of cars to corporate fleets.

Toyota wants to use those corporate fleet customers as guinea pigs before flooding showrooms with the cars. Why so nervous? Toyota says it doesn't have enough data on cost, consumer reaction to plug-in hybrids, or durability of the needed lithium ion batteries to go confidently to showrooms yet. "There's no science to all of this because we're betting where batteries will be, where consumers will be, and where gasoline prices will be in three years," says Bill Reinert, national manager for advanced technologies at Toyota Motor Sales USA. "That's why we're doing test (fleets) in 2010."

Production Problems

Toyota may have a point. Lithium ion batteries work in test cars at GM and Nissan. Silicon Valley's Tesla Motors has sold about 30 electric roadsters that use lithium ion batteries. But mass producing them and selling the cars at retail is another issue. "Manufacturing lithium ion batteries is not a big deal if you only want to make a few cars," says James N. Hall, principal of 2953 Analytics, a Detroit consulting firm. "But mass producing large cells is a problem. No one has done it before."

That's part of Toyota's issue with the technology. Until mass production is in place, getting the cost down will be problematic, Hall says. The batteries and their power-management systems are very expensive, Reinert says. If gasoline prices fall from today's levels, consumers may not want to pay the premium. "Can you get the cost of plug-ins down?" says Reinert. "We don't know much about the plug-in customer."

Toyota also thinks more durability testing is necessary. Plug-in hybrid drivers will run the lithium ion batteries down to low energy levels before plugging them in for a recharge. When batteries run down to low levels and charge it back up, they won't last as long, Reinert says.

Toyota has other queries about plug-in hybrids and electric cars, both of which will be offered by rivals GM, Nissan, Mitsubishi (MMTOF), and Chrysler in the next couple of years. In all cases, it is assumed that owners will plug them in at night when local power utilities have electricity to spare. But Reinert says that plenty of owners will want to plug in during the day. In some areas, that won't be a problem. But in locales with older electric power systems or maxed out capacity, it could be an issue, he says.

Powering Up the Volt

Whatever Toyota's concerns are, GM is forging ahead. Its engineers have been working long hours for three years trying to get the Chevrolet Volt ready for consumers by late 2010. At the company's 100th anniversary event in Detroit earlier this month, Vice-Chairman Robert A. Lutz said GM will have 50 Chevrolet Cruze (BusinessWeek.com, 10/3/08) compact cars running on the Volt's electric drive system by the end of this year.

Next year, the company will amp up its on-road testing with an additional 100 Chevy Volt demonstration vehicles. In 2010, Lutz said, GM will have hundreds of Volts for sale. He plans to sell 10,000 of them in 2011.

GM insists that the car will be reliable and durable. By the time the company is selling the Volt to consumers, GM will have had almost two years of testing the electric-drive system and demo cars on the road. Lutz says "it's almost scary" how well the car is testing so far.

When GM unveiled the Volt on Sept. 16, the company said that it was negotiating with electric utilities to offer consumers incentives to recharge their cars during off-peak hours. That should lower the load on the power grid, says Tony Posawatz, vehicle line director for the Volt.

Toyota's Caution

GM executives also think Toyota has been lukewarm on lithium ion technology for other reasons. Almost since GM said it was rushing development of the Volt nearly two years ago, its Japanese rival has issued cautious warnings about how quickly the batteries could be ready. GM thinks the Japanese are behind in developing the lithium ion batteries using a chemistry that works best in cars.

Some have doubted the technology because lithium ion batteries caught on fire in laptop computers. If that happened in a car, it would be a disaster. But Lutz says GM is using a different chemistry that doesn't have temperature issues. "The Japanese battery industry, which has been doing lithium ion for years, concentrated on lithium ion chemistry for these," he said, holding up his BlackBerry. "They can have runaway thermal issues. The chemistry we know in the U.S. does not."

Plus, Toyota has invested in a joint venture with Panasonic to assemble nickel metal hybrid batteries like those used in today's Prius. With so much capital committed to nickel metal hydride technology, Toyota wants to get the most out of it, GM executives have argued.

Driver Education

Reinert said he thinks improved efficiency in convention vehicles and hybrids will still be the solution going into the next decade. Plug-in hybrids will play a role, too, but Toyota just wants to test the batteries and spend time educating consumers about them. Some drivers will get well over 100 mpg if they drive shorter trips before plugging the car in. Others will drive longer routes, use more gasoline and get significantly less, he said. "You have to have reasonable expectations about what they will give you," he says.

Make no mistake. Toyota is doing plenty of battery research. Hall notes that the company has a seven-story building in Toyota City, Japan, where the company does nothing but electric-drive and battery research. Toyota engineers are racing to get the cars ready. "I'm not saying they won't work. There are challenges," Reinert says. "We're spending billions on plug-in hybrids."

Maybe Toyota, with its seemingly bullet-proof image and billions in the bank, can afford to be more cautious. But GM, whose very future is in question as the company burns billions in cash this year, needs a big win to ignite sales. Says Lutz: "One of the reasons some people don't consider GM is they don't consider us a leader in energy-saving technology." Well, here's the General's big chance to lead.

Click here to see a round-up of electric cars that are either currently available or will be coming to the market soon.


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