Industry Report: Toyota Plans for Hybrid Alternative in 100 Percent of Models in Future

It must be incomprehensibly tough to fight against auto-giant Toyota. No sooner had Bill Ford, the amiable spokesman and ever optimistic CEO of the automaker that bears his great-grandfathers name, announced that 50 percent of its models will come equipped with its proprietary gasoline-electric full-hybrid system, which will be the equivalent of about 8 percent of the automakers lineup, than Toyota, now the worlds second largest automaker (rubbing more salt into an open wound) responds with an announcement that it plans on offering its arguably most advanced Hybrid Synergy Drive system in every model it produces!

"In the future, the cars you see from Toyota will be 100 percent hybrid," executive vice president Kazuo Okamoto told a media scrum attending the Frankfurt auto show in Germany on Monday.

While Okamoto wouldnt offer an ETA for his grand future plans, no-one would be foolish enough to doubt that, if Japans number one brand decides that such a move is in its best long-term interests, it will happen.

Okamoto cited high gasoline prices as the impetus behind such a decision, and with placards popping up in various locations across the nation at $1.50 per liter, an end to rising fuel costs hardly looks near.

So what are its short-term goals? Toyota is targeting up to 400,000 hybrid-electric vehicles (HEVs) worldwide in 2006, or so said the automakers president, Katsuaki Watanabe at an investor conference in New York on Monday, which will include its dedicated Prius hybrid compact-to-midsize liftback, as well as the Highlander Hybrid midsize SUV, and upcoming Camry hybrid. Toyotas Lexus brand will continue forward with its RX 400h model, which shares components with the Highlander Hybrid, as well as a new midsize GS 450h. Also, the companys Coaster buses will be outfitted with a version of the automakers HEV system. This would equal a 60 percent rise over its 2005 hybrid sales.

Not only does Toyotas 2006 HEV sales goal represent a sharp increase in production over one year, but its 400,000 prospective annual unit sales would almost equal its total hybrid sales to date - approximately 425,000 since its first-generation Prius was launched in 1997 - if its targets are realized.

And how will Toyota achieve such a dramatic rise in HEV fortunes? Well, factoring in high consumer demand - the automaker could sell every hybrid it produces twice over with a waiting list remaining - and a reduction in production costs since integrating the alternative technology into its traditional assembly line process - all Toyota hybrids are now built alongside conventionally-powered models instead of the dedicated plant that previously built Prius; and then taking in consideration that increased volumes will reduce component costs and therefore increase the potential for HEV profitability - prices will inevitably come down making the technologys value proposition more attractive to mainstream (read lightweight environmentalists) consumers.

Watanabe is planning to reduce production costs and in the process halve the $5,000 price premium average HEV buyers get charged over a conventionally powered model with the same features, or so the Detroit News reports.

But in the case of Toyotas new Highlander and Lexus RX 400h, which along with Hondas new Accord Hybrid buck HEV convention in order to deliver strong performance benefits along with fuel savings and significant emissions reductions, there are no gasoline-only-powered equivalents to compare them to. Rather, the Lexus, for instance, would need to be tested side-by-side with a V8-powered luxury SUV to equal its luxurious appointments and acceleration off the line and during passing. It matches BMWs 4.4-liter X5, for instance, and prior to this year completely outclassed Mercedes-Benzs ML430 for straight-line performance at 6.7 seconds to 60 mph.

While Toyota and Honda have been under attack from some motoring media scribes for enacting this new hybrid philosophy, citing real world fuel consumption results that arent anywhere near as optimistic as the EPA estimates suggest (which is par for the course with EPA ratings for most conventionally-powered vehicles), such reporters are missing the entire point. The Highlander Hybrid is all about performance, with the added benefit of reasonably good fuel economy and, of course, its "green" attributes.

There has been some talk among HEV insiders that a driver controlled system is on the way, which would optimize fuel savings when "dialed in" to do so, or performance if out-accelerating your stoplight neighbor is needed. Such a system would be flexible enough for one vehicle and engine configuration to meet the needs of multiple driving styles, and in-turn, reduce production costs overall.

And if Toyota wants this or any other technology to become popular, it has ample capitalization to make sure its plans are carried out; which is the real reason consumers shouldnt be concerned about any negative implications that may or may not revolve around jumping on the hybrid bandwagon.

Still, there are factors outside of Toyotas direct control that could keep the automaker from reaching its short and long-term goals, the first being a shortage of hybrid parts; a problem that has plagued the company throughout the year. Watanabes predecessor, Fujio Cho, had previously set his sights on 300,000 HEV unit sales globally for 2005, but the automaker is currently only on target for 240,000 to 250,000 deliveries. According to Jim Press, Toyota Motor Sales, U.S.A. VP of sales, a lack of batteries and other components are the cause of the problem.

Still, Toyota most likely has plans to overcome such setbacks, reach its 400,000 HEV units sales by year-end 2006, and then on past 1 million hybrid models per year by 2010 - its longer-term target. And who can stop them. GM? Ford? DaimlerChrysler? Not likely. Toyotas lead is too long, its technical know-how too rich, and pockets too deep for any competitor, less Honda, to put up a significant threat.