Toyota Works to Keep the Wow in Hybrids

An experimental plug-in version of the Prius hybrid on the move in Detroit.

Plugging in. Toyota has answered GM in its usual understated way. In January, President Katsuaki Watanabe gave a bland speech in which he announced that his company would field a "significant fleet" of plug-ins available to commercial customers, matching GM's 2010 target date. And Toyota recently announced a new plan to team with Panasonic in Japan to mass-produce its own lithium-ion battery. The chase car on its tail seems to be driving Toyota to move faster. "For the first time, they're seeing a reinvigorated challenge from GM," says powertrain analyst Kevin Riddell of J. D. Power & Associates.

On the surface, Toyota's strategy is admittedly less aggressive than GM's. Instead of the kind of game-changing breakthroughs that some GM executives are hinting at, Toyota plans to introduce a plug-in that's an incremental improvement on the Prius. "Think of it as a Super Prius," says Bill Reinert, Toyota's national manager for advanced technology. Its maximum range on battery power alone might be 10 miles, not the 40 GM is promising. But Toyota does plan to leverage its reputation for reliability. "Our plug-in will be excuse-free," Reinert insists. "It will be able to meet a 150,000-mile warranty without being subsidized." Some analysts think the Volt, by contrast, might be such a technology stretch that GM will have to bear a big portion of the actual cost if it holds to a sticker price of $30,000.

Toyota's 2010 prototypes most likely will be built on the same platform as the next Prius, due in spring 2009. At some point within the next five or six years, the prototype will be ready for prime time, and the Prius plug-in will move from test fleets to the consumer market. In some families, the Prius is already the equivalent of a beloved pet, and here's one more idea that could endear the car to its owners: equipping it to function as an emergency generator. Once a plug-in is equipped to draw power from the electrical grid, through a household outlet, it's also able to put power back in. "There's enough power in a Prius battery to power a 1,200-square-foot house," O'Brien points out. So with a few modifications, a Prius could keep the lights on and the refrigerator running if a storm knocks out the electricity for a few hours or even a day or two.

Like its competitors, Toyota is also investing more research into diesel engines, turbocharging, direct-injection fuel systems, and other ways of improving a car's efficiency. Such technologies tend to be expensive but make more sense as gas prices rise. Combining direct injection with a turbocharger, for instance, is one way to get more power from a smaller engine—and improve fuel economy without asking buyers to cram themselves into a smaller car. And it could accelerate a trend toward smaller engines. "I can easily imagine deleting the v-6 from the Camry lineup," says O'Brien.

Toyota's scientists sound less optimistic than its competitors about ethanol and other biofuels, pointing to unresolved problems like the acreage of arable land required to produce feedstocks and the cost of technology for converting other material to fuel. GM, by contrast, has invested in an ethanol start-up, and it already builds thousands of "flex-fuel vehicles" that can run on the stuff. That's a simple assembly-line conversion, however, and if the fuel becomes widely available, Toyota could easily build as many ffvs as it chose.

Down the road, hydrogen fuel—which could be cheaper than gasoline or plug-ins and generate better mileage still—might offer the most promise of all. Toyota, GM, Honda, and others are all investing heavily in fuel cells in the hope of spearheading a genuine energy revolution. It will still take years to perfect the technology and build a nationwide network of fueling stations. But "there appear to be emerging pathways for solutions on fuel cells," Reinert says. For the time being, O'Brien credits Honda—which plans to lease a real-world hydrogen-powered car to a few customers beginning this summer—with having the lead. "Honda has a better overall product," he says. "We're more about powertrains right now."