In hybrids, it's Toyota vs. the world; if market develops, the technology will be a c
03-25-05, 06:06 PM
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In hybrids, it's Toyota vs. the world; if market develops, the technology will be a c
In hybrids, it's Toyota vs. the world; if market develops, the technology will be a cash cow
MARK RECHTIN | Automotive News
Posted Date: 3/25/05
LOS ANGELES -- Toyota Motor Corp. is going all-in on hybrids and its gamble is part of one of the industry's highest-stakes poker games. While other automakers are hedging their bets - fearing that stiff development costs and higher sticker prices of hybrids will limit the technology to a niche - Toyota stands to benefit handsomely if its rivals are wrong.
Toyota is the only automaker developing production hybrid powertrains for front- and rear-drive vehicles, for both cars and trucks, and for four-, six- and eight-cylinder engines.
"Eventually all of our vehicles" will be offered with a hybrid option, says Jim Press, COO of Toyota Motor Sales U.S.A. Inc.
Hybrids use an internal combustion engine and an electric motor to power the wheels.
Toyota believes a large pool of consumers will want hybrids to boost fuel efficiency or performance. Hybrids also provide a technological halo for all Toyota vehicles.
And Toyota's heavy spending is creating patents - 650 and counting - that could provide an edge over competitors. As one indication of that, Ford Motor Co. licenses some of Toyota's technology for the Escape hybrid.
Toyota sees even more advantages if fuel cell vehicles are a major commercial success. Fuel cell vehicles will use a lot of hybrid technology, potentially creating decades of income from licensing deals. Fuel cells use hydrogen to create pollution-free power.
K.G. Duleep, managing director of transportation for Energy and Environmental Analysis Inc., in Arlington, Va., sees "a lot of carryover between hybrids and fuel cells in the electronics and motors. Toyota could have a real competitive advantage in developing fuel cells. It's one of the few companies that has the money to do everything."
Even if fuel cells fail to become a significant alternative to the internal combustion engine, Toyota will be well positioned in a proven alternative to save fuel: hybrids.
Wary automakers
But other automakers are wary. They are unsure how many people will pay a premium for hybrid technology, estimated by analyst Duleep at $3,500 per vehicle (see box above). Some even have knocked Toyota by calling the Prius hybrid a massive PR campaign to deflect attention from Toyota's big pickups and SUVs. Toyota starts selling a full-sized pickup in fall 2006.
Honda Motor Co. and Ford are selling hybrids in the United States but are proceeding more deliberately than Toyota. Nissan Motor Co. is licensing the Toyota technology and plans an Altima hybrid in 2006. General Motors is planning full-sized hybrid-powertrain pickups and SUVs in 2007 at the earliest. Many European automakers are concentrating on diesel technology instead.
Toyota doesn't have a stranglehold on hybrid technology. Breakthroughs are possible with any emerging research effort. Ford and Honda are learning from their early work, and GM's December deal with DaimlerChrysler will accelerate those companies' hybrid development. And Hyundai is working at its gleaming new South Korean r&d studio.
And while Toyota does not have all of its products on the road, the hybrid plan has the full weight of the company behind it. President Fujio Cho calls it "the core technology of the future."
Eric Noble, president of The Car Lab consulting firm in Orange, Calif., sees Toyota as the "800-pound gorilla of hybrid technology." He believes Toyota will have a lock on licensing its intellectual property. Licensing the technology from Toyota is "smarter than parallel competing development, especially when no one can keep up in spending with Toyota," Noble adds. "It's nothing to be ashamed of."
Honda, which builds the Insight, above, is proceeding more slowly with hybrid technology than Toyota.
Toyota's 650 hybrid patents cover the "power flow" of the hybrid system, encompassing the syst***s control logic, as well as primary power source, secondary energy storage system and the motor-generator system.
Toyota spent about $800 million developing the Prius, estimates analyst Duleep. "But a lot of Toyota's basic r&d in Prius is being applied to other vehicles, too," Duleep says.
The Prius' price tag is roughly the same as developing a drivetrain from scratch - with significantly more fiscal upside if hybrids take off. Toyota officials say their hybrids are breaking even, even at this early stage of development. And Toyota has about $30 billion in cash, so money is not an issue.
Future fuel cells
Toyota's push into hybrids is about much more than market share. Toyota desires the intellectual property rights for the heart of the fuel cell propulsion system of the future, says Dave Hermance, executive engineer for environmental engineering for Toyota Technical Center U.S.A.
"To the extent that the future is fuel cell, it's a hybrid fuel cell," Hermance says. "All the work we do today lets us be the low-cost provider to three-fourths of the fuel cell system."
Fuel cells may eliminate gasoline-powered engines, but the hybrid's electric motors still will propel the car, and the electronics will convert the direct-current power of the fuel cell and battery over to alternating current, Hermance says.
If Toyota plays its cards right, other automakers will have to pay licensing fees to Toyota for every fuel cell car they build. "Toyota is building their own power controllers and motors, and they have a joint-venture with Panasonic to build batteries," says analyst Duleep. "Everyone else is depending on large Tier 1 suppliers like Siemens or Hitachi for their components."
Honda steps back
While Toyota is moving ahead full bore, marketers at Honda are pausing to examine the depth of the market. This change comes even though Honda was the first automaker to have three hybrid vehicles for U.S. sale.
"We want to get a better sense for the depth of the (hybrid) market and the preference of the marketplace, then move forward in any number of directions," says Dan Bonawitz, American Honda vice president of corporate planning and logistics.
Honda still plans to launch the 2006 Civic with new-generation hybrid technology. But Honda is looking into other technologies, including natural gas.
Bonawitz declined to say when Honda or Acura would add another nameplate with a hybrid powertrain. He also downplayed the idea of Honda building larger hybrid vehicles, along the lines of the Lexus RX 400h and Toyota Highlander.
"As you move up into bigger vehicles such as SUVs and minivans, there is more frontal area and weight, and you start getting a certain diminishing return" in terms of fuel economy, Bonawitz says.
Ford, like Toyota, advertises the green halo of its hybrid, the Escape Hybrid. Ford Division expects to sell about 20,000 Escape Hybrids in 2005. It will start selling hybrid versions of the Mercury Mariner in the fall and the Mazda Tribute in 2007. The Mariner and Tribute are sister vehicles of the Escape. Ford's second-generation hybrid technology will debut in the Ford Fusion and Mercury Milan sedans in 2008.
GM's full hybrid system for the Chevrolet Silverado won't arrive until at least 2007. A 2005 Silverado is shown.
Ford says it developed the Escape Hybrid powertrain, but the methods used to switch from electric to gasoline power and to operate the regenerative brakes were similar to Toyota's. So, Ford says, it licensed some of the processes that Toyota patented as a legal precaution.
Pessimists
Then there are the pessimists. Once the early adopters buy their Priuses, the pessimists say, demand will not grow enough to satisfy all entrants.
Nissan CEO Carlos Ghosn sees the cost-benefit equation as too risky.
Hybrids "make a nice story," Ghosn said in January, "but they're not a good business story yet, because the value is lower than their cost."
Nissan is covering its bases by licensing Toyota technology and offering it in the Altima in 2006.
At the Detroit auto show in January, GM Vice Chairman Robert Lutz belittled Toyota's thrust into hybrids as little more than "an advertising expense.
"We business-cased it, took a hard, analytical look and thought the engineering and investment were irresponsible vis-a-vis our shareholders," he said.
GM's attitude irks Roland Hwang, vehicles policy director for the Natural Resources Defense Council.
"GM is particularly troubling to us. It has been the ringleader in opposing new (environmental) standards. Hybrids are not about PR. It's a serious market," Hwang says. "GM has shown a lot of bling-bling concepts, but we're still waiting for the vehicles."
GM's first full hybrid system, on full-sized SUVs and pickups, won't arrive until 2007 at the earliest.
"People say we're a little late to the market," says Larry Nitz, executive director of GM's hybrid program. "This is a marathon, not a sprint."
Consumer research by J.D. Power and Associates shows most mainstream buyers are interested in hybrids mostly for fuel economy, not for environmental benefits.
For customers who want fuel economy to save money, there are many other cheaper technologies available, such as cylinder deactivation, clean diesel, turbocharging, ethanol and six-speed transmissions, which all give fuel economy benefits at a lower cost by hybrids.
But analyst Noble says Toyota warns against automakers believing internal-combustion advances will be enough to thwart hybrids.
"Any of the internal combustion technologies the others are proposing can be incorporated into hybrids anyway," he says. "While others wait, Toyota's lead will increase with market experience and they will advance their technological edge."
MARK RECHTIN | Automotive News
Posted Date: 3/25/05
LOS ANGELES -- Toyota Motor Corp. is going all-in on hybrids and its gamble is part of one of the industry's highest-stakes poker games. While other automakers are hedging their bets - fearing that stiff development costs and higher sticker prices of hybrids will limit the technology to a niche - Toyota stands to benefit handsomely if its rivals are wrong.
Toyota is the only automaker developing production hybrid powertrains for front- and rear-drive vehicles, for both cars and trucks, and for four-, six- and eight-cylinder engines.
"Eventually all of our vehicles" will be offered with a hybrid option, says Jim Press, COO of Toyota Motor Sales U.S.A. Inc.
Hybrids use an internal combustion engine and an electric motor to power the wheels.
Toyota believes a large pool of consumers will want hybrids to boost fuel efficiency or performance. Hybrids also provide a technological halo for all Toyota vehicles.
And Toyota's heavy spending is creating patents - 650 and counting - that could provide an edge over competitors. As one indication of that, Ford Motor Co. licenses some of Toyota's technology for the Escape hybrid.
Toyota sees even more advantages if fuel cell vehicles are a major commercial success. Fuel cell vehicles will use a lot of hybrid technology, potentially creating decades of income from licensing deals. Fuel cells use hydrogen to create pollution-free power.
K.G. Duleep, managing director of transportation for Energy and Environmental Analysis Inc., in Arlington, Va., sees "a lot of carryover between hybrids and fuel cells in the electronics and motors. Toyota could have a real competitive advantage in developing fuel cells. It's one of the few companies that has the money to do everything."
Even if fuel cells fail to become a significant alternative to the internal combustion engine, Toyota will be well positioned in a proven alternative to save fuel: hybrids.
Wary automakers
But other automakers are wary. They are unsure how many people will pay a premium for hybrid technology, estimated by analyst Duleep at $3,500 per vehicle (see box above). Some even have knocked Toyota by calling the Prius hybrid a massive PR campaign to deflect attention from Toyota's big pickups and SUVs. Toyota starts selling a full-sized pickup in fall 2006.
Honda Motor Co. and Ford are selling hybrids in the United States but are proceeding more deliberately than Toyota. Nissan Motor Co. is licensing the Toyota technology and plans an Altima hybrid in 2006. General Motors is planning full-sized hybrid-powertrain pickups and SUVs in 2007 at the earliest. Many European automakers are concentrating on diesel technology instead.
Toyota doesn't have a stranglehold on hybrid technology. Breakthroughs are possible with any emerging research effort. Ford and Honda are learning from their early work, and GM's December deal with DaimlerChrysler will accelerate those companies' hybrid development. And Hyundai is working at its gleaming new South Korean r&d studio.
And while Toyota does not have all of its products on the road, the hybrid plan has the full weight of the company behind it. President Fujio Cho calls it "the core technology of the future."
Eric Noble, president of The Car Lab consulting firm in Orange, Calif., sees Toyota as the "800-pound gorilla of hybrid technology." He believes Toyota will have a lock on licensing its intellectual property. Licensing the technology from Toyota is "smarter than parallel competing development, especially when no one can keep up in spending with Toyota," Noble adds. "It's nothing to be ashamed of."
Honda, which builds the Insight, above, is proceeding more slowly with hybrid technology than Toyota.
Toyota's 650 hybrid patents cover the "power flow" of the hybrid system, encompassing the syst***s control logic, as well as primary power source, secondary energy storage system and the motor-generator system.
Toyota spent about $800 million developing the Prius, estimates analyst Duleep. "But a lot of Toyota's basic r&d in Prius is being applied to other vehicles, too," Duleep says.
The Prius' price tag is roughly the same as developing a drivetrain from scratch - with significantly more fiscal upside if hybrids take off. Toyota officials say their hybrids are breaking even, even at this early stage of development. And Toyota has about $30 billion in cash, so money is not an issue.
Future fuel cells
Toyota's push into hybrids is about much more than market share. Toyota desires the intellectual property rights for the heart of the fuel cell propulsion system of the future, says Dave Hermance, executive engineer for environmental engineering for Toyota Technical Center U.S.A.
"To the extent that the future is fuel cell, it's a hybrid fuel cell," Hermance says. "All the work we do today lets us be the low-cost provider to three-fourths of the fuel cell system."
Fuel cells may eliminate gasoline-powered engines, but the hybrid's electric motors still will propel the car, and the electronics will convert the direct-current power of the fuel cell and battery over to alternating current, Hermance says.
If Toyota plays its cards right, other automakers will have to pay licensing fees to Toyota for every fuel cell car they build. "Toyota is building their own power controllers and motors, and they have a joint-venture with Panasonic to build batteries," says analyst Duleep. "Everyone else is depending on large Tier 1 suppliers like Siemens or Hitachi for their components."
Honda steps back
While Toyota is moving ahead full bore, marketers at Honda are pausing to examine the depth of the market. This change comes even though Honda was the first automaker to have three hybrid vehicles for U.S. sale.
"We want to get a better sense for the depth of the (hybrid) market and the preference of the marketplace, then move forward in any number of directions," says Dan Bonawitz, American Honda vice president of corporate planning and logistics.
Honda still plans to launch the 2006 Civic with new-generation hybrid technology. But Honda is looking into other technologies, including natural gas.
Bonawitz declined to say when Honda or Acura would add another nameplate with a hybrid powertrain. He also downplayed the idea of Honda building larger hybrid vehicles, along the lines of the Lexus RX 400h and Toyota Highlander.
"As you move up into bigger vehicles such as SUVs and minivans, there is more frontal area and weight, and you start getting a certain diminishing return" in terms of fuel economy, Bonawitz says.
Ford, like Toyota, advertises the green halo of its hybrid, the Escape Hybrid. Ford Division expects to sell about 20,000 Escape Hybrids in 2005. It will start selling hybrid versions of the Mercury Mariner in the fall and the Mazda Tribute in 2007. The Mariner and Tribute are sister vehicles of the Escape. Ford's second-generation hybrid technology will debut in the Ford Fusion and Mercury Milan sedans in 2008.
GM's full hybrid system for the Chevrolet Silverado won't arrive until at least 2007. A 2005 Silverado is shown.
Ford says it developed the Escape Hybrid powertrain, but the methods used to switch from electric to gasoline power and to operate the regenerative brakes were similar to Toyota's. So, Ford says, it licensed some of the processes that Toyota patented as a legal precaution.
Pessimists
Then there are the pessimists. Once the early adopters buy their Priuses, the pessimists say, demand will not grow enough to satisfy all entrants.
Nissan CEO Carlos Ghosn sees the cost-benefit equation as too risky.
Hybrids "make a nice story," Ghosn said in January, "but they're not a good business story yet, because the value is lower than their cost."
Nissan is covering its bases by licensing Toyota technology and offering it in the Altima in 2006.
At the Detroit auto show in January, GM Vice Chairman Robert Lutz belittled Toyota's thrust into hybrids as little more than "an advertising expense.
"We business-cased it, took a hard, analytical look and thought the engineering and investment were irresponsible vis-a-vis our shareholders," he said.
GM's attitude irks Roland Hwang, vehicles policy director for the Natural Resources Defense Council.
"GM is particularly troubling to us. It has been the ringleader in opposing new (environmental) standards. Hybrids are not about PR. It's a serious market," Hwang says. "GM has shown a lot of bling-bling concepts, but we're still waiting for the vehicles."
GM's first full hybrid system, on full-sized SUVs and pickups, won't arrive until 2007 at the earliest.
"People say we're a little late to the market," says Larry Nitz, executive director of GM's hybrid program. "This is a marathon, not a sprint."
Consumer research by J.D. Power and Associates shows most mainstream buyers are interested in hybrids mostly for fuel economy, not for environmental benefits.
For customers who want fuel economy to save money, there are many other cheaper technologies available, such as cylinder deactivation, clean diesel, turbocharging, ethanol and six-speed transmissions, which all give fuel economy benefits at a lower cost by hybrids.
But analyst Noble says Toyota warns against automakers believing internal-combustion advances will be enough to thwart hybrids.
"Any of the internal combustion technologies the others are proposing can be incorporated into hybrids anyway," he says. "While others wait, Toyota's lead will increase with market experience and they will advance their technological edge."
03-25-05, 06:30 PM
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I don't want to wax TOO philosophical, but this article explains in a nutshell why Toyota is on a success vector and every other carmaker seems to be standing still. They are actually willing to make a bold decision, look beyond this quarter's stock price, and leverage their company's strengths. It's sad to see even Honda taking a conservative, wait-and-see approach to the future.
Does ANY car company have a hybrid drive in production or even in the works that does not license Toyota's design? I guess Honda does with the Civic Hybrid, but I even see more Prius' (quirky as they are) than Hybrid Civics on the road. It's just plain sad to see the top leadership of these companies, IN PUBLIC!!, make such wishy-washy statements about seeing how things develop. In today's marketplace you're either blazing a trail or dying. If you're coasting (like the Nissan and Honda guys say they are), you're either slowing down or going downhill. In a strange quirk of physics, I think it's both.
Does ANY car company have a hybrid drive in production or even in the works that does not license Toyota's design? I guess Honda does with the Civic Hybrid, but I even see more Prius' (quirky as they are) than Hybrid Civics on the road. It's just plain sad to see the top leadership of these companies, IN PUBLIC!!, make such wishy-washy statements about seeing how things develop. In today's marketplace you're either blazing a trail or dying. If you're coasting (like the Nissan and Honda guys say they are), you're either slowing down or going downhill. In a strange quirk of physics, I think it's both.
03-25-05, 09:01 PM
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It's kinda of fascinating how the other car manufacturers are just standing by and waiting to see how Toyota does. With big risk comes big rewards. Toyota has calculated the risks and with it's technology and reliability it will become the number one car manufacturer by far and no one will be able to catch up with them. Yes we are entering the new era of hybrids, who knows how long it will last. Maybe one day we will see Toyota Prius's with 500,000 miles as common thing. Eventually it will evolve into the fuel cell/hybrid era and gasoline engines will be history but that's a very long way to come. We'll just have to wait and see.
03-25-05, 09:18 PM
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GM is still placing their bets on SUVs and pushrod motors, IMO. Their "hybrid" system isn't a true hybrid system, it just stops the engine at a stoplight, and starts it again with a 42V starter.
03-25-05, 11:14 PM
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I think Toyota stands the best chance of recovering should Hybrid technology and it's applications backfire. In fact I don't think it would even affect them that much financially. Perfect example why being rich is not a bad thing.
03-26-05, 11:18 PM
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It amuses me how skeptical all others are. I'm sure Toyota will have trouble holding in their "I told ya so"s in a couple of years. Are they all blind? Are Prius' not being bought like mad, accumulating waiting lists? Is the customer satisfaction of a Prius not higher than any other vehicle at 94%? Is there not a waiting list for the RX400h months long where Lexus had to push back intro to produce enough units? Hellooooo auto industry. Stop callin BS on Toyota when you see the walls starting to cave in on you.
P.S. Nissan, what the hell are you talking about? You talk down Toyota's hybrid system and them pay for their services...?
James
P.S. Nissan, what the hell are you talking about? You talk down Toyota's hybrid system and them pay for their services...?
James
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03-27-05, 12:25 AM
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Hybrids are only effective in city traffic ... if you make a lot of mileage on the highway ... a hybrid is not much more fuel effective than a modern fuel engine.
So it depends where you would ultilize the hybrid...
So it depends where you would ultilize the hybrid...
03-27-05, 02:55 AM
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Originally Posted by HKGS300
Hybrids are only effective in city traffic ... if you make a lot of mileage on the highway ... a hybrid is not much more fuel effective than a modern fuel engine.
So it depends where you would ultilize the hybrid...
So it depends where you would ultilize the hybrid...
James
03-27-05, 07:56 AM
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Toyota is doing their typical thing of aggressively pursuing new/emerging markets. They'll take all the risk, find out what works and what doesn't, see where customer's preferences are, and then by the time it's all figured out they'll be on mature 2nd or 3rd generation systems and have owner loyalty from a whole bunch of customers. And that's why Toyota will be #1 and other companies will not.
Honda is also doing their typical thing of reacting passively to the market and waiting for them to unfold. They waited for years to get into the SUV market seriously and had two rebadged Isuzus in the meantime. Although Honda can take credit for the first V6 FWD hybrid sedan. 255hp, 30mpg city, 37 mpg hwy. Pretty slick! I just got done setting up a forum for that car over at v6performance.net (link).
Nissan is still recovering financially so I'm not surprised to see them just licensing some Toyota technology in the meantime. And their parent company, Renault, probably has little in-house hybrid technology also. Given they're a European company they probably have a ton of different diesel engines, though.
Anyways, I'm seriously considering a hybrid for my next car. Even if I don't save enough on gas to offset the $3500 (typ) higher price of the car, you're giving that money to auto manufacturers instead of oil companies, and I'd rather give that money to auto manufacturers instead.
Honda is also doing their typical thing of reacting passively to the market and waiting for them to unfold. They waited for years to get into the SUV market seriously and had two rebadged Isuzus in the meantime. Although Honda can take credit for the first V6 FWD hybrid sedan. 255hp, 30mpg city, 37 mpg hwy. Pretty slick! I just got done setting up a forum for that car over at v6performance.net (link).
Nissan is still recovering financially so I'm not surprised to see them just licensing some Toyota technology in the meantime. And their parent company, Renault, probably has little in-house hybrid technology also. Given they're a European company they probably have a ton of different diesel engines, though.
Anyways, I'm seriously considering a hybrid for my next car. Even if I don't save enough on gas to offset the $3500 (typ) higher price of the car, you're giving that money to auto manufacturers instead of oil companies, and I'd rather give that money to auto manufacturers instead.
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