From: Reuters
Published January 14, 2008 11:10 AM

Toyota to offer some plug-ins by 2010

By Kevin Krolicki

DETROIT (Reuters) - Toyota Motor Corp plans to market a test fleet of rechargeable hybrid vehicles to companies or government agencies by the end of 2010, raising the stakes in a race with rival General Motors Corp to bring the first mass-market plug-in to market.

Toyota has also already begun preparations to build a factory that will produce the next-generation lithium-ion batteries needed for plug-ins and purely electric vehicles, Toyota President Katsuaki Watanabe told reporters on Monday.

"Hybrids are a core business for Toyota," Watanabe said at a briefing on the sidelines of the North American International Auto Show. "That strategy has absolutely not changed."

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The comments from Toyota constituted the clearest statement yet from the Japanese automaker of its commitment to plug-in vehicle technology and amounted to a direct challenge to GM, which has won widespread attention for its announced plans to build its own rechargeable hybrid vehicle, the Chevrolet Volt.

GM initially said it expected to have the Volt in production by the end of 2010, but last week Chief Executive Rick Wagoner said there was no guarantee that target could be reached because of the complexity of the development effort.

GM's vice chairman and product chief Bob Lutz on Monday at a separate briefing at the show told reporters that GM's goal of bringing the all-electric Volt into production in 2010 was a "big stretch" but still a working target for GM.

"We welcome competition because that is how new technology is developed for consumers," Watanabe told reporters on Tuesday. "But we don't want to lose."

Toyota plans to have several hundred plug-in vehicles with operators of large fleets of vehicles by the end of 2010, Watanabe said. A Toyota spokesman said current company plans were to market a test fleet of about 400 such vehicles.

Environmental advocates have been urging automakers to roll out rechargeable or plug-in hybrid vehicles which are capable of running on battery power alone over short distances and recharging in a standard electric outlet.

Backers see the technology as a way to reduce fuel consumption and greenhouse gas emissions. The sharp increase in fuel economy the vehicles provide could also help automakers such as GM meet more stringent U.S. government-imposed fuel economy standards.

Watanabe also said Toyota had redoubled its efforts to ensure that the company's focus on quality was not compromised by its global growth -- a commitment some critics have recently questioned after a spate of quality problems.

"At the present time, it's true that our global growth and the development of our supply base have not always been well aligned," Watanabe said.

"As quality improves, costs go down. The two are directly linked, "he added. "That's the kind of thinking we need to have through the organization."

Watanabe also said Toyota was working on low-cost vehicle for emerging markets, although he said it would have to be priced above $2,500. Earlier this month, India's Tata Motors Ltd. rocked the industry with plans for a no-frills subcompact for that price, billing it as the world's cheapest car.

"I think it would be very difficult for us to produce in that price range," Watanabe said, adding that Toyota was close to approving a competing vehicle program. "I think we are very near a go sign."

RAMPING UP BATTERY PRODUCTION

Toyota owns a 60 percent stake in Panasonic EV Energy Co, a joint venture it created with Matsushita Electric Industrial Co to build batteries for its market-leading Prius about a decade ago. Watanabe said Toyota would increase production of the nickel-metal hydride batteries used in current hybrids through that joint venture.

Panasonic EV Energy now has capacity to make just under 500,000 battery units annually. By next year, Toyota plans to have capacity for 600,000 units, Watanabe said.

On Sunday, Watanabe had announced that Toyota planned to build two new dedicated hybrid models, one sold as a Toyota, the other under its luxury Lexus brand.

Speaking to reporters on Monday, Watanabe said that the new hybrid would be larger than the Prius and probably built at a Toyota factory in Japan.

"If I say any more than that the engineers will be mad at me. But I am the president," he said.

(Reporting by Kevin Krolicki, editing by Peter Bohan)

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