Toyota Confirms 2009 Model Lithium-Ion Prius—
No Talk of Plug But Promises of More Power (outdated)
Feb 26, 2007 (From the CalCars-News archive)

Business Week's March 5 issue has several
articles about Toyota. We have three items below.
First, a sidebar in which CEO Katsuaki Watanabe
confirms that the next-generation Prius (model
year 2009, out late 2008 or early 2009) will use
lithium-ion batteries. So much for rumors about an early plug-in.

The second story contains the opposite of what we
hoped for, and logically expected. In an
accompanying Q&A (online only) Watanabe promises
(astonishingly that the new Prius will have "much
higher performance and good mileage per gallon."
We interpret this to mean a bit better MPG that
drivers need and much quicker 0-60MPG to Prius
owners who love the safe handling and pep of the current car.

The context is, of course, the national attention
to PHEVs getting 100+MPG of gasoline, plus
electricity. On the plus side, we were pleasantly
surprised when the Toyota website
<http://www.calcars.org/calcars-news/694.html>
published its poll showing that 39% of
respondents wanted PHEVs; a total of 94% wanted
PHEVs/higher fuel economy/alternative fuel
hybrids and only 6% wanted "higher power output".
On the minus side, we were unimpressed by new
billboard ads touting Prius as "PRIUS. 60 MILES
AND MILES AND MILES AND MILES AND MILES PER
GALLON." The billboards have a small footnote,
saying EPA Estimated City MPG -- but ads on pumps
at independent gas stations show the car with a
"60MPG" sticker with no footnote. (The Prius
sticker says 50MPG highway/60 MPG city. Until now
the company has summarized that as 55 MPG. Soon,
with revised EPA tests, the car will probably
average around 45-48MPG, which is close to what
most drivers experience.) We can supply photos
for journalists of the billboards and gas-tank signs.

Third is from the main print story "Why Toyota Is
Afraid of Being Number One," which is mostly
about the company's current push on powerful
trucks and its continuing fears of a backlash in
the U.S. We excerpt some history on its early
hybrids, including the company's relationship
with the Sierra Club, and its early successes in
Hollywood (this Oscar season somewhat shadowed by PHEVs and EVs).


Toyota's Bid for a Better Battery
CEO Watanabe confirms that Toyota will develop
new lithium-ion batteries for its third-generation hybrids
http://www.businessweek.com/magazine/content/07_10/b4024075.htm

It's easy to see why Toyota's image as an
environmentally friendly auto maker has gotten a
bit scuffed up of late. The Japanese carmaker's
recent focus on bigger, faster autos has made it
an easy target for green groups.

At the North American International Auto Show in
January, for instance, Toyota (TM ) unveiled the
all-new Tundra (see BusinessWeek.com, 01/30/07,
"First Drive: 2007 Toyota Tundra") pickup, its
biggest truck ever, and the FT-HS, a
400-horsepower concept car that uses the
company's hybrid system to help propel it from
0-60 in four seconds. Small surprise, then, that
environmentalists were complaining that it was
more about performance for Toyota than ecology.

New versions of the Highlander and Sequoia
sport-utility vehicles, meanwhile, will also be
bigger and heavier than their predecessors.
"That's not terribly green," says Kurt Sanger, an
analyst at Macquarie Securities in Tokyo.
"Toyota's fuel economy remains relatively good,
but it's not getting better with the new
products" (see BusinessWeek.com, 2/7/07, "Going Young at Chicago Auto Show").

LI-ION IN THE STREETS Yet Toyota should soon be
giving the environmental lobby something to cheer
about. In an interview with BusinessWeek on Feb.
16, Chief Executive Katsuaki Watanabe confirmed
that Toyota's third-generation hybrid cars, due
out in late 2008 or early 2009, will use
lithium-ion batteries. Lighter and more powerful
than the current nickel metal hydride packs, the
new batteries will help make for more
fuel-efficient hybrids. "We will change the
battery from nickel hydride to the lithium
battery," the CEO said during a rare one-on-one
interview at the company's headquarters in Toyota
City. Toyota officials say it's the first time
Watanabe had confirmed the change of cells (see
BusinessWeek.com, 2/22/07, "Talking with Toyota's Top Man").

While widely expected, some had wondered whether
Toyota's li-ions would be available in time for
its new hybrid system. Watanabe, who occasionally
visits the site where the batteries are being
developed, has no doubts: "We can develop the battery in time," he says.

It's not just the batteries that will be better.
The rest of Toyota's next-generation hybrid
systems will also be a big step up from what's on
the road today. "We are now aiming at reducing,
by half, both size and cost of the
third-generation hybrid system," saysWatanabe.
That should go some way to bringing the price of
hybrids closer to regular gasoline cars.

MORE HYBRID MODELS On performance, Toyota is
more circumspect. Watanabe says the company isn't
ready to reveal data on the extent to which
performance and fuel efficiency will improve.
Analysts suspect Toyota will lean more towards
bettering the latter. "There will be a greater
benefit for consumers who are really serious
about fuel efficiency," says Koichi Sugimoto, an
analyst at Merrill Lynch (MER ) in Tokyo. He
reckons fuel economy could increase by 20% to 30%.

If that proves correct, it should assuage the
green lobby, which has complained that Toyota's
hybrids—like the Lexus RX 400h (see
BusinessWeek.com, 3/8/06, "Hybrid Heaven in a
Lexus ") and Toyota Highlander SUVs—don't have
much better fuel economy than the gasoline-only versions.

Longer term, Watanabe reiterates that he believes
hybrid sales could reach 1 million a year by the
early part of next decade. At the Detroit show,
Toyota North America chief Jim Press told
reporters the company is looking to boost hybrid
sales by 50% in 2007, to between 250,000 and 300,000.

To ramp up sales, Toyota will increase the number
of hybrids on the market. Reports in Japan
suggest the company plans to offer a hybrid
version of any model that sells more than 100,000
units a year (see BusinessWeek.com, 4/3/06,
"Toyota Winning the Hybrid Race"). "We're
considering what sort of hybrid system can be
applied to many types of hybrid vehicles," says
Watanabe. But for hybrid sales to reach seven
figures "we will probably have to double the
number of models with a hybrid system installed."
Applying hybrid systems to diesel and other
alternative fuels is also under consideration.

SAFETY MATTERS If Toyota can achieve its goal of
rolling out li-ion powered hybrids in
double-quick time, it will widen its lead over
other many auto makers. To catch up, the Big
Three U.S. carmakers have asked Washington to
subsidize advanced battery research to the tune
of $500 million, spread over five years. General
Motors (GM ), meanwhile, has asked Johnson
Controls-Saft Advanced Power Solutions, a joint
venture between automotive-systems manufacturer
Johnson Controls (JCI ) and Paris-based Saft, and
Cobasys, a joint venture between Chevron (CVX )
and Energy Conversion Devices (ENER ), to develop li-ions.

Still, Toyota should be wary of rushing. For one
thing, its li-ions will need to be durable in
order to win over buyers. "You don't want a
hybrid car, which you already pay more for up
front, where you have to replace the battery
after a few years," says Macquarie's Sanger.

Then there's the safety issue. Last year, Sony
(SNE ) took a $430 million charge after li-ion
powered laptops caught fire (see
BusinessWeek.com, 9/20/06, "Battery Woes Spark
Few Concerns Among Auto Makers"). In cars, where
the risks are greater, avoiding fires is even
more important. "We're making sure that the
problem can be avoided." says Watanabe. "These
difficulties must be reflected in the design."


Talking with Toyota's Top Man
Katsuaki Watanabe made his name at Toyota as a
cost cutter. Now he's steering the world's most profitable automaker to No. 1
http://www.businessweek.com/magazine/content/07_10/b4024074.htm

If it's tough at the top, Katsuaki Watanabe isn't
showing it. Since taking over from Fujio Cho as
chief executive of Toyota in June, 2005, the
65-year-old has won admiration for showing calm
assurance, tenacity in battling complacency, and
razor-sharp knowledge of all things Toyota.
<snip>
Q. Despite the success of the Prius, Toyota has
also been criticized lately for introducing
larger vehicles like the new Tundra. Will
Toyota's next generation hybrids provide a response to critics?
A. I still have the idea of having [hybrid sales
of] 1 million units [a year] in the early part of
the next decade. For us to be able to do that, we
will probably have to double the number of models
with a hybrid system installed.

We always talk about the right vehicle at the
right location and the right timing. An easy to
understand example may relate to Brazil, a
country with extensive bio-fuel availability. We
have decided to [introduce a] Corolla that can
accommodate 100% ethanol. We also think about
diesel engines and compressed natural gas.
Further into the future, the fuel cell is another
area we're considering. But for all of those
systems, a hybrid system can be applied.

Q. Will Toyota's next generation of hybrids,
which are expected in late 2008 or early 2009,
focus on fuel economy or performance?
A. When we shifted from the first generation to
the second generation hybrid we enhanced
substantially performance in many different
aspects. On top of that, we reduced both the cost
and size by half. We are currently working on the
third generation hybrid, which will also have a
much higher performance and good mileage per
gallon. On top of that we are now aiming at
reducing, by half, both size and cost of the
third generation hybrid system. We are not yet at
the stage where we can disclose data relating to
performance or fuel consumption.

Q. Will Toyota use Lithium-Ion batteries in the next generation hybrids?
A. We will change the battery from nickel hydride
to the lithium battery, and therefore we would
like to reduce the size of the motors and
inverters by half, so the overall size of the
hybrid system can be reduced by half.

Q. There's been a lot of discussion lately over
how long it will take Li-Ions that are safe and
durable for autos. Will the batteries be ready in time?
A. Yes, I believe we can develop this battery in
time. Occasionally I visit the site where the
development is going on to see the trial model.

Q. But were you worried by Sony's problems last
year when Li-Ions in laptops were reportedly catching fire?
A. Of course, we're experimenting on the problem
that Sony encountered last year. We are making
sure that the problem can be avoided. Automobiles
are used in different conditions. For example,
cars are used in temperatures from -20 degrees
Celsius to 40 degrees Celsius and are constantly
exposed to high vibrations. It's extremely
difficult to build those systems for automobiles
compared with cell phones which are used in
relatively stable environments. These
difficulties must be reflected in the design.


http://www.businessweek.com/magazine/content/07_10/b4024071.htm
Why Toyota Is Afraid Of Being Number One
It's overtaking Detroit—with trepidation. Now,
the carmaker is relying on ever-savvier PR to
avoid the U.S. backlash it dreads
<snip>
Few automakers have a more unassailable
environmental pedigree than Toyota (its closest
rival is Honda). And no car better represents the
company's green cred than the Prius. To hear
Toyota tell it, the hybrid was simply so trendy
and well-engineered it practically sold itself.
There's more to the story than that.

Just before Toyota was about to launch the Prius
in 1999, it called Dan Becker, director of global
warming initiatives at the Sierra Club. The
company wanted the group's seal of approval for
the Prius. Becker persuaded his superiors to
create an award for the best hybrid technology.
The idea was controversial, and Becker says some
Sierra Clubbers called him a "whore for the auto
industry." In the end, Honda's hybrid Insight won
the Sierra Club Award for Excellence in
Environmental Engineering; the Prius won the following year.

The Toyota-Sierra Club dance didn't end there. In
2001, the group borrowed a half-dozen Priuses and
drove them from Maine to Florida, stopping in
cities along the way and letting people drive
them. The group also held a cross-country trek
along Route 66, hitting towns and cities from
Chicago to Los Angeles. The drive-and-tell seemed
to work wonders. Says Becker: "Someone at Toyota
told me that a phenomenal percentage of people
who tested the car bought one." By 2004, Toyota
had passed Honda and had the greenest image.
"They just blew past us in the surveys," says
John German, manager for environment and energy
analysis for American Honda Motor Co. "They're in first place now."

Meanwhile Toyota turned to its point man in
celebrity-ville: Mike Sullivan, who owns Toyota
of Hollywood. Sullivan got hold of 26 Priuses and
took them to the 2003 Oscars. Before long, such
stars as Cameron Diaz and Leonardo DiCaprio were
being photographed ("Look, we're so green!") with
their Priuses. "It became the cool thing to do,"
says Sullivan. Now, every November, Toyota
sponsors the annual Environmental Media Assn.
Awards in Los Angeles. TV shows and movies that
feature environmental causes get a trophy.
Celebrities enter the ceremony along a green
carpet, Sullivan is a sponsor, and the Toyota image is omnipresent.
<snip>