Toyota's Gamble

The New York Times reported today that Toyota could be falling behind its rivals in the race to go electric. They specifically mentioned rivals Mitsubishi, Nissan, Tesla and GM, but could have listed a dozen others (see Plug In America's EV Tracker for a complete list).

“The time is not here,” Masatami Takimoto, Toyota’s executive vice president, said during a factory tour this year. Electric cars “face many challenges,” he said, adding that “to commercialize pure E.V.’s, we need a battery that far exceeds the current technology.”

Coming from a VP of Toyota, this is an absurd comment. I'm still driving a Toyota-made EV that was designed over a decade ago. Hundreds of these RAV4 EVs continue running perfectly, and I can assure you these are not secondary vehicles but the primary vehicle for the families that own them. To make a comment like this doesn't show ignorance, there's something else behind it.

“In a world where vehicles run on electrons rather than hydrocarbons, the automakers will have to reinvent their businesses,” Russell Hensley, an analyst at the consulting company McKinsey, told clients in a recent report.

True statement.

"Toyota executives rattle off reasons to be skeptical of electric cars: They do not travel far enough on a charge; their batteries are expensive and not reliable; the electrical infrastructure is not in place to recharge them."

How far is far enough? Over 80% of American drivers don't exceed 40 miles a day. Tens of millions never drive long distances, and of those who do, a plug-in hybrid would suffice.

The batteries are costly, I'll give him that, but the prices are getting lower every day. As for not reliable, of all the RAVs Toyota has put on the road, virtually none have had battery failures. The batteries are exceptionally reliable.

This last bit about the infrastructure is laughable. The electric grid is everywhere. The cost and effort to install a charge station in a garage or driveway is minimal. The public charging will be built out as the cars are delivered. I recently attended a stakeholder's meeting at Plug In 2009 in Long Beach, CA where utilities, automakers and city planners were all discussing how they were going to build out home, workplace and public charge stations over the coming years. Toyota wasn't in the room. Maybe they should attend these conferences. They'd learn a lot and maybe stop making such boneheaded statements.

"Even when electric cars are sold widely, the company says, they will be suitable only for short trips and serve a decidedly niche market."

Short trips constitute the vast majority of all trips. A car suited for short trips of less than 100-200 miles per day does not serve a niche market, it serves the majority market.

"Meanwhile, Toyota’s new president, Akio Toyoda, has become a big promoter of the company’s fuel cells, which he calls the “ultimate” technology."

A huge mistake!

“You don’t see many competing technologies survive in a key market for very long,” said Mr. Shimizu, the Keio University professor.

And more often than not in the history of innovation, a change in the dominant technology means a change in the market leader.

“Electric cars are a disruptive technology, and Toyota knows that,” Mr. Shimizu said. “I wouldn’t say Toyota is killing the electric vehicle. Perhaps Toyota is scared.”

Here's what I think. Toyota is working feverishly on an EV to compete with Nissan's Leaf. They are going to release the plug-in Prius late next year to compete with the Volt. In the meantime, they'll make public statements about how the batteries and the infrastructure aren't ready to try and damp enthusiasm for plug-ins so they can continue to sell their hybrid models to the very demographic who are likely plug-in buyers. Then watch what they say when they hit the market with their own EVs.

Paul
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