Hybrid sales forecasts cautious
Toyota's aim for U.S. may be too lofty
August 11, 2005
BY RICK POPELY
Toyota's bold prediction that it would sell 600,000 hybrid vehicles annually in the United States by early next decade has been met with a collective "We'll see how it goes" from the rest of the industry.
In a forum on future engines at the automotive Management Briefing Seminars last week in Traverse City, the domestic automakers and Honda took the road of caution.
Honda sells hybrids now and the others plan to roll out gas-electric models over the next few years, but none would venture a sales projection.
Ford says it will add three models by 2008, giving it five, and will have its second generation of the technology on the road by then.
"That won't be our last," said Mary Ann Wright, director of Ford's fuel-cell program. "But we're not in a race with Toyota."
Even Honda, the first to offer a hybrid in the United States with the 2000 Insight, has not projected beyond the 50,000 hybrids it expects to sell this year because of uncertainty over demand.
"We have to see what the market is, so we really take it one step at a time," said John German, American Honda's manager of environmental and energy analyses.
Besides the Insight, Honda has hybrid versions of the Accord and Civic but hasn't announced others. "We literally haven't made up our minds about what our next hybrid will be," German said.
What does Toyota see that the others don't? For one, it has received a public edict from the top. Toyota Motor Corp. President Katsuaki Watanabe recently set a goal of selling 1 million hybrids globally by early next decade, with 600,000 expected to be sold in America, its largest market.
Hybrid vehicles are powered by gasoline and electricity; the engine switches between the two, thus improving mileage and reducing emissions.
Toyota announced last week that it will introduce 10 hybrids over the next six or seven years. "We'll be in all segments" to reach the 600,000-vehicle goal, about 25% of Toyota's expected sales volume, said Dave Hermance, Toyota's executive environmental engineer.
J.D. Power and Associates is not so sure. The research organization sees hybrid sales industrywide leveling off at around 650,000 vehicles per year by 2012.
The reason? Cost, says Anthony Pratt, J.D. Power's senior manager of global powertrain research.
Power says gas-electrics cost more, about $2,300 to $11,000 more than gasoline-powered cars. Moreover, the American automakers and Honda are exploring more efficient gas engines, diesels and even natural-gas vehicles that will be alternatives by then.
But costs are declining as Toyota gains experience, said Hermance, who insists the talk that Toyota sells hybrids at a loss is inaccurate.
Hermance also says the electric motors, software and batteries it develops for hybrids can transfer to hydrogen fuel-cell vehicles, which are considered the vehicle of the future.
Ford has said it will limit sales of its hybrid models to about 20,000 this year partly because it can't get more batteries and other components. Hermance says that is not an issue for Toyota, which develops the hardware and software in-house and gets its batteries from a joint venture with Panasonic.
Though the other manufacturers are cautious about hybrids, they aren't blind to their possibilities. They are designing vehicles so they can easily add the necessary hardware, particularly the bulky battery packs, if demand warrants.