Hybrid cars try merging into the mainstream

TOKYO Reuters published this feature story: In a car park in Tokyo's trendy waterfront area this month, some 40 cars lined up face to face.

They weren't there to race and the models might not be the coolest designs ever to hit the road, but their owners are convinced they are driving the cars of the future.

On one side were 20 Prius sedans, on the other Estima hybrid minivans -- both models that combine a gasoline engine and a battery-powered electric motor.

Touted by Japanese makers as ``the next big thing'' after the traditional internal combustion engine, hybrid gas-electric vehicles offer from 1.5 times to twice the fuel efficiency of gasoline cars of the same size, cutting carbon dioxide emissions.

``My company is environmentally conscious and there was the attraction of trying something new, and my colleagues were egging me on, so I bought one,'' said Shigetsugu Betchaku, a member of Priusmania, a web-based club that organized the meeting for gas-electric vehicle owners.

Unlike pure electric cars, hybrids do not need to be plugged in to be recharged, but they are more expensive than gasoline cars, with the Estima hybrid costing some 500,000 yen ($4,000) more than an Estima with a gasoline engine.

Most members of Priusmania admit they are car enthusiasts obsessed with the newest technology, but the popularity of hybrids is spreading, with vehicles now bought by the eco-minded willing to a pay a premium to be green.

``I've always been interested in the environment so I decided my next vehicle would be a Prius,'' said new owner Hiroshi Takeda.

TOYOTA AIMS HIGH

Since it pioneered the way with the Prius in 1997, Toyota Motor Corp's (7203.T) worldwide hybrid sales have topped 100,000. That includes the Estima as well as Crown luxury sedans that are ``mild hybrids'' using a cheaper but less efficient system.

Honda Motor Co (7267.T) is the only other automaker so far to mass-market hybrid vehicles -- the two-seater Insight and a recently launched hybrid version of its popular Civic compact -- and has sold some 13,000 since late 1999.

But it is still very much a niche market and the question of just how fast and how far it will develop is crucial for an industry that must decide how to divide up research funds between hybrids and competing technologies such as fuel cell vehicles.

Fuel cells use an electrochemical process to create electricity by mixing hydrogen with oxygen, emitting only water and heat.

Toyota is the most ambitious, aiming to build 300,000 hybrids annually in 2005, although it has said the target may include sales to other automakers.

``We are going to do everything we can to spread this technology,'' said Hiroyuki Watanabe, senior managing director in charge of environmental product design.

``What we are trying to do is not just reduce costs by a bit but cut costs by half while at the same time improving performance,'' he said, without specifying a time frame.

Tax credits offered in Japan and the United States will help the vehicles gain acceptance, while European car makers' aims to cut carbon dioxide emissions to 140 grams per kilometre by 2008 will push them towards hybrids, he added.

Toyota reckons hybrids will probably have a long lead time before fuel cell vehicles provide real competition.

On a ``well to wheel'' basis -- which tracks the efficiency of fuel technology from the time an energy source is extracted from the ground to when it turns the wheels -- Toyota says hybrids offer almost the same amount of fuel efficiency as current fuel cell technology.

GREEN AND PROFITABLE?

Toyota is the only automaker claiming to show a profit on hybrid sales, after selling the Prius at a loss for some years.

Most other automakers are still at the starting block.

Ford Motor Co will offer a hybrid version of its Escape sports utility in 2003 and DaimlerChrysler AG is also aiming for a vehicle next year. General Motors Corp has said it will offer a hybrid pick-up truck in 2004.

Toyota's nearest rival, Honda, says Toyota's goals look ambitious, citing the high costs of the new technology and a lack of confidence over how enthusiastic consumers will be.

``The fact of the matter is that the cost of making hybrids is still high, placing a huge burden on a company as they are not yielding a profit,'' said Michiyoshi Hagino, senior managing director of Honda's automobile division.

Hagino says more Honda hybrids will follow the Civic but the strength of those sales will probably determine how aggressively it pushes ahead. It is aiming for U.S. sales of 20,000 to 24,000 Civic hybrids annually and Japanese sales of around 6,000.

Not that either Toyota or Honda are putting all their eggs in the gas-electric basket.

Like other major automakers, both are aiming to put a fuel-cell vehicle on the market next year and both are confident about their respective technologies.

Toyota, never reluctant to tout its prowess in environmental technology, claims it is the most aggressive automaker developing fuel cell technology.

Its fuel cell vehicle prototypes offer the best driving performance, says Watanabe, adding that Toyota was working on building facilities to produce fuel cell stacks in numbers roughly equivalent to fuel cell developer Ballard Power Systems Inc.

Honda will be using a fuel cell stack from Ballard in its first vehicle next year but says its own stack will be ready in the near future.

``Our fuel cell stack will not be inferior to Ballard's. In fact it may even be better,'' said Hagino.