Beyond the Prius

Toyota's Prius hybrid stole a march on the car industry. What comes next?

WHETHER in Los Angeles, Tokyo or London, the Prius, Toyota's trailblazing petrol-electric hybrid car, has become a common sight since the second (and much-improved) version was launched three years ago. The Prius has since achieved cult status among image-conscious Hollywood stars and greener-than-thou politicians. Last week Toyota said it had passed the milestone of manufacturing more than 1m hybrid vehicles.

The charms of the Prius are not hard to grasp. The combination of a frugal 1.5-litre petrol engine with an electric motor provides the performance of a 2.0-litre engine but with lower fuel-consumption than a diesel. The Prius recaptures energy usually lost during braking and can run on electric power alone in stop-start traffic. Its CO2

emissions of 104g/km make it cleaner than almost any other car on the road.

But there is disagreement about where hybrid technology is heading. Hybrid SUVs from Ford and General Motors (GM) have been slow sellers. And last week Honda said it would no longer offer its bestselling Accord in a hybrid option, but would instead introduce a low-emission diesel version in 2009. Honda reckons hybrid technology is better suited to small cars, such as its Civic, used for short trips.

For its part, GM reckons that hybrids will only become more popular if their range in all-electric mode can be increased. It is pinning its hopes on the futuristic-looking Chevrolet Volt, a “plug-in” hybrid that can be charged overnight using mains electricity. With its powerful and compact lithium-ion batteries the Volt will have a range in all-electric mode of up to 40 miles (64km), at which point a small petrol engine will kick in to recharge its batteries. (Unlike the Prius's petrol engine, the Volt's will not drive the wheels directly.) Last week GM's chairman, Rick Wagoner, said contracts had been placed with battery-makers to develop power packs safe and reliable enough for a production vehicle, which GM hopes to launch by 2010.

Toyota's top hybrid engineers say they are all for plug-ins, but they don't think the lithium-ion batteries they depend on will be ready to meet their stringent quality standards for several years. (They cannot resist a polite titter about spontaneously combusting laptop batteries.) Toyota is therefore likely to stick with the heavy and range-limited nickel-metal hydride battery for the third-generation Prius, due in 2009.

But it is not only GM that has the next Prius in its sights. PSA Peugeot Citroën hopes to offer diesel-electric hybrid versions of its mid-range cars by 2010 that will use less fuel than the Prius on long journeys. Toyota responds that combining the higher cost of a diesel engine with hybrid technology will be too expensive, but PSA claims it will make money on cars that will undercut the Prius on price.

And then there are the big German carmakers, which are adopting a range of technologies that they say provide most of the benefits of hybrids but without the added cost and complexity. For example, all BMW's four-cylinder engines (both petrol and diesel) will come with “start-stop” technology to cut the engine when it is idling. This is sometimes called a “mild” or “start-stop” hybrid. Mercedes and Volkswagen, meanwhile, are working to improve the efficiency of internal-combustion engines, especially ultra-clean diesels—though Mercedes will offer a petrol-electric hybrid version of its S-Class limousine later this year.

Toyota's ample cash and engineering resources mean that it is unlikely to be caught out, whichever way the market goes. Even if the Prius is pushed aside by other forms of hybrid, it has done wonders for Toyota's reputation by making the firm seem green and technically cool. At a time when the Japanese firm was taking advantage of the collective woes of America's carmakers to become the market leader, that has been politically priceless.
Jun 14th 2007 From The Economist