Who Killed The Electric Car? Toyota Now Tries For That Role

By Dale Buss

Contributor/ Forbes Magazine

Drawing a dramatic line in the sand for a global auto industry that has continued to invest heavily in  all-electric vehicles, a top Toyota executive today simply said what a lot of people are thinking: EVs don’t make business or financial sense at this point.

And then Toyota Vice Chairman Takeshi Uchiyamada, also head of Toyota R&D, announced in Japan that the company was backing up its dramatic conclusion with equally decisive action: Toyota killed plans for a volume launch of its second all-electric car, the eQ, a version of the iQ minicar, and said that it hopes for only 2,600 sales worldwide of its other EV, a RAV4 version, over the next three years.

Now, Toyota plans to sell only about 100 battery-powered eQs in a very limited release in the U.S. and Japan. In 2010, in unveiling eQ and plans for it, the company said it wanted to sell several thousand of the nameplate each year.

At the same time, Toyota has announced a dramatic doubling down on the vehicle-electrification strategy it does like: hybrids. Toyota established, defined and still dominates the global market for gas-electric hybrids through its hugely successful Prius franchise (using technology developed by Uchiyamada). So it plans to have a total of 21 hybrids in its lineup within three years, including 14 all-new ones.

A Nissan executive said he understood Toyota’s move. “It takes an awful lot for a company to invest in and build the infrastructure for EVs,” Brendan Jones, director of EV marketing, sales and strategy for Nissan in the United States, told me. “If you’re going to commit to it, you’ve got to commit to it.”

And as far as concerns Nissan, which trailblazed the segment with its Nissan Leaf EV, “It’s the right thing to do,” Jones said. “We’ll keep on delivering to a market that is only going to grow over time.”

Toyota already was much more conservative about vehicle electrification beyond conventional hybrids than rivals General Motors and Nissan, who established the U.S. market and have been joined by Ford, Mitsubishi and others.

But still, Uchiyamada’s declaration before auto journalists in Tokyo on Monday was about the most damningly direct dismissal of EVs and their prospects that any reputable auto executive has thus far uttered.

“The current capabilities of electric vehicles do not meet society’s needs, whether it may be the distance the cars can run, or the costs, or how it takes a long time to charge,” Uchiyamada said.

Uchiyamada thereby concisely captured the three main arguments against EVs: They still have very limited range after development efforts worthy of a moon shot behind that very challenge; they remain extremely pricey, even with massive government tax credits on their purchase; and they take too long to be ready to run.

The forthright Toyota executive didn’t even mention what surely has become an increasingly relevant factor in Toyota’s EV calculations: Even at a time when $4-a-gallon gasoline seems to have settled in for a long run in the U.S. market, the changing mid- and long-term prospects for greater oil production in the United States and elsewhere, combined with huge leaps in fuel economy by internal-combustion engines, mean there’s even less of an imperative for auto companies to field EVs.

Toyota even remains disappointed in consumer acceptance of plug-in hybrids like its own Plug-In Prius and the original, GM’s Chevrolet Volt. “We believe that there is social demand for the plug-in hybrid,” Uchiyamada said. “But our efforts to let the customers know what it is have not been enough.”

On cue, Toyota also has just begun a new advertising campaign for its four-member Prius family of hybrids in the United States, showing them traversing a Candyland-like landscape and emphasizing that there’s a right Prius for everyone.

And, by implication, a right EV for just about no one.