April 2004

Hybrids' Rising Sun

Gas-electric cars are transforming the auto industry. Toyota's head start has Detroit scrambling to catch up.

By Peter Fairley

Banners two meters tall outside Toyota Motor's sprawling factory in Tsutsumi, Japan, scream "Hybrid," the word emblazoned over an image of the earth. Inside, beneath signs reading "Yoi shina, yoi kangae" ("Good thinking, good products"), assemblers in blue jackets and white gloves turn out about 400 of Toyota's newly designed Prius hybrid sedans every day.

Apart from the signage, it looks much like any other automotive factory floor-and that's what's remarkable. The Prius, which uses both a gasoline engine and an electric motor for propulsion, gets an average of 55 miles to the gallon-about double the mileage of a comparable gasoline car. What's more, the latest model rolling off the factory floor at Tsutsumi doesn't sacrifice power or comfort and sells for only about $1,000 more than a base model of Toyota's mid-size sedan, the Camry.

And the Prius is only a preview of Toyota's ambitious plans for the new hybrid technology. By the end of this year, the automaker plans to sell a luxury sport utility vehicle using the technology-a hybrid Lexus-in the United States. Within a decade, say Toyota executives, the gas-electric combination could be offered in every category of vehicle the automaker sells, from subcompacts to heavy-duty pickup trucks. "When Toyota's SUVs hit the market, and people see what a really powerful hybrid electric vehicle can do, I think it's going to rattle a few cages," says former General Motors chairman Robert Stempel, who chairs Rochester Hills, MI-based technology developer Energy Conversion Devices.