Drive beyond the cluster of auto plants around Tsutsumi and nearby Toyota City and into the hills north of Nagoya, and you find another Toyota plant-this one bereft of banners. At this factory, called Hirose, Toyota did something extraordinary for a carmaker: it built dedicated facilities to fabricate state-of-the-art semiconductor chips. Most carmakers are satisfied to buy off-the-shelf electronics or farm out electronics manufacture to suppliers. Toyota is doing everything in-house. Its high-tech chip plants churn out the power controllers that constitute the hybrid vehicle’s heart, making Hirose the centerpiece of a hybrid investment that some analysts peg at $1 billion.
The Hirose plant is off-limits to journalists, but the story of Toyota’s program is one that its architect-Takehisa Yaegashi, the unassuming engineer revered within Toyota as “the father of the hybrid”-is eager to tell. Drinking black coffee in a nondescript meeting room in Toyota’s offices in Tokyo, Yaegashi traces the origins of Toyota’s hybrid strategy back to the early 1970s, when the U.S. Congress set the first national limits on tailpipe emissions.
In 1971, Yaegashi was a 28-year-old mechanical engineer, two years out of Hokkaido University, when Toyota assigned him to its new clean-engine project. Over the next 20 years, he designed everything from exhaust-scrubbing catalytic converters to emission-reducing engine control systems. All this helped make Toyota’s fleet of cars one of the cleanest sold in the United States. (The cars in Toyota’s 2003 U.S. fleet get an average of 32.3 miles per gallon of gasoline, 3.6 miles more than GM’s cars. Toyota’s SUVs and light trucks, however, get an average of 21.9 miles to the gallon, only eight-tenths of a mile better than GM’s.)
But Toyota didn’t stop at innovative catalytic converters. By the early 1990s-even as Toyota followed the lead of U.S. automakers by making popular but fuel-guzzling SUVs-Toyota’s leaders prepared to redouble their efforts to clean up the automobile and make it more fuel efficient. “We saw two things happening at the same time: demand for cleaner air and demand for greater fuel savings,” recalls Yaegashi.
At the time, the solution seemed to be battery-powered electric vehicles. Toyota built electric versions of its small SUV, while GM test-marketed a sporty two-seater. But neither of these early electric vehicles ever made it to mass production; the batteries limited their range to barely 100 kilometers. Still, these experiments taught engineers an important lesson: you could make electric cars powerful, quiet, and peppy by using high-power electronics to manage the flow of electricity between the battery and the electric motors. As Stempel puts it, “The electronic revolution gave the engineers the tools they needed to make electric cars quite drivable. That broke open the logjam.”