Toyota Motor is backing off from electric vehicles and focusing on hybrids, with plans to offer 21 new or redesigned hybrid models by 2015. It sells one electric vehicle now, the pricey Rav4 EV. It had planned to sell thousands of a second, small electric vehicle, but now it only intends to sell about 100 of them to to governments and “selected users in Japan and the U.S.” According to Reuters, Toyota says it “misread the market and the ability of still-emerging battery technology to meet consumer demands.”

“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,” said, [Takeshi] Uchiyamada, who spearheaded Toyota’s development of the Prius hybrid in the 1990s.

The focus on hybrids isn’t entirely new (see, “Toyota Plans a Hybrid Strategy”). Toyota has been more reluctant than other automakers to bet heavily on electric vehicles, or even plug-in hybrids, especially compared to Nissan, whose Nissan Leaf was lead the current wave of electric vehicle offerings.

Toyota has often noted the limitations of battery technology. (Last year we identified battery costs as the key limiting factor in electric vehicles. See our feature, “Will Electric Vehicles Finally Succeed?”) The automaker is working to make better ones that are far cheaper and more compact than the lithium ion batteries used in electric vehicles now. It’s focused its research on solid-state batteries, which replace liquid electrolytes with solid ones to save space and allow for more compact designs (see, “Solid-State Batteries”).

Hybrids are more economically viable, but Toyota is still taking a risk focusing on them. They cost significantly more to make than conventional vehicles. From the Wall Street Journal:

“Profits from conventional [gas] powered cars are still higher, so we need to reduce hybrid costs more in order to promote their diffusion,” Takeshi Uchiyamada, Toyota’s vice chairman and R&D head, said at a news conference.

Hybrids are inherently more expensive than conventional vehicles, because they have more equipment, such as electric motors and batteries, in addition to a conventional engine.