Ford Transit Connect

Two words are on the tip of the auto industry’s tongue these days: electric cars. Nissan, which had languished behind Honda, Toyota, Ford and General Motors in the race to bring hybrid cars to market, is currently a media darling on the strength of its soon-to-be-introduced LEAF battery-electric car. Ford is building buzz with its upcoming Ford Transit Connect and Ford Focus battery-electrics. Meanwhile, General Motors, which famously introduced and then withdrew the battery-electric GM EV1, is about to re-enter the competition with its Chevrolet Volt. (GM labels the Volt an electric car because the propulsion is always electric, though it is equipped with an internal combustion engine to recharge its batteries.) All of which leaves Toyota Motor Corp., which is widely acknowledged to be the leader in hybrids, behind the curve in battery-electric cars.

That’s just where Toyota wants to be. The Japanese auto giant hasn’t completely turned its back on electric cars. In fact, it announced plans to build a battery-electric RAV4 crossover vehicle with technical help from Tesla Motors and another battery electric urban vehicle. Regardless, Toyota is committed to staying the course with hybrids. Toyota Executive Vice President Takeshi Uchiyamada told a recent press gathering in Detroit that his company is planning to introduce six more hybrid models by the end of 2012. And he gave special attention to the plug-in version of the Prius hybrid expected to come to the U.S. market in June 2012.

Why put battery-electrics on the back burner? Toyota engineers have serious questions about the viability of battery-electric propulsion for vehicles larger than sub-compact cars, so it’s moving forward with its hybridization strategy. But is that the right course?

The plug-in version of the Prius has what the press described as a “modest” sales target of 20,000 units a year. For any hybrid car other than Prius, that target is ambitious. Then there’s the question of “cannibalization.” Let’s say Toyota sells 20,000 plug-in Priuses. How many of those buyers would have purchased the non-plug-in Prius or another “conventional” Toyota or Lexus hybrid model?

Frankly, even some Toyota staffers are skeptical about the success of the plug-in Prius and other plug-in hybrid cars, because the vehicles don’t seem to offer many advantages over “conventional” hybrids. For example, the plug-in Prius offers an all-electric range of about 13 miles. That’s more than the minimal all-electric range from the current Prius. But is that advantage enough to justify a $3,000 to $5,000 premium over the current non-plug-in hybrid? 

The larger question surrounding both hybrid cars and electric cars is the size of the potential market. Alternative-propulsion vehicles have never reached 5 percent of the overall new-vehicle market in the United States. The introduction of new models could spur the expansion of the market as more consumers find vehicles that appeal to them and fit their needs. But as long as hybrid cars are significantly more expensive to build than conventionally-powered vehicles -- and that seems it will be the case long over the horizon -- then hybrid cars will have to justify their premium by demonstrating added value to consumers.

It’s an open question whether consumers will find that the improved fuel economy and hard-to-quantify environmental benefits of hybrid and electric cars are worth thousands of dollars. This is especially the case when studies continue to point out that the “payback period” for the technology is very lengthy -- so lengthy many original owners will never reap the monetary rewards.

In the end, building electric and hybrid cars might simply be a matter of business pragmatism. The manufacturers hope to sell enough hybrids and electrics to meet government standards so they’re allowed to sell the conventionally powered cars that actually make them money.

Tom Ripley Driving Today Contributing Editor Tom Ripley writes about electric cars, the auto industry and the human condition from his home in Villeperce, France.

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