Plug-in hybrids may be limited by the vehicle price, recharge time and battery durability

   Toyota Motor Corp. said U.S. consumer demand for plug-in hybrids, a technology backed by President Barack Obama, may be limited by the vehicles’ price, recharge time and battery durability.

Toyota estimates sales of hybrids that can be recharged at household outlets may be 50,000 units a year at most and could be as few as 3,500, Bill Reinert, U.S. national manager for advanced technology, told a National Academy of Sciences panel today in Washington. Sales of Toyota’s Prius, the best-selling gasoline-electric vehicle, were almost 159,000 last year.

A market for the plug-in electric hybrid vehicles “will emerge, but their success depends on advantages over existing hybrids,” Reinert said in prepared remarks. “There is a great deal of variation on how current PHEVs perform in real-world conditions.”

Interest in plug-ins surged after gasoline prices reached record highs last year and Obama campaigned on a goal of getting 1 million such vehicles on U.S. roads by 2015. The Energy Department said this month it plans to begin awarding a portion of $25 billion in low-cost federal loans to companies that build plug-ins and other fuel-efficient vehicles at U.S. factories.

General Motors Corp. has committed about $1 billion to develop the rechargeable Chevrolet Volt, which the Detroit automaker is banking on to leapfrog Toyota’s Prius. Hybrids such as the Prius boost fuel economy and cut emissions of carbon dioxide by supplementing a gasoline engine with an electric motor and battery pack that’s recharged from braking.

GM Plug-In Plans

GM aims to begin next year selling the Volt, which goes 40 miles on battery power before a gasoline engine engages to recharge its lithium-ion pack. Toyota hasn’t announced plans to sell plug-in hybrids to consumers. Honda Motor Co. said last month it’s studying plug-ins, and as yet has no plan for consumer sales.

The companies estimate lithium-ion batteries needed for plug-ins may add at least $5,000 to $10,000 to the vehicle price.

Tests of Priuses fitted with $10,000 lithium-ion packs from battery maker A123 Systems Inc. found fuel economy rose only to the mid- to low 50 miles per gallon from the standard Prius’s 46 mpg rating, Toyota said. The results of the tests by Google Inc.’s Google.Org, Consumer Reports and Portland General Electric include energy used to recharge the extra batteries.

The automaker also cited recent studies by Duke University and Carnegie Mellon University showing plug-ins may provide only limited reduction of greenhouse gases compared with current hybrids such as Prius that don’t need to be plugged in.

Test Fleets

Still, Toyota plans to build 500 plug-in Priuses with lithium-ion batteries to be delivered to global test fleets from this year, Shinichi Abe, head of the Toyota City, Japan-based company’s hybrid vehicle management system, told the National Academy in prepared remarks. “This type of developing process is necessary before mass production,” he said.

GM, which is now struggling to avert bankruptcy, applied for Energy Department loans for projects related to Volt. Toyota isn’t seeking U.S. funds.

Toyota’s wariness on demand in the U.S. for plug-in vehicles stems from its experience selling battery-powered RAV4 sport-utility vehicles in California in the early 2000s, Reinert said.

While the company spent 15 times as much per vehicle to advertise and promote the all-electric SUVs as it did for its first-generation Prius, it managed to sell only about 300 a year, he said. “These marketing efforts were successful in generating high awareness, as shown in our Web site traffic data, but sales remained low and did not increase over time,” he said.

Market Readiness

Testimony from Toyota, GM, A123 and other companies is being collected by the National Academy as part of a report it’s preparing for the Transportation Department to determine the market-readiness of advanced batteries and plug-in vehicles.

K.G. Duleep, managing director of Energy & Environmental Analysis Inc. in Arlington, Virginia, and a consultant on the report, said it may be published in July or August.

The Obama administration, pressing for more fuel-efficient vehicles, won’t block the Chevrolet Volt electric car even after the president’s auto task force called it too expensive, a person familiar with the matter said last month.

Questions about the plug-in car’s future arose after the administration ousted Chief Executive Officer Rick Wagoner on March 27 and criticized the car in a report that said government-supported GM’s recovery plan was insufficient.

“While the Chevy Volt holds promise, it will likely be too expensive to be commercially successful in the short-term,” according to the March 30 report by Obama’s auto task force.

The administration’s concerns about the Volt were offset by its belief that GM needs cleaner, fuel-efficient vehicles to succeed in the long term, said the person, who asked not to be identified because the task force’s deliberations are private.

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