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Toyota doesn't see opportunity for an all-electric car

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Toyota Prius hybrid badge hev stock 1024
Toyota Prius hybrid badge hev stock 1024

Toyota's future lies in hybrids and hydrogen fuel cell vehicles, rather than all-electric cars like Tesla's Model S. The company's chairman, Takeshi Uchiyamada, spoke frankly on the near-term future of cars in a speech on Monday, noting that electric vehicles require breakthroughs in battery technology to become a viable replacement for traditional cars. The Wall Street Journal quotes Uchiyamada saying "the reason why Toyota doesn't introduce any major [all-electric product] is because we do not believe there is a market to accept it."

Toyota has invested in Tesla

The comments come despite a business relationship between Toyota and Tesla that has yielded component sharing and a large investment in Tesla itself. Toyota currently owns 2.5 percent of the fledgling manufacturer, a figure that was larger but decreased as Tesla issued more shares. It's clear that Uchiyamada understands the recently profitable company is correct in pursuing the all-electric market, but doesn't see it as an appropriate market for a company the size of Toyota. The Japanese company has produced all-electric vehicles, but continues to target the mass-market with its Prius hybrid instead.

Toyota sees hybrids as a 'long and sturdy bridge to the future'

Toyota will aggressively pursue the energy-efficient market with hybrid vehicles, with Uchiyamada calling the Prius "the most important vehicle for [Toyota's] future." Should the all-electric market, which virtually every other major manufacturer is entering, prove to be larger than Toyota suspects, the company is in a good position to transition over — hybrid technology "encompasses all of the technologies required to make an electric vehicle," says Uchiyamada. "Some people say hybrid vehicles such as the Prius are only a bridge to the future ... but we think it could be a long bridge and a very sturdy one. There are many more gains we can achieve with hybrids."

Looking further into the future, Toyota plans on selling a hydrogen fuel cell vehicle for around $50,000 in 2015. Fuel cells generate electricity through hydrogen, expelling only water. The advantages of fuel cells are a lack of local pollution and the ability to quickly refuel, but hydrogen itself is difficult to transport and store, costly to isolate, and not clearly environmentally friendly.