`I want every car in the world to be a hybrid.'

HIROYUKI WATANABE Toyota's senior managing director in charge of environmental matters

This is the third installment in a series on Japanese inventions and what they offer to the world in 2005.

When Toyota Motor Corp. came out with the Prius in 1997, rivals cast a skeptical eye on the first mass-produced hybrid car. Many considered it only an intermediate stop on the road to a truly petroleum-free vehicle.

High production costs initially forced Toyota to swallow large losses on Prius sales, leaving rival automakers feeling confident they had made the right decision in steering clear of hybrids that combine an electric motor with a gasoline engine.

However, a new and improved Prius introduced in 2003 turned the auto world on its ear. Not only was Toyota receiving high acclaim and a long order list, but it was actually turning a profit on each Prius sold.

Boasting the best mileage of vehicles on the road today-and with super-low levels of pollutant and greenhouse gas emissions-hybrid cars are considered the best bet to reduce a nation's dependency on petroleum, alleviate air pollution and stem global warming.

Those developments have left rivals scrambling to jump on the hybrid bandwagon.

And they're not the only ones. Politicians are also hitching their fortunes to the increasingly popular car. Witness California Governor Arnold Schwarzenegger's lobbying trip to Japan in November. Meeting with Toyota executives, the former actor made a play for getting the American Prius production line located in his state.

Meanwhile, Toyota and Honda Motor Co., the other major producer of hybrid cars, are reinforcing their lines to tighten their hold on the eco-friendly car sector.

The latest hybrid entry in the market is Honda's Accord Hybrid, which went on sale in North America in December. Though the Accord Hybrid is priced at a hefty $30,000 (about 3.15 million yen), Honda officials hope to sell 20,000 of the midsize vehicles annually.

Honda's first hybrid was the Insight, a futuristic vehicle that got great mileage, but was only big enough for two. This was followed by the Civic Hybrid. The new Accord Hybrid has a 3-liter engine that is more than twice as large as the engines in the first two Honda hybrids.

All the hybrids enjoy excellent fuel economy, with the Prius getting 35.5 kilometers per liter.

An improved version of the Honda Insight recently recorded 36 km/l, making it the most fuel-efficient vehicle on the road today. The Civic Hybrid gets 29.5 km/l.

The Honda hybrids depend more on the gasoline engine, with the electric motors playing only a supplementary role. The Prius, on the other hand, uses the electric motor at startup and low speeds. Only at higher speeds does the gasoline engine kick in to give the Prius an extra boost.

All hybrids share the ability to recharge their electric motors with the energy generated when braking.

The American magazine Motor Trend selected the Prius as its car of the year for 2003, a rarity for a magazine that had until then unabashedly extolled the virtues of cars that were primarily fast and powerful.

The Prius is so popular in the United States that customers must normally wait several months, sometimes up to half a year, before they can get their hands on one.

Because Toyota plants in Japan have been unable to keep up with demand for the Prius, the company will start turning them out at a Chinese plant this year.

In 2005, Toyota plans to ship about 100,000 Prius vehicles to the United States, about double the number delivered last year.

Significantly, Toyota is not planning to rest on its hybrid laurels.

Hiroyuki Watanabe, Toyota's senior managing director in charge of environmental matters and one of the major forces behind the company's move into hybrid vehicles, has an ambitious dream for his creation.

``I want every car in the world to be a hybrid,'' Watanabe said.

However, higher production costs prevent that from happening any time soon. The Prius, for example, costs about 500,000 yen more than other cars with a similar size engine.

Watanabe insists that Prius owners still get their money's worth. The 1.5-liter engine, he says, has all the power of a larger engine and also offers smoother acceleration. But he realizes that as a profit-driven company Toyota will have to take a practical approach to spreading hybrid technology.

``Realistically, the first hybrids will be those models with top-class engines, and emphasis will be placed on luxury brand recognition,'' Watanabe said. ``Only later will other models be outfitted as hybrids.''

Over the long haul, automakers' survival will depend on developing viable hybrids, according to Noriyuki Matsushima, a managing director at Nikko Citigroup Ltd.

``Until about two or three years ago, the attitude of the Big Three automakers in the United States and many European firms was largely negative concerning hybrids,'' Matsushima said.

Hybrid vehicles were generally considered a transitional, albeit significant, step in the development of the ultimate environmentally friendly car-a fuel-cell vehicle that runs on hydrogen and emits only water.

``Now, because of the results achieved (by Toyota and Honda) and the increasing likelihood that development of a fuel-cell vehicle is still years down the road, moves are increasing to tie in development of hybrid cars with improved electric cars in the future.''

Matsushima said improvements in hybrid cars would help automakers in their search for the holy grail of vehicles.

``Parts, like the motor and generator for electric cars, including fuel-cell cars, are still very expensive because companies have not yet succeeded in mass-producing them,'' he said. ``Because hybrid cars have some parts that are already being mass-produced for gasoline cars, the production costs have come down. In moving to mass production of electric cars, such efforts to cut production costs will take on added importance.''

But other firms seeking to develop hybrid models of their own face a daunting barrier: Toyota controls most of the patents.

``A major hurdle that the other automakers will have to overcome is developing their own hybrid vehicle that gets around those patents,'' Matsushima said. ``If that is not accomplished, the Toyota technology could become the de facto model for hybrid vehicles.''

It was this, Matsushima says, that likely drove General Motors Corp. and DaimlerChrysler AG into each other's arms. In December, GM announced a tie-up with DaimlerChrysler to develop a hybrid vehicle, despite GM's close relationship with Toyota in the United States.

GM and DaimlerChrysler are expected to work out a final agreement in early 2005. The first hybrid from the joint venture is expected to hit the market in 2007, a decade after the original Prius went on sale.

Some rivals have turned to Toyota for help.

Ford Motor Co. has been selling a sport utility vehicle hybrid, the Escape, based on Toyota technology.

Toyota's Watanabe said because there were many different avenues possible for the development of hybrid vehicles, better vehicles could still emerge from rival automakers.

``Many nations have put a lot of effort into basic science research in such fields and so Toyota cannot afford to become complacent,'' he said.

However, Nikko Citigroup's Matsushima said it's more likely that Toyota and Honda will extend their lead in hybrids.

Toyota is planning to release the RX 400h SUV in its luxury Lexus division. The RX 400h will be available in North America this spring. Initial reports had Toyota rolling out the Lexus hybrid in January, but the flood of orders and inquiries prompted executives to delay the start of sales rather than risk another predicament in which customers ended up waiting months for delivery of their Lexus hybrid.

Even though the Lexus hybrid will have a sticker price of between $45,000 and $50,000, Toyota's American subsidiary had received orders for about 10,000 vehicles by the beginning of December.

A marketing strategy that highlights the outstanding driving performance of the Lexus will help ``consumers realize that not only are the hybrids good for the environment, but are also very attractive cars as well,'' Matsushima said.(IHT/Asahi: January 4,2005)