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Toyota fights two-front war for future of cars

Automaker hurries to catch up in EV development while staying committed to fuel cells for long term

Toyota Motor introduced the Mirai in 2014 as the first mass-produced fuel cell vehicle.

NAGOYA, Japan -- Toyota Motor may have belatedly accepted that electric vehicles, their limitations notwithstanding, are becoming the way of the automaking world. But Japan's top car company remains fixated on what it considers the "ultimate" earth-friendly fuel: hydrogen.

Toyota recently formed a joint venture for electric vehicle development with group supplier Denso and Mazda Motor, pouring staff and expertise into the effort to convert technology into actual products faster.

While Western and Chinese automakers are shifting focus to electric vehicles, Toyota has yet to devise a clear road map for a future product lineup. Estimates shared with parts suppliers show electric and fuel cell vehicles totaling 15% of Toyota's global sales in 2030, with hybrids including plug-in hybrids accounting for 40% and conventional-engine vehicles making up 45%. Toyota's purchasing department is asking suppliers this year how these projections could impact their businesses through 2030.

The Toyota group employs 1.4 million people and does business with 30,000 companies in Japan. This broad impact leaves the company understandably cautious about changes in powertrain systems.

No spark for electric cars

Toyota is hardly a newcomer to electric vehicles. In 1991, the company developed a compact electric van. Two years later, it supplied an electric version of the Crown Majesta luxury sedan to the Tokyo metropolitan government. The automaker released an electric version of its RAV4 sport utility vehicle in 1997.

"We have the core technologies for EVs," Chairman Takeshi Uchiyamada said, noting the company's advances in motors, inverters and electric control devices through its hybrid program. But Toyota has lagged rivals like Nissan Motor and Tesla in making a serious entry into the electric-vehicle market.

Electric autos pose "many usability challenges," Uchiyamada said. One problem is driving range. In rough terms, fully charged electric vehicles can run 400km, compared with 1,500km for fully fueled hybrids and 1,000km for gassed-up cars. Another challenge involves the lengthy time needed for recharging.

Moreover, battery deterioration could slash resale values of used electric cars. "They are different from conventional vehicles, which are driven an average of 13 years," a top Toyota official said. "The cost burden on new-vehicle buyers is heavy" with electric vehicles.

Yet such countries as the U.K., France, India and crucially China -- the world's biggest auto market -- are promoting the transition to electric. Some are even removing hybrids from the "green car" category. People at Toyota worry that the automaker misjudged the speed of changes in environmental regulations. This explains the sudden urgency with which the company seeks to go electric.

Playing the long game

But Toyota still considers fuel cell technology as superior. The Toyota Mirai, released in 2014 as the world's first mass-produced fuel cell vehicle, achieves a range of 650km and requires only three minutes for refueling the hydrogen, overcoming the range and charge-time constraints on electric vehicles.

However, creating the infrastructure to support fuel cell vehicles is tougher than for electric cars. Because hydrogen stations cost several million dollars to build, few automakers have embraced fuel cells. Hybrid vehicles caught on by the time Toyota released the third-generation Prius. But fuel cell technology probably will take longer, so "we're going to have to persevere for a while," an executive said.

Toyota will continue developing fuel cell technology with the long term in mind, seeking to make inroads first into buses and other commercial vehicles. It sees a time coming when excess electricity output from smaller, regional power-generation networks will be used to produce hydrogen, solving the distribution problem.

Toyota envisions eliminating most conventional-engine vehicles by 2050. But for the near future, the automaker and group companies will continue pumping around 4 trillion yen ($35.5 billion) a year into capital investment and for research and development from all angles: engine, electric, fuel cell, hybrids and plug-in hybrids. The financial burden will test Toyota's overall ability to shape regulations and collaborate with group companies.

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