"Toyota Says Hybrid Cost Premium to Disappear"

by Chang-Ran Kim

Toyota Motor Corp. expects to cut costs for hybrid cars enough to be able to make as much money on them as it does on conventional gasoline cars by around 2010, a top executive said on Thursday.

Japan's top automaker has been keen to see the fuel-saving powertrain enter the mainstream since launching the Prius, the world's first hybrid car, in 1997, but sales have come at the expense of profitability given their high production costs.
But Masatami Takimoto, executive vice president in charge of powertrain development, said cost-cutting efforts on the system's motor, battery and inverter were bearing fruit, and the cost structure would improve drastically by the time Toyota reaches its sales goal of one million hybrids annually in 2010 or soon after.

"By then, we expect margins to be equal to gasoline cars," he told Reuters in an interview at Toyota's headquarters in Toyota City, central Japan.

If it succeeds, Toyota, on its way to becoming the world's biggest carmaker, will be removing the main hurdle to cost-competitiveness for the hybrid -- the expense of the powertrain, which twins a conventional engine with an electric motor. It will also likely widen its sales lead as more consumers seek better mileage amid rising fuel costs.

Data this week showed US gasoline prices at an all-time high above US$3 a gallon, and Takimoto said he expected energy prices to continue rising.

Toyota likely achieved cumulative hybrid sales of one million units this month, having moved 998,900 by the end of April. By 2020, Takimoto said he expected hybrids to become the standard drivetrain and account for "100 percent" of Toyota's vehicles.

In 2006, it sold 313,000 units, accounting for the majority of the world's hybrid cars, and aims to lift that to 430,000 units this year with ramped-up production of the popular Prius...

In other efforts to improve fuel economy, Toyota is trying to reduce the weight of vehicles through increased use of high-tensile steel and resin products, Takimoto said. Aluminium, at one-third the weight of steel, was once an attractive alternative, but he said its use was unlikely to expand for cars due to high and volatile prices.