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Forbes.com

 

Toyota's MPG game

December 24, 2007

By Peter W. Huber

PRINTER FRIENDLY

Maybe the people who are running Toyota are just smarter than your average American green. Anyone planning an energy future from a desk in Tokyo should be. Japan needs a serious plan for an oil-free, carbon-free energy future more than any other economic power on the planet. Its tiny, densely populated, fantastically productive islands are carbon free--no oil, no natural gas, no coal.

Back here in the States the manufacturer of the hybrid Prius, ever so frugal and clean, has joined U.S. carmakers in opposing new gas-mileage mandates from Washington. When political push came to shove, as furious greens see it, Toyota (nyse: TM - news - people ) chose to defend its huge, retrotech Sequoia SUV and Tundra pickup rather than back Washington's attempt to whip the whole industry into the future. Here's another possibility: Toyota knows that Washington's meddling is the one thing that might mess up the company's hybrid-centered competitive strategy. In the coming decade Toyota will use its hybrid technology to meet and beat any fleetwide fuel-economy standards that Washington might conceivably mandate, with or without Toyota's political support.

Toyota wants to sell cars worldwide, but its strategic vision is surely influenced by Japan's interests, too. Electricity from uranium is the one form of energy that Japan can generate abundantly, cheaply and reliably. The raw fuel is readily available from politically stable allies and is easy to stockpile. Perched on slivers of real estate, which is all that Japan can spare, nuclear plants dispatch the highest-grade power routinely used by industrial societies and the only form of power that can propel postindustrial digital economies. More nuclear electricity--Japan already generates a lot--is the one plan that can guarantee our most important Asian ally a plentiful supply of high-grade energy at a stable price indefinitely into the future.

The Prius is the first big step toward a practical, run-of-the-mill, cost-effective car that can draw fuel from the grid. A hybrid uses big banks of batteries. It has room for them because the electric drive train is so compact and light. And the next step for hybrids cars is to recharge the batteries from the grid whenever they're parked. This technology is merely interesting in North America, where (doomsayers notwithstanding) we still have quite a lot of oil within quite easy reach. For Japan, it's vital.

It's also a huge economic opportunity. Taking into account the fact that electricity is a much higher-grade form of energy, nuclear power is much cheaper than oil. Nuclear power is also high-tech, compact, clean and unobtrusive--altogether Japanese, one might say. The fit is just too compelling to miss. Japan will go nuclear, and Toyota will go hybrid with or without further prodding from Riyadh and Washington.

The biggest threat facing Toyota's hybrid-electric technology isn't something even newer and more radically different; it's the old technology made better by competitors who aren't yet ready to follow Toyota's lead. Over the course of the last century Detroit doubled--and then redoubled--the efficiency of conventional combustion engines. If forced to do so, Detroit will find ways to squeeze another 10 miles per gallon out of gasoline cars.

It already has plenty of incentive. Hundred-dollar oil has to horrify every company that sells big cars and trucks as much as it delights every honest green. By unsettling supply lines, boosting demand and doubling the price of oil, political instability in the Mideast and economic stability everywhere else are doing far more to promote efficiency and alternative fuels than any new federal law ever could.

But it does take time for consumers to change habits and replace expensive things like cars. Fuel prices and carbon worries will force a fundamental shift from old technology to new only when the differences between the old and new become sharp enough to convert the market mainstream. And there are plenty of ways the differences could be kept very blurry for years to come. Gee-whiz visionaries routinely underestimate how far tried-and-true technology can be stretched, and how cheaply, when it's got a century of experience, capital and mass production straining to stretch it.

In this kind of contest, old-tech Detroit's complacent inertia may play a key role in letting a new technology gain experience and build up scale economies of its own. The last thing Toyota needs right now is for Congress to cattle-prod Toyota's competitors into improving the efficiency of gasoline cars.

Original Source: http://www.forbes.com/free_forbes/2007/1224/100.html

 

 
 
 

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