Big Three Push Ethanol, Big "T" Pushes Hybrids

WASHINGTON, May 24, 2006; John Crawley writing for Reuters reported that Japan's Toyota Motor Corp. told Congress on Wednesday it could produce more than 1 million hybrids per year globally within the next decade as it looks to capitalize on energy and environmental concerns and the popularity of gas-electric vehicles.

The fastest growing automaker in the United States, which makes the top-selling Prius hybrid, relies on a different strategy than its U.S.-based rivals to address calls in Washington to make vehicles more efficient and reduce energy dependence.

"Hybrids are a core technology for Toyota," William Reinert, Toyota's advanced technology manager, told the House of Representatives Energy and Commerce subcommittee hearing.

Detroit-based giants General Motors (GM.N: Quote, Profile, Research), Ford Motor Co. and Chrysler Group also intend to produce more hybrids, but their plans for that technology, at least for now, are less ambitious than Toyota.

Over the past week on Capitol Hill, executives of GM, Ford and Chrysler have pushed a vision supported by the White House that features alternative fuels, like ethanol blends and hydrogen fuel cells. Mass market availability of both is considered years, if not decades away.

But the Big Three also see alternative fuels as a potential long-term market option to help reverse sagging finances. The U.S.-based companies have steadily lost market share to Toyota and other foreign rivals, which have prospered with smaller, more fuel-efficient vehicles.

The energy saving strategy of U.S.-based automakers requires massive capital investments, broad-based political support that is not yet apparent, and unprecedented cooperation between the auto, energy and agricultural industries.

In meetings with House and Senate leaders last week, GM, Ford and Chrysler sought incentives to broaden consumer access to ethanol-based fuels and promoted hydrogen fuel cells.

Hybrids comprise only 1 percent of U.S. new car sales but consumer interest is growing. Some analysts question whether fuel savings cover the extra cost to consumers.

There are about 500,000 hybrids on the road today in the United States from all manufacturers.

A poll by Consumer Reports on Wednesday showed that 37 percent of those surveyed said they may replace their vehicles with more fuel-efficient models. Half of that group said they may buy a hybrid.

"Clearly the American market is the key to expanding our hybrid technology," Reinert said.

Reinert said there is no option that is a "single silver bullet" and Toyota recognizes the potential of alternative sources, but it views them all in concert with the hybrid design.

"Some have characterized hybrid technology as an interim approach, a bridge to fuel cells. In our view, this underestimates the value of the hybrid system," Reinert said.

The U.S. market represents half of the 600,000 hybrids sold by Toyota since 1997. It has five hybrid models in the United States with the Lexus LS 600h scheduled to go on the market in 2007.

Last year's energy bill offered a tax credit for hybrid purchases.

Additional reporting for Reuters by Jui Chakravorty.