Toyota says hybrids’ margins should equal gasoline cars’ by 2010
TOYOTA CITY, Japan: By 2010, Toyota Motor expects to have cut costs for hybrid cars enough to be able to make as much money on them as it does on conventional gasoline cars, a top executive said on Thursday.
Japans top automaker has been anxious to see the fuel-saving powertrain enter the mainstream since launching the Prius, the worlds first hybrid car, in 1997. But sales have come at the expense of profitability, given its high production costs.
But Masatami Takimoto, executive vice president in charge of powertrain development, said cost-cutting efforts on the systems motor, battery and inverter were bearing fruit, and that the cost structure would improve drastically by the time Toyota reached its sales goal of a million hybrids annually in 2010 or soon after.
“By then, we expect margins to be equal to gasoline cars,” he said in an interview at Toyotas headquarters.
If it succeeds, Toyota, which is on its way to becoming the worlds biggest carmaker, will be removing the main hurdle to cost-competitiveness for the hybrid: the expense of the powertrain, which pairs a conventional engine with an electric motor. It will also likely widen its sales lead as more consumers seek better mileage as fuel costs rise.
Data this week showed U.S. gasoline prices at an all-time high - above $3 a gallon, or 80 cents a liter - and Takimoto said he expected energy prices to continue rising.
Toyota probably achieved cumulative hybrid sales of a 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 Toyotas vehicles.
In 2006, it sold 313,000 units, accounting for the majority of the worlds hybrid cars, and aims to lift that to 430,000 units this year with ramped-up production of the popular Prius.
Toyota struggled for years to keep up with demand for the second-generation Prius. But sales began to suffer late last year after U.S. tax credits whittled down for the model, prompting Toyota to offer incentives of up to $2,000.
Takimoto said he saw little impact on profitability before and after the incentives appeared, mainly thanks to larger volume - Prius production will rise by 40 percent to 280,000 units this year - and the ongoing efforts to shave costs.
European auto majors like DaimlerChrysler and Volkswagen, meanwhile, have poured much of their energy into clean-diesel engines to challenge hybrids.
