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Climate Change or Regulation Change?

By KBB.com Editors on April 23, 2010 3:17 PM
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Gone is the steady drumbeat of "global warming," replaced by the weaker refrain of "global climate change." And while few will dispute that the climate is changing, skeptics will point out that it has always been thus. So Toyota's most recent seminar on sustainable mobility was far less about imminent climate-related catastrophe and more about building vehicles that will help automakers meet government-imposed requirements while at the same time being salable consumer products. Frankly, there was more concern expressed about that prospect than about the fate of the polar bear this time around. Toyota was remarkably candid to admit that its efforts in the hybrid, plug-in hybrid and fuel cell arenas are driven as much by U.S. government regulatory policy as by the possible implosion of the world's ecosystem these days.

"Where the market used to be one hundred percent consumer pull, now a percentage is regulatory push," said Bill Reinert, Toyota's national manager of the advanced technologies group. "We have to bring consumers along with us or we will fail."

While a segment of the car-buying public is clearly willing to express themselves by buying green cars -- and Toyota has done a great job of catering to them -- the run-of-the-mill car-buyer is a tougher sell. In survey after survey, including ones we at Kelley Blue Book have conducted, Americans say they care about protecting the environment. But when it comes to spending "extra" money to buy a car that will limit carbon dioxide production, they get a bit more reticent. Now that some of the urgency about global warming seems to have cooled, the general public's willingness to part with additional funds to do a tiny bit to solve a problem that might not even be a problem has gotten weaker. The Toyota Prius has been the one certified hit among hybrids in the marketplace, but as Toyota readies a plug-in version of the Prius for sale in 2012, company officials frankly admit they don't know what demand will be.

"We are taking a cautious approach to the market launch in 2012," said Toyota's JC Chitwood. "There are a lot of unanswered questions, so the keyword about our demonstration program is education."

The biggest hurdle to consumer acceptance is price. Though Toyota execs wouldn't say what the Prius plug-ins price would be, there is little doubt that it will cost thousands of dollars more than the current Prius. There is a looming possibility that a percentage of current Prius owners will switch to the plug-in version when it becomes available because it will be pictured as being "greener," but will other buyers jump on the plug-in hybrid train? Addressing this very real issue has prompted Toyota to take plug-in development in a direction that emphasizes keeping the cost low rather than the electric-only capability high. Witness the battery pack. The upcoming Prius plug-in is expected to have a three-part lithium ion battery pack that will offer a limited (under 20-mile) range in electric-only mode, a decision largely determined because of the price of battery power. The longer the range, the more expensive the battery, and the more expensive the vehicle. Is this the right decision? Before the Prius plug-in comes to market in 2012, Toyota will be conducting a 150-vehicle demonstration drive program over the next year or so. Course corrections might result, as Toyota continues to refine its hybrid strategy.

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