Toyota And GM Are Both Going To Market Test Plug-in Hybrids. Will Both Of Them Survive That Test?

Implications: Toyota will have a limited production plug-in hybrid on the road probably as much as a year before GM's Volt. Toyota is test marketing a concept, the limited range, in full electric operation, commuter car.   Toyota thinks that this is a niche market, and will approach it with a modified version of their best-in-class Prius hybrid. The Toyota plug-in will have a range of only 10 miles on a fully charged lithium ion type battery.   Toyota will probably price this plug-in at least $10,000 less than the GM Chevrolet Volt, and can, and can afford to, absorb any cost overrun due to the expense of the limited production battery. Is this really a competition to which GM wants to dedicate precious resources of time and money?

Analysis: Toyota is telegraphing the plug-in hybrid market and its competitors a message: Lithium-ion batteries can not now be made economically with the longevity and reliability needed to insure safety and performance beyond 10 miles of operation on a charge.

The real test of the lithium ion battery technology is about to commence. Toyota has said repeatedly that the lithium technology id not ready for mass production. GM has scoffed at this and has staked its reputation on being able to produce some 30,000 Chevrolet Volts a year with a range of 40 miles on a charge and with a battery life of 10 years and up to 150,000 miles-That's what Bob Lutz said, and in fact he has staked his own reputation also on those specifications being met.

In fact Toyota is going to deliver what they consider safe, reliable, long lived and practical. GM is betting the farm on the hype and the hope that they can come close to the dream.

The real test will be how many of these plug-in hybrids run at their stated specifications for the length of their warranty. That test will take years. Years during which GM and Toyota will have to sell other cars at a profit. This is something that GM has been unable to do for at least 5 years, but that Toyota has been doing consistently every year.

Toyota brings to the great plug-in hybrid 'beta test' a solid and proven capability and capacity to build hybrid cars that are best sellers and the performance of which is far superior to any plug-in hybrid. Toyota's cars, of course, use the proven in mass production over a period of ten years nickel metal hydride batteries. Those batteries are warranted for 8 years and 100,000 miles and almost all of the ones that have reached that age or have endured that mileage are still going strong. This is a tribute to careful engineering and testing a process with which GM seems to have lost touch.

The market today is valuing GM shares at the lowest point in the company's history. In 1954 dollars GM shares now sell for less than a dollar. In 1954 they sold for more than eight 1954 dollars each.

If GM survives until the debut of the Volt and the Volt does not cast a halo over the company causing the share price to rise and people to buy the cars that GM is then mass producing then it is over for GM at that point.