Toyota Marginalizes GM's Volt By Announcing Plans To Ramp Up Nickel Metal Hydride Battery Capacity

Implications: Toyota is 1. Increasing the production capacity of its existing original joint venture plant with Matsushita (Panasonic) to make nickel metal hydride, NiMH, batteries for hybrid vehicles, 2. Building an additional new nickel metal hydride battery plant with Matsushita, which, when combined with the original one's expansion will give it a NiMH production capacity of 1 million units a year by 2011, and 3. Building a plant to make lithium-ion batteries for vehicles which by 2011 will have a capacity of "several tens of thousands" of such batteries a year.

Analysis: Toyota has clearly chosen to go with nickel metal hydride battery packs for its planned and announced expansion of production of hybrid vehicles; the company is essentially tripling its manufacturing capacity for such batteries to a total of one million units per year by 2011.

At the same time the company will build a new plant to make vehicle size lithium-ion batteries, but the capacity of that plant will be only "several tens of thousands" per year.

My interpretation of these moves is that Toyota has chosen to utilize nickel metal hydride battery technology for the indefinite future as the battery system for its rapidly expanding line of hybrid vehicles.

The small capacity plant for vehicle size lithium-ion battery packs is being built either as a hedge on its bets or, more likely, as a source of batteries for plug-in hybrids, which will by this limitation be only a marginal vehicle line.

Note well that battery plants are not simple to build or operate when they are exclusively for either one of these "new' technologies, but that, unlike GM's disaster with Cobasys, Toyota now has nearly a decade of experience building high volumes of safe, reliable, vehicle size nickel metal hydride batteries. This puts Toyota in the position, along with Matsushita, of being the world's leading maker of nickel metal hydride batteries, which, it must be noted, are now no longer made in the USA, and, in fact, were never mass produced in the USA.

Lithium-ion battery cultists will now say that Toyota could simply switch production at one or both of its nickel metal hydride battery plants in 2011 to lithium-ion batteries or ramp up production then at the new lithium-ion battery plant "when the technology is ready." This is not true. Toyota is building up capacity for nickel metal hydride batteries, and not for lithum ion batteries, because it is planning to make safe reliable hybrids, which like the current generation of Priuses, have had almost no trouble with their NiMH batteries. Toyota does not wish to squander its green technology crown on unproven, increasingly expensive lithium-ion technologies. This is just common sense.

GM, on the other hand, in sharp contrast to experienced Toyota, is betting on the, completely unproven-in-the-market, plug-in hybrid 'concept.' GM has ignored nickel metal hydride batteries to the point where it is now replacing all of the NiMH batteries it placed in its 8,000 2007 hybrids with new ones due to consistent failures of the low quality poorly designed and built NiMH batteries it obtained last year from Cobasys. Astoundingly GM has just announced that it plans to buy Cobasys and award it a contract to monitor the quality control of the lithium-ion batteries it will choose, it says, for the plug-in hybrid Volt. 

Honda, like Toyota, has announced that it will continue to use NiMH batteries in its to be ramped up hybrid fleet beginning in 2009 with a high volume Prius 'fighter.' Honda further says that lithium-ion batteries are not ready for mass production. Toyota apparently agrees.

Existing NiMH batteries do not lend themselves to use in plug-in hybrids; a car such as the Prius can go only one or two miles on the charge in its NiMH battery pack. 

Toyota has made its judgement on batteries based on costs. If a car company wishes to build a plug-in hybrid then it must use a lithium-ion, or a lead acid, battery system. Toyota has decided, based on its actions, that the cost of a lithium-ion plug-in hybrid will then price it out of the market.

GM is hinting that the introductory price of the Volt is spiraling upward from its original target of $30,000 to, now, as much as $45,000; GM is asking for tax breaks and/or subsidies to help it lower the cost of this poorly thought out concept. This is not only because GM wants to give its customers an incentive to buy a clearly overpriced car, but because GM, which does not make a profit, simply cannot afford to sell Volts at a loss.

By the end of 2011 Toyota, just to keep this in perspective, may well be producing one million NiMH powered hybrids a year profitably! It will also have, in 2011, just as much lithium-ion battery manufacturing capacity as GM will then have. Should there be a market for a plug-in hybrid Toyota will undoubtedly then steal that market from GM just s it took the hybrid market for itself when GM abandoned the electric car program in the late 1990s.

The Volt program is the most hyped, lowest future volume, of anything GM is now promoting. Yet the company may have foolishly bet the farm on a niche vehicle, which is marginal before the first production one hits the road.

GM has not planned for a back up to its dependence on unproven, very expensive, lithium-ion batteries. Just as it has given no thought to insuring that its 'chosen' battery makers can get raw materials. It has handed the hybrid market, once again, back  to Japan. Such a colossal error by Japanese executives would cause them to resign in mass. Luckily for the dwindling number of expensive restaurants and purveyors of luxury goods in Detroit GM executives have no shame.