Toyota Plans to Build Plug-In Hybrids

Toyota sees a future in plugging in vehicles — instead of simply pulling in for gas.

Already a leader in the hybrid market with its Prius sedan, Toyota Motor Corp. (TM) plans to develop a hybrid vehicle that will run locally on batteries charged by a typical 120-volt outlet before switching over to a gasoline engine for longer hauls.

The technology is far from being ready — and there's no timeline for when such cars might be offered for sale.

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Still, the automaker is taking a serious look at another idea aimed at reducing motorists' dependence on gasoline: flexible fuel vehicles capable of running on E85, an alternative fuel made of 85 percent ethanol.

"Make no mistake about it, hybrids are the technology of the future, and they will play a starring role in the automotive industry in the 21st century," Jim Press, president of Toyota's North American subsidiary, said Tuesday in a speech at the National Press Club.

Press, who recently became the first non-Japanese president of Toyota's U.S. unit, said its hybrid technology has long-term staying power because it can adapt to several alternatives, such as clean diesels, biodiesels, ethanol, plug-in hybrids or hydrogen fuel cells.

The plug-in being pursued by Toyota would be able to "travel greater distances without using its gas engine, it will conserve more oil and slice smog and greenhouse gases to nearly imperceptible levels," he said.

Plug-in hybrids use larger battery packs that can be recharged with a 120-volt outlet, allowing a driver to travel locally on battery power before the vehicle uses its gasoline engine. DaimlerChrysler (DCX) has been developing a plug-in hybrid van.

President Bush has touted the potential of the technology but obstacles exist, ranging from making the batteries lighter, less expensive and more durable.

Some observers have expressed concern about the ability of the electrical grid to support the vehicles, but supporters say most plug-ins would be recharged at night.

Hybrids account for only about 1 percent of the market but have grown in popularity with gas prices topping $3 a gallon. A report on fuel economy trends issued by the Environmental Protection Agency this week found that the Prius, Honda (HMC) Civic hybrid and Ford (F) Escape hybrid sport utility vehicle had the highest gas mileage ratings in their respective classes.

Press said E85 and other ethanol blends are found in limited quantities at many fueling stations, but "as that develops and as consumers show an interest in flex-fuel products, we definitely want to be able to provide it."

Detroit's Big Three automakers have detailed plans to double their production of flexible-fuel vehicles to 2 million by 2010 and have urged Congress to expand access to ethanol and biofuels, which is mostly limited to Midwest fuel stations.

Environmental groups have noted that few flexible fuel vehicles ever use ethanol blends, but auto manufacturers receive a credit of 1.2 miles per gallon on federal fuel-economy requirements by producing the vehicles.

"Toyota knows how to make clean, efficient vehicles. Why don't they stick to that rather than availing themselves to a loophole?" asked Dan Becker, director of the Sierra Club's global warming program.