If everything goes according to plan, Toyota will make hydrogen fuel cell vehicles available to private buyers within six years. The company that pioneered the hybrid, made it popular, economical and sexy- is now moving forward with fuel cell vehicles as well as a plug in version of the Prius. Is Toyota now advancing from their comfortable lead with hybrids to the next level? A closer look at comments by Toyota executives may show another story:

Koei Saga, managing officer of the Toyota Motor Corporation said in January, 2010: All-electric vehicles (EVs) are best as “very small commuter-type vehicles” and that long-range EVs are only possible “if we forget about battery life and if we forget about the cost incurred for replacement of those batteries. In my personal view, I think we will never abandon the internal-combustion engine.”

Ok, but Toyota is planning a plug in version of the popular Prius within the next few years. Plug-ins are of course a close family member of the EV.   The plug in Prius will be the first and ONLY of the Toyota family (including Lexus) to use lithium and not the less efficient, less powerful nickel metal hydride battery. While other companies in the market charge full speed ahead with lithium ion technology (Fisker, Tesla, Nissan, Volvo & more) Toyota has been very reluctant to embrace lithium ion technology expressing doubts about reliability.

But Toyota’s core competency in next generation automobiles is the traditional hybrid. And just this month Toyota announced it will increase production from 500,000 hybrids/year in 2009 to over 1,000,000 by 2011. “Toyota plans to add about 10 new hybrid models in the next few years to its existing lineup and to increase the number of sites where it can assemble hybrid models, the Nikkei said without citing sources. For the foreseeable future, the focus of Toyota’s (low-emission car) strategy will be on hybrids, not electric or fuel-cell cars, said Yoshihiko Tabei, chief analyst at Kazaka Securities, adding the production volume reported by the Nikkei was in line with his expectations.”

Now- seeing this hybrid strategy- take a look at these 2 quotes from Bill Reinert- the Toyota manager of advanced technology in the US:

1) “I think you’ll see that for the next 10 to 20 years that a hybrid … is probably about as green as you can get. I would say within 10 years, that hybrids might be at 10-per-cent market share. Plug-ins are a very small subset of that. Electric vehicles are a smaller subset of the subset.”

2) “One hundred miles covers most daily trips but not all,” he says. “How many people can afford a specialized car that can’t be used on vacation?”

Reinert is referring to the Nissan Leaf- which will be released as early as December 2010 in Japan and the US. Nissan’s director of product planning, Mark Perry, sees an ulterior motive in Reinert’s skepticism. “Our friends at Toyota have invested in hybrids,” he said “and they want to get a return on that hybrid investment.”

“Still- Reinert says EVs could experience a five-year bubble, like solar panels during President Carter’s term in the late 1970s. If budget cuts force governments to end subsidies, only a handful of EVs could be left standing in the market. Ghosn says competitors are trailing Nissan in EVs, so naturally they’re going to play down the technology’s prospects. They cannot say, ‘we’re forecasting a 10 percent market share for EVs and, by the way, we have nothing, he says.”

Is Toyota disparaging plug ins and full electric vehicles to further promote the brand that has helped the firm gain additional market share? Perhaps Toyota sees their rival Nissan attempting to leap frog the hybrid market and skip forward to full electrics. What about the Prius plug in program and the fuel cells? Are these real programs or merely demonstration projects?

The modern hybrid is a technological innovation that many consumers love. It however is not perfect and offers modest efficiency with room for improvement. The hybrid is also widely considered a “bridge” technology to the holy grail which is an efficient, economic full electric vehicle.

Driving 100 miles/charge, as the Leaf and Tesla Roadster offer, is not the best an EV will ever offer. The Tesla Model S will cost just under $50,000 and travel up to 300 miles on a charge but is also $50k and yet to be released. However while the battery issues are well known, and well discussed, most expect these to improve over time in large part to the economies of scale first created by hybrids. Perhaps Toyota is hoping this bridge technology lasts a little longer than do their competitors who are now about to pass them up in the fast lane. It’s unclear what their intentions are, but as the industry aggressively tackles EVs and Plug Ins, Toyota may want to take a clear stance beyond hybrids and show commitment.