Toyota's New Fleet Of Hybrids--Obsolete Before They Are Launched

Toyota Motor (NYSE: TM) will launch six new hybrids over the next two years to sit in showrooms with its highly popular Prius. Hybrid sales are modest, making up 15,444 vehicles  of the company’s August sales of 144,388.

Toyota’s product pipeline may be about to be clogged with hybrids, which would make a lot of its product development expenses wasteful.

The hybrid, an odd mix of a gasoline engine and a battery, is neither fish nor fowl. It may be supplanted by all-electric cars or vehicles that run on ethanol. There is even talk that some future vehicles will run on algae or even water. Hybrid technology could become obsolete as quickly as it came into being.

The hybrid could be flanked by several other things. The first is that the price of a gallon of gasoline may drop back below $2.50 or even $2.25 if the price of oil drops and refinery production improves. Gas engines are much more fuel-efficient than they were four or five years ago. Vehicles are lighter. Some companies, led by VW, has introduced clear-engine diesels into the market and are pushing the technology hard in the US.

The hybrid was supposed to be the star of the next generation of vehicles, but a VW Golf gets 46 MPG on the highway without a hybrid engine. That means its annual fuel cost for the average Golf driver is only $150 more than the Prius. Over five years, the annual cost to own a Prius is $33,769, according to Edmunds. That is no better or worse than a Mini Cooper, which is probably more fun to drive.

The Toyota hybrid faces a world that is not far off when people will plug in their cars overnight like so many golf carts in retirement communities. They will not need gas stations at all and the Prius will be a relic.

Douglas A. McIntyre