Why Toyota has Pulled Ahead in E-MobilityWednesday, February 22, 2012
Note from the editor: This piece initially appeared in IDTechEx updates and the full report is available here.
By Dr Peter Harrop, Chairman, IDTechEx
In this article, we share some of the research carried out for the new IDTechEx report, "Electric Vehicle Industry Profitability 2012 - Where, Why, What Next - vehicles & components, hybrid & pure electric, land, water, air, winning strategies, forecasts."(www.IDTechEx.com/EVprofit )
The leaders in e-mobility participate in most of the major sectors of the market, not just cars. They include Toyota, Nissan, Mitsubishi and Hyundai in industrial electric vehicles, both hybrid and pure electric. Indeed, a massive 33% of Toyota's $235 billion of gross sales in the fiscal year 2011 was in material handling vehicles where it is world leader. All the indoor ones are electric and now the outdoor forklifts and the like are rapidly becoming hybrid electric to improve performance and fuel economy.
IDTechEx is a member of the Electric Drive Transportation Association (EDTA).
Ex factory value of EVs, in billions of US dollars, sold globally, 2012-2022, by applicational sector, rounded
A much higher percentage of the buses and material handling vehicles made in the world are electric compared to cars. Toyota - like its large competitors - has only a minor percentage of its total car sales being electric as yet but it is launching new electric models faster than anyone. Its leading hybrid car the Prius outsells every other one in the world by at least a multiple of four. This is partly because it was "born electric", readily recognised by customers and it was sold at a loss and constantly improved ten years before most alternatives became available. Toyota thinks very long term.
Toyota also owns Hino Motors profitably making electric buses and trucks. The message from the President of Hino Motors in its annual report was, "Simply stated, employing more fuel-efficient commercial vehicles around the world will lead to lower emissions of carbon dioxide. Therefore, we have continued to place considerable emphasis on the development and commercial application of hybrid trucks and buses." With the increased use of similar components in all its electric vehicles and cross-marketing etc., Toyota exemplifies how to exploit the synergies, from bulk buying of components to testing new electric components on one type of vehicle before incorporating them across the other ranges as appropriate. Toyota's rapidly increasing intellectual property in electrics, electronics, traction motors and traction batteries is particularly important here as are its designed-to-purpose range extenders for hybrids of all sorts. At "Electric vehicles Land, Sea, Air" in San Jose, California on March 27 -28 (www.IDTechEx.com/evUSA) one Toyota speaker covers the formidable new range and another covers its imminent fuel cell on-road vehicle.
Toyota is almost always profitable. It forecasts selling 7.38 million vehicles of all types in the year ending March 2012 generating 390 billion yen in net income on sales of 19,000 billion yen. Part of that involves a gross income in electric vehicles of four times that of the nearest competitors. That means mainly hybrid for on-road and mainly pure electric off-road. The nearest competitors include KION Industries boxed into material handling vehicles and Nissan, Hyundai and Mitsubishi with a broader and more robust approach. Sensibly one of them should buy KION, which although has remained profitable after being removed from industrial giant Linde, does not have the resources to expand into the overall market.
Ford, Daimler AG, Volkswagen, BMW and others are also racing to catch up as Toyota rapidly offers hybrid versions of all its cars and increases the percentage of its buses, trucks and other vehicles that are electric. We are moving from customers choosing between a conventional and an electric vehicle to choosing between different types of electric vehicle because, within 20 years, most on-road vehicles manufactured will be electric by market value. In other words, electric vehicles are rapidly becoming a meaningful, separate market.
Honda and Daimler AG are taking quite a broad based approach, variously electrifying cars, buses, leisure, military vehicles and motorcycles and this will be to their advantage. Of those coming up fast with a broad and synergistic approach, also involving key component intellectual property, Tata Motors of India is particularly impressive. For example, it does not take the simplistic view that there are only two types of range extender - today's designed-to-purpose piston engines and tomorrow's fuel cells. It is developing a mini turbine as range extender and is heavily involved in allied technologies such as multiple energy harvesting.
However, only Toyota is filing powerful and numerous patents on traction motors and traction batteries and only a few automotive manufacturers make these themselves, Toyota being one. Its approach is extremely broad ranging, including possible magnesium and other technologies and a wide range of lithium technologies. It develops and uses both synchronous and asynchronous motors. It is almost unique in sharing EV experience between divisions and cross fertilising ideas. For example, it first introduced the more rugged, magnet-free asynchronous motors in its forklifts then in on-road vehicles. The Renault-Nissan partnership is also strong in this respect, for example controlling battery manufacture and being first to succeed with switched reluctance motors to escape the tyranny of magnet price hikes.
Toyota makes vehicles in all key markets, selling and manufacturing globally, something that few of its competitors achieve. For example the total production of the hybrid Auris for the world is made in the UK.
Toyota is very cautious about the rigged Chinese market. Unlike the competition, it has not surrendered major intellectual property in one the three key enabling technologies for EVs (motors, electrics/electronics, batteries) in order to manufacture in the country. This has been a requirement of the Chinese government which also demands that local companies have the major shareholding and therefore total control of such joint ventures.
Toyota offers a small pure electric car but it does not think that the range and cost of pure electric vehicles is near to making them suitable for prime time, in contrast the Renault, Nissan, Mitsubishi and Fiat. IDTechEx believes that a viable strategy to combat Toyota in on-road vehicles may be to offer a range of pure electric on-road vehicles with a drop in range extender module sold as an optional extra. Compact and micro cars would be the best candidates for the drop in range extender, in particular "fuel generators" meaning range extenders that do not need a shaft to a separate generator. See the IDTechEx report "Range Extenders for Electric Vehicles 2012-2022"; www.IDTechEx.com/range for more information.
However, those wishing to catch up and beat Toyota, in particular have to produce superior industrial and commercial hybrids, notably outdoor forklifts and earthmovers, buses and hybrid family and sports cars. Toyota is moving so fast that such strategy must be largely pursued with acquisitions and the IDTechEx report "Electric Vehicle Industry Profitability 2012 - Where, Why, What Next" scopes many opportunities.
Secondarily, joining the new wave of pure electric on-road pure electric vehicles with 150 miles range is useful and it should be followed by being the first to achieve affordable 200 mile range in mainstream electric cars. A means of offering an affordable on-road pure electric vehicle with 500 miles/ 800 km would be highly disruptive. One possibility is to have a much smaller battery, given their expense, with other devices doing more of the work without problems of cost, size, weight and safety.
This can be achieved either by continuous pickup of power as with OLEV Technologies in the USA and KAIST in Korea or - much more broadly applicable - a combination of energy storage and other technologies. Supercapacitors are being developed that have the storage density of batteries without their limited life and charge-discharge rate. Fast charging is becoming available for the frequent top up of batteries in vehicles. Multiple energy harvesting can operate something of a relay race in providing energy. For example, when parked, the vehicle may garner light and wind power. When at cruise speed, heat capture is particularly effective but going over bumps maximises input from energy harvesting shock absorbers whereas slowing down maximises power from regenerative braking. The company that maximises all these things to provide an affordable long range pure electric vehicle will have a huge competitive advantage. In addition to allaying range anxiety it will attract people wanting a huge reduction in fuel costs vs gasoline, even though that is only a quirk of taxation. Ambitious giant electric vehicle companies can still buy into most of these new technologies to marginalise competition.
There are marketing breakthroughs that are also feasible. Plug-in hybrids cost more than mild hybrids to make but Ford has copied the early Japanese ploy with conventional vehicles, of offering all extras free - something that helped to power Toyota to the number one spot. Ford offers one hybrid model at the same price as the conventional alternative, swallowing the cost premium in manufacture. Sales have leapt. Expect to see more of this as the leaders in electric vehicles seek economy of scale and thus competitive advantage.
In "Electric Vehicle Industry Profitability 2012 - Where, Why, What Next" we also look into the highly profitable niches in electric vehicles where companies such as AeroVironment and Kongsberg prosper and we explain the "rules of the marketplace" that have largely predicted success and failure in EVs over the last decade.