Toyota to Mass Produce a Battery-Powered Electric Car by 2020

Give Toyota (TM) credit for flexibility and adaptability -- as well as a practical outlook - when it comes to corporate strategy.

The global No. 1 automaker in terms of sales disclosed this week to the Nikkei news organization that it will mass produce a battery-powered vehicle by 2020, probably in time for the next Olympic games in Tokyo. The move follows an accelerated adoption of EV technology by rivals responding to government pressure.

Previously, Toyota had downplayed battery-powered electric vehicles due to their limited range and the lack of a public recharging infrastructure. Instead, Toyota has brought out fuel-cell vehicles that run on hydrogen as a means of complying with zero emission regulatory standards.

Toyota will create an in-house team, perhaps by the start of the new year, to develop a new EV and answer basic questions such as which vehicle architecture to use -- Prius or Corolla -- and whether to rely on internally developed batteries or buy from the outside. It remains unclear whether the automaker may de-emphasize or delay further fuel-cell research.

Over the next month or two, Toyota executives are sure to elaborate on the reasons for the change of direction, as well as details such as where the new model will be sold and its expected performance characteristics. California and U.S. states mirroring California's zero-emission regulations could be the first markets to see the new model.

Battery-powered EVs, though still representing only a sliver of the new-vehicle market, have moved closer to the mainstream in the past few years because of improvements in range and affordability. Nissan (NSANY) , the leading EV manufacturer, sells the mass-market Leaf EV in the U.S., while Tesla's (TSLA) Model S and Model X are luxury cars.

General Motors (GM) no doubt raised eyebrows across the Pacific by disclosing that its Bolt EV, set to go on sale by the end of the year, boasts a range of 238 miles between charges, significantly more than the first Leaf, whose range was less than a hundred miles. Volkswagen (VLKAY) has said a quarter of its cars will be EVs by 2025, up from 1% now. And the Chinese government has been creating incentives for local EV manufacturers.

Toyota sold some EVs in collaboration with Tesla from 2012 to 2014. The short range, high cost and weight of batteries were worries. The Japanese automaker has been a pioneer in gas-electric hybrids, which improve mileage and reduce pollution.

Doron Levin is the host of "In the Driver Seat," broadcast on SiriusXM Insight 121, Saturday at noon, encore Sunday at 9 a.m.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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