Toyota's Battery Breakthrough Is One Factor in Push for Electric Vehicles

With Toyota's (TM) reported breakthrough in lithium-ion battery chemistry, the Japanese automaker's strategic shift toward creating more battery-powered electric vehicle models comes into clearer focus.

This week, Toyota invited reporters to its Tokyo headquarters where the automaker's head of research and development, Hisao Yamashige, explained how and why the automaker believes it can improve the range of vehicles powered by lithium-ion batteries by about 15%.

Using an enormous synchrotron near Kobe, Toyota scientists were able to observe the movement of lithium ions in order to understand why they slow down and a battery loses its effectiveness. With this understanding, the company believes it can improve the design and create a better battery within two to three years.

Toyota until now has downplayed the role of rechargeable batteries for zero-emission vehicles, asserting that the technology was too costly, ineffective and unsafe. Instead, Toyota has been pushing fuel cells, which also generate electricity using hydrogen as a basic fuel; the automaker is leasing a small number of Mirai fuel-cell sedans in California.

Earlier this month, Toyota disclosed that it was changing direction and intended to mass produce a new electric vehicle, or EV, in time for the 2020 Olympics in Tokyo. The automaker will create a four-person team to answer basic questions such as what kind of vehicle architecture to use and to devise a battery manufacturing strategy.

Toyota has said it remains focused on developing hydrogen fuel-cell-powered vehicles.

Two other factors likely are influencing the automaker's strategic thinking. One is competitive. Volkswagen's (VLKAY) diesel-emission scandal has created a cloud over the entire diesel engine industry, with VW now undertaking a massive initiative to de-emphasize diesels and simultaneously to expand EVs to 25% of its output by 2025.

Likewise, German automakers BMW and Daimler are racing to introduce new EV models, including luxury versions, which means that European, U.S. and Chinese consumers will be able to choose from more EV models than ever.

Stricter environmental standards and improving incentives for EVs in China, where Toyota is a major player, also are affecting the automaker's thinking.

"Differing energy and infrastructure issues around the world and the rapid strengthening of regulations aimed at increasing the use of zero-emission vehicles have heightened the need for product lineups that can respond to various situations," the automaker said in a statement released earlier this month.

Zero-emission rules in California and 14 other states in the U.S. have been in place for some time, though the new U.S. presidential administration may tweak environmental regulations affecting vehicles.

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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