WAYS TO GO

WITTMANN, Ariz. — At a remote 12,000-acre test track in the Sonoran desert here, the almost neurotically secretive Toyota Motor Co. recently had a coming-out party of sorts.

Amid the cactuses and desert blooms, the Japanese auto maker candidly revealed its lineup of alternative-fuel vehicles--an electric sport-utility vehicle, a natural-gas sedan and a low-emission hybrid-powertrain car. It even showed off fuel-cell technology and discussed future plans.

“Toyota decided to come out of the closet with a vengeance,” declared vice president James Olson.

Traditionally close-mouthed about future products, especially where advanced technology is involved, Japanese auto makers are being forced into the spotlight by the fast-approaching California requirements that they begin selling pollution-free automobiles.

Although there’s been much apprehension in Detroit, the exercise in openness so far suggests there are no blockbuster Japanese auto technologies just around the corner--no cars powered by water, no 100 miles-per-gallon sedans. The leading Japanese companies appear no further along in alternate-fuel vehicle development than the Big Three and other competitors. Indeed, in some areas the Japanese appear to be lagging.

The main barometer is Toyota, the largest and richest of the Japanese auto makers. Though it has sharply boosted spending on alternative-fuel vehicles, its approach is conservative and practical, emphasizing refinements of known technologies.

“Toyota has made good progress on improving the gas engine, but when you look at advanced technologies, the U.S. companies are probably stronger,” said David Cole, executive director of the University of Michigan’s Office for the Study of Automotive Transportation.

Toyota does, to be sure, see a future in alternative-fuel vehicles. But that future could be decades away. So while it is increasing alternative-fuel research and development, Toyota--like most of the world’s auto makers--figures the internal combustion engine will remain the world’s dominant auto propulsion system for the next 20 to 30 years.

In fact, the company is spending as much on perfecting the conventional engine as it is on developing electrics, gasoline-electric hybrids and fuel cells. It is pushing forward on “lean-burn” and other technologies that vastly improve the efficiency of current gasoline engines.

Still, Toyota vows to be a major player in the alternative-fuel field.

“We plan to be a leader,” declared Akihiro Wada, executive vice president of research and development.

U.S. regulatory pressure isn’t all that is driving auto companies to find new sources of propulsion. Demands for lower emissions and better fuel economy are growing worldwide in countries where air pollution is severe and gasoline prices are high. Attention on auto exhaust is coalescing in advance of a global summit this December in Kyoto, Japan, where an agreement to reduce emissions such as carbon dioxide will be the main topic of debate.

But the immediate prod is the emissions regulations established by the California Air Resources Board for the state’s seven top-selling car makers--the Big Three U.S. companies and Japan’s Toyota, Honda, Nissan and Mitsubishi. In addition to complying with steadily tightening emissions standards, each must field an electric-vehicle demonstration fleet between 1998 and 2000. Beginning in 2003, the air board will require 10% of all new vehicles sold in the state to have zero emissions--a standard that only electric vehicles now meet.

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The Japanese auto makers’ efforts to develop electric and other advanced-technology vehicles have often been shrouded in secrecy, causing worry in Detroit as environmentalists warned that American companies were being outflanked.

And critics argue that General Motors, Ford and Chrysler spend more time and money on fighting California’s zero-emissions mandate than on developing cars that would meet it. While the Big Three are scheming to delay the mandate, they say, the Japanese are quietly pushing forward and will soon seize the market, leaving Detroit in the dust.

For a while, the Big Three shared that fear. In 1992, GM pushed a plan for joint Big Three development of electric cars. Dubbed Team USA, it was meant to counter a “Team Japan,” a reputed monolithic effort by Japan’s auto makers and government to win the electric-vehicle race.

Team USA never got off the ground, but Detroit’s auto makers still share future vehicle technology through several government-industry consortia. The biggest is the Partnership for a New Generation of Vehicles, a cooperative effort among the auto makers, federal government and national laboratories to develop affordable low-emission family vehicles that can get 80 miles per gallon.

Toyota, Honda, Nissan and Mitsubishi--which are excluded from the partnership program despite the fact that they build many of their vehicles in the United States--say the notion of a Team Japan is a myth.

There is some support from the Japanese government, they say, but each company is independently pursuing alternative-fuel vehicle programs.

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Honda, smaller than Toyota and traditionally an innovator, is the first Japanese auto maker to enter the EV sweepstakes in the U.S. market--and second in the U.S. after General Motors, which introduced its EV1 in December in California and Arizona.

This month, Honda is introducing its four-seat EV Plus at four Southern California dealerships. Honda, long regarded as a world leader in low-emissions technology, is building the vehicle in Japan.

EV Plus, a subcompact, is the first vehicle to use the costly but energy-packed nickel-metal-hydride battery technology. The car can go 100 miles in normal city driving on a single charge, but Honda is telling consumers to expect only 60 to 80 miles in “real-world” conditions. It plans to sell 300 over the next three years.

The batteries have a usable life double that of the conventional lead-acid battery pack now used in GM’s EV1, but they also cost twice as much. This accounts for the EV Plus’ hefty sticker price of $53,999. But as with GM’s EV1, Honda will only lease the EV Plus. The price is $499 a month for three years, including insurance and maintenance.

Honda’s other current push in the U.S. market is a Civic converted to run on natural gas--a bid to meet progressively tighter emissions standards for all cars. Most auto makers are experimenting with natural gas. Honda asserts that the Civic GX--starting production this year in Ohio--is extraordinarily clean-burning. The vehicle meets California’s current ultra-low-emissions standards.

“It’s the cleanest internal combustion engine ever put into production,” said Robert Bienenfeld, manager of the alternative-fuel task force at American Honda. “There are almost no emissions.”

Says Honda spokesman Yoshio Shibata in Japan: “If we cannot harmonize with the requirements of the environment, we cannot exist for a long time as a manufacturer.”

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But the big question has been what to expect from Toyota, arguably the world’s premier mass-market auto maker. A bigger force in Japan than General Motors is in the United States, it has vast technological resources and, under President Hiroshi Okuda, has undertaken a major retooling aimed at pulling ahead of the competition. It is expanding in emerging markets, building factories in Asia, North America and Europe, and trying to shore up its dominance in Japan with new products and aggressive marketing.

Okuda caused a stir last fall when he announced that Toyota would double its annual research and development budget for alternative-fuel vehicles to $800 million a year--more than twice what GM spent to develop its EV1.

“To spend that kind of money shows they are quite serious about alternative-fuel vehicles,” said Jason Mark, transportation analyst for the Union of Concerned Scientists, an environmental advocacy group.

But some believe that Toyota’s increased spending is more indicative of the auto maker’s concern that it is falling behind in the advanced-vehicle race.

Consider electric vehicles. This fall, Toyota will introduce in California an electric version of its four-door, five-seat RAV4 sport-utility vehicle. The vehicle, to be priced under $42,000, will use advanced nickel-metal-hydride batteries and have a range of up to 130 miles.

But the RAV4, a nicely packaged product that offers a smooth ride, is simply a conversion from an existing gasoline-powered vehicle. Both GM and Honda have made greater commitments to the electric cause, designing and building vehicles specifically for an electric powertrain.

Toyota is using the same costly battery technology as Honda in the RAV4 EV, which has a driving range similar to Honda’s EV Plus. But it will be priced at least $12,000 cheaper, reflecting that it cost Toyota much less to convert the RAV4 than to start from scratch.

Taking a more conservative marketing approach than GM and Honda, Toyota will not sell or lease the RAV4 EV to individuals but only to commercial fleet operators such as utilities and government agencies.

“We don’t want to tarnish the image of electric vehicles or of Toyota,” said Mark Amstock, head of Toyota’s alternative-fuels marketing. “It’s sort of ‘selling no wine before its time.’ ”

The RAV4 EV is strategically important to Toyota as the first alternative-fuel vehicle it will introduce in North America. The vehicle is being built in Japan, where the company is already selling a two-door electric version, but Toyota says U.S. production is possible in the future. It is committed to selling 320 over the next three years.

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But Toyota, like other auto makers, seems more interested in pursuing a hybrid approach to electric vehicles. A hybrid combines a small battery pack with a second power source, such as a smaller gasoline or natural gas-powered engine, or even fuel cells.

Hybrids are increasingly regarded as the most practical approach to electrifying the automobile. They don’t produce “zero emissions,” but the exhaust reduction is considerable and the driving range is greater.

California Air Resources Board Chairman John Dunlap has said that hybrids “hold promise” and that the agency is studying changes to its regulations to allow certain hybrids to qualify as zero-emissions-equivalent vehicles.

Toyota is most excited about a hybrid system that uses a small, efficient gasoline-burning engine in conjunction with an electric motor, generator and small nickel-metal-hydride battery. The sophisticated system can deliver a fuel efficiency of 70 miles per gallon while reducing emissions greatly, Toyota says. “This gets bodacious fuel efficiency,” said David Hermance, general manager of powertrains at Toyota’s technical center in Torrance.

Toyota plans to begin selling a version of the vehicle--slightly smaller than the mid-size Camry and probably to be priced below $35,000--in Japan later this year. There are no plans yet to bring it to the United States, though executives say that is getting serious consideration.

The auto maker is also working on fuel cell technology. Fuel cells, which have powered space vehicles for decades, use hydrogen in a chemical reaction with oxygen from air to produce electricity and water vapor. Fuel-cell-powered cars are thought to be at least eight years away from becoming a reality.

Toyota and Germany’s Mercedes-Benz are the only two companies to have produced a working fuel-cell prototype vehicle. Toyota displayed its vehicle, a RAV4, last October in Japan.

Nissan, the No. 2 Japanese auto maker, is working with Ballard Power Systems of Vancouver, British Columbia, on fuel-cell projects, as are Honda and each of the Big Three. Mercedes-Benz, regarded as the leader in fuel-cell vehicle development, recently acquired 25% of Ballard and announced plans to begin selling a small fuel-cell car by 2005.

Nissan has had an electric-vehicle program for more than 30 years, but development has been slowed by financial problems in recent years. The company began selling an electric-powered version of its Prairie Joy minivan earlier this year in Japan.

Early next year, the Nissan EV, a four-passenger compact van derived from a gasoline-powered vehicle, will make its U.S. debut. The company plans to have 30 of the vehicles on California roads in 1998 and 90 more the in the two years after that, all for sale to fleets.

The Nissan EV uses another type of battery: lithium-ion. Small lithium-ion batteries now power a variety of consumer products, such as laptop computers and camcorders. They pack three times the energy of lead-acid batteries and one-and-a-half times that of nickel-metal-hydride, meaning they make for a much lighter vehicle battery pack. But they present cost, safety and production problems that must be overcome.

Nissan is also working on hybrids, but it hasn’t announced any production plans.

“By limiting the size of the battery pack and using a small internal combustion engine, you can get some good packaging and performance,” said John Schutz, general manager of Nissan’s U.S. research operations.

Another company experimenting with lithium-ion batteries is Mitsubishi, the smallest of the Japanese companies subject to the California air board rules. Mitsubishi, however, is not offering a pure electric but rather a hybrid vehicle that combines battery power with a small internal combustion engine.

Mitsubishi has supplied the air board with three hybrid vehicles--one using compressed natural gas and two that burn gasoline--for a 30-month evaluation that will be completed by early next year. The vehicle is based on the Mitsubishi Chariot minivan, sold in Japan.

As the Japanese and other auto makers experiment with batteries, fuel cells and other technologies, the lineup of alternative-fuel vehicles is likely to change repeatedly. In the meantime, industry executives say, only one thing is certain.

As Toyota’s Wada puts it: “In 20 years, the internal combustion engine will still be on top.”

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Nauss reported from Michigan and Arizona, and Holley reported from Tokyo.