Toyota and the market for hybrids

From Rick Newman in U.S. News & World Report...

Again, not as exciting with lower gas prices for now, but still interesting given technological advance, business strategy, and market processes...

For a company that hates to gamble, Toyota put a big stack of chips on the table when it decided, in 2003, to build pickup trucks in Texas. After debating the move for years, the Japanese automaker broke its own rules in order to plant a flag in the heart of truck country, hoping a Texas-built Tundra would earn the all-American cred needed to invade the one bit of automotive turf still dominated by its domestic competitors....By the time trucks started rolling off the line in 2006, the project seemed more like a public-works boondoggle than the kind of lean operation Toyota is famous for, with costs ballooning to $1.3 billion—60 percent over budget.

It got worse from there. Toyota ended up introducing the new Tundra (city gas mileage: 15 mpg) just as gas prices were beginning their ascent toward $4 per gallon. The housing meltdown and slowing economy have further constricted sales, since builders and contractors are prime pickup buyers...

Yet no car company stands to gain more than Toyota as skyrocketing gas prices and the eroding economy batter all the automakers. Despite missteps like the Tundra, Toyota's renown in the car business borders on mythic: It had the vision, after all, to introduce the Prius hybrid back in 2000, when gas was a mere $1.50 a gallon and most American car buyers cared more about cupholders than gas mileage. Toyota sold 181,000 Priuses last year and can hardly meet demand. The company now offers six high-mileage hybrids—more than any other automaker—and has more on the way. That's helped Toyota remain steady while sales have plummeted at the Detroit automakers. Toyota now sells more cars in the United States than Ford or Chrysler, and it could catch up to General Motors before long....

The stakes are huge: The automaker that seizes the plug-in market could dominate for years. And already GM has targeted the pole position on plug-ins, with the Chevrolet Volt, due in 2010....Toyota has answered GM...[and will] field a "significant fleet" of plug-ins available to commercial customers, matching GM's 2010 target date....