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Does Toyota have the energy to keep up on EVs?

Even as Toyota is about to introduce its first all battery-powered electric model, the RAV4-EV, it remains openly skeptical of lithium technology, in contrast to many of its rivals.

Toyota will lift the covers off its first pure battery-electric vehicle at the upcoming Los Angeles Auto Show. The move marks a distinct shift in strategy for the world’s largest carmaker which, until recently, had downplayed the potential of lithium-ion-based vehicles.

Long considered the leader in advanced automotive propulsion, Toyota has spent the last decade focusing on gasoline-electric models, such as the Prius, now the world’s best-selling hybrid. The decision to bring out the prototype RAV4-EV comes as key competitors threaten to gain a leg up in the fast-changing market – Nissan with the Leaf battery-electric vehicle, or BEV, and Chevrolet with the Volt, its plug-in hybrid.

Yet, even as it hints the RAV4-EV will find a place in its line-up sometime in 2012 — along with a plug-in hybrid version of the Prius — Toyota remains openly skeptical of lithium technology, in sharp contrast to the growing number of rivals who see battery-based propulsion as the industry’s future direction.

While “the evidence shows we’re not behind on anything,” according to John Hanson, a public relations executive for Toyota’s advanced propulsion systems, he doesn’t hide the maker’s lack of enthusiasm, insisting battery-electric vehicles “don’t … have a cost and convenience advantage” over more conventional powertrains.

Toyota isn’t the only company concerned about battery economics. Noting that lithium-ion technology currently costs as much as $1,000 a kilowatt-hour, GM plug-in chief Mickey Bly says, “It’s pretty much accepted that needs to get down to $300 or below to make (battery propulsion) cost neutral” with more conventional gas or hybrid technology.

But on a personal level, Bly sees that sharp drop on the horizon, a position reflected by GM itself, which is investing billions on Volt and what is expected to be a series of plug-ins and more advanced battery cars to follow.

Nissan is also diving into the lithium-ion pool with Leaf, despite its limitations, which include a range of around 100 miles per charge. For his part, Nissan CEO Carlos Ghosn contends the battery car and similar models under development, “will change the industry.”

Why the difference in opinion? Insiders say Toyota made a risky bet on what many believed to be the most promising of many variations of lithium-ion chemistry. But the version using cobalt to improve energy density — translating into greater range — proved to have significant problems. Among them, a propensity for nano-scale manufacturing defects that could lead to shorts and, potentially, fires.

Significantly, for the RAV4-EV, the typically insular Toyota chose to partner with the California battery-car start-up, Tesla Motors, rather than develop the drivetrain itself. The zero-emissions version of the popular crossover/SUV will be powered by a lithium-based drivetrain almost identical to the one used in Tesla’s 2-seat Roadster, and which will power the company’s upcoming Model-S sedan.

Toyota is working on a battery car of its own, but it will be a shorter-range microcar more suited to places like Japan, where speeds are low and driving distances are short.

Perhaps the real test of Toyota’s own battery car prowess will come with the belated launch of a Prius plug-in hybrid. Though company vice president Bob Carter last year said the new model will reach market late in 2010, about the same time as Leaf and Volt, it now appears only a small number of prototypes will be ready by then and only for use in controlled fleet tests. Retail sales won’t begin until Spring 2012, more than a year behind the competition.

And, the Prius plug-in will have far more limited battery functionality. Initially, Carter said the model will be able to get 17 miles per charge, but that’s now down to 13 miles, according to Hanson. And the Toyota plug-in will only be able to operate in electric mode at speeds up to around 62 mph, which would create problems if used in fast-moving commuter lanes in key markets like Los Angeles. Volt and Leaf both top out around 90.

“That could make a big difference,” according to Joe Phillippi, of AutoTrends Consulting. But even the most avid battery-car proponents acknowledge it’s too early to tell what typical consumers will want from these vehicles, if they prove to want them at all.

At least for the time being, it’s generally considered that the government will have to take steps to prop up demand. Washington will offer up to $7,500 on qualifying high-mileage models and more than a dozen states will be offering incentives of their own. That will bring Leaf’s sticker price to around $25,000, a reasonably competitive number considering its size and features. Toyota hasn't revealed the RAV4-EV's price.

Whatever the reluctance of corporate planners, Toyota is only likely to push even deeper into the emerging battery-car market. There’s the question of corporate image, of course. But there are also more practical matters, notes Hanson.

“There’s the ZEV mandate,” he notes, referring to California’s requirement that a certain percentage of each manufacturer’s fleet produce zero emissions. “Every manufacturer that wants to sell in California has to meet its quota.” And with the quota ramping up in 2012, he concludes, “You will have to come up with a wide choice of (battery) vehicles.”