Lexus: The hybrid debate blog

The Toyota Prius may lead today’s hybrid popularity contest, but it’s not classically good-looking and, to take advantage of its efficiencies, you still have to pay a premium up front. We’ve yet to see a "killer2 hybrid car that is just too good a package for the average driver to resist - something that’s competitive in terms of cost, efficiency, looks and other criteria.

Once that happens, the industry will quickly reach a tipping point and develop in the same way as other high-tech industries of the recent past. Investment will pile in. Then there will be a Darwinian shake-out, during which the market decides what constitutes the ideal clean-driving solution (or solutions). Then, finally, we’ll be left with a few dominant players.

What constitutes the ideal hybrid after that will depend on the different usage scenarios of key customer groups. For example, it’s easy to imagine a small group of categories such as short-distance/city commuting; intercity/long-distance touring; family transportation; off-road venturing and so on.

In any case, certain components - such as batteries, regenerative braking components or exotic body-shell materials designed to be light-weight and sustainable - will become much more important to both the performance of a car and its competitive advantage. At present, aerodynamics still has the greatest impact on performance of any design activity, but we might see a situation in which external suppliers of, say, batteries, see their impact increase dramatically.

Brands that today produce white-label components for car manufacturers may in the future command higher margins thanks to improved consumer recognition. They may even act as hallmarks of quality. For example, Johnson Controls, a present-day leader in hybrid battery technology, could be associated with superior battery performance in the same way that Bridgestone is associated with superior tyre performance today. Meanwhile, car manufacturers could proudly announce their affiliation with specific battery brands, in the same way that certain computer manufacturers already trumpet the fact they have "Intel Inside".

Optimal energy storage is the key: this is where hybrids come into competition with hydrogen fuel cell cars. Every car-maker is currently to grab and hoard as many fuel cell and engine type patents as they can. And, going forward, there will continue to be frenetic innovation in battery technology and related systems. The mobile phone reached its tipping point thanks largely to advances in battery technology, and the same thing could happen for the car.

The leaders in this area will become large and influential, but they may not come from a battery manufacturing background. Just as it took a former wood-pulp mill (Nokia) to revolutionise the phone industry, and a computer company (Apple) to revolutionise the music industry, so it may have to be a company from outside automotive, with a completely fresh perspective and innovative energy, to invent the ultimate mobile energy storage solution.