By on November 14, 2011

Yesterday, we met Toyota Chief Engineer Satoshi Ogiso in his office in Toyota City. He is responsible for all new technology at Toyota. Yesterday, we talked mostly about the past. Now, we talk about the future.

When I ask Ogiso what car we will be driving in the future, he whips out a chart. It’s a chart which I call “Peak Oil 2.0.”

It’s not that oil wells will suddenly go dry. Level headed people expect oil to flow unabated well into the future. The problem is vehicle growth. In the saturated established markets, vehicle growth is expected to be largely stagnant. It’s the exponential growth in emerging markets that will open a gap between oil supply and oil demand – if all those cars run on petroleum-based fuel. That gap is what keeps Satoshi Ogiso awake at night – and he usually sleeps only 5 hours anyway.

There are many versions of this chart. The one used by Toyota says that we have been living with a small gap since 2005. Experts generally agree that the gap will become a serious problem in the 2015-2020 time-frame. In the world of an auto engineer, 2015 is today. With a lead time to 3 to 5 years, auto manufacturers around the world better have their act together now and answers to how that gap will be filled.

Satoshi Ogiso has the answer, and many will not want to hear it:

“To control this gap, we must go multi track. We must improve gasoline and diesel engines. We must increase the number of hybrid models. We must produce the plug-in hybrid. We must develop city commuter electric vehicles. We already started small production of fuel cell vehicles.  We must do all these improvements at the same time.”

This translates into huge R&D costs which will be beyond the capabilities of many carmakers. The first victims of Peak Oil 2.0 will be small carmakers who cannot keep up with the expense of a multitrack research program at breakneck speed with only small returns in the foreseeable future.

How will this gap be filled? Ogiso puts another chart on the table. Mind you, this is not how all of future fuel will be divvied up. This is only how the 15 or so extra million barrels of oil will be made up for when the gap has opened its hungry mouth by 2030.

According to Ogiso and his team of experts, compressed Natural Gas or CNG will grow in importance. Ogiso sees a “big future in CNG.” Liquid fuels will be with us long into the future. Gasoline will be around for a long time. Increasing amounts of these liquid fuels will not be made from oil.

All of these fuels will drive some kind of internal combustion engine, either directly mounted to the transmission, or in hybrid fashion.

The pressure to improve efficiency, combined with the maturing technology will push the equilibrium more and more in the direction of the hybrid. Asked what kind of a car I will own in 2020, Ogiso says:

“In 2020, hybrid will be mainstream. If  you can have two cars, then by 2020, you will likely have one tiny city commuter car that is pure electric. Your regular car will be a hybrid.

The pure hybrid will be the majority, next volume down will be the plug-in hybrid. Plug-ins can use pure electricity without people worrying about the range. Eventually, city commuter EVs will become popular. And of course, the conventional car will still remain on the market – especially in the developing countries, but even in Japan.”

Efficiency improvements of traditional gasoline engines may soon hit a wall, Ogiso figures. He gives the gasoline engine an improvement potential of “maybe 10 to 20 percent.”  For modern diesel engines, he sees very little room for improvement.

Listening to Ogiso and looking at his charts, it quickly becomes evident that he does not believe in the wholesale electrification of the automobile anytime soon. When he says “EV”, he always adds “city commuter” to it. This is a small niche market, especially when city commuters are supposed to commute via public transport. It is also interesting to note that on his chart, electricity does not play a serious role until 2020. Even then, the electricity may not come out of a battery. It may come out of a gas tank. Filled with hydrogen.

Yes, hydrogen.

For Ogiso, a hydrogen-powered car is like an EV, but without the weight, slow charge time and range anxiety of the battery. He sees a range of 700 km (434 miles) for a hydrogen-powered car that can be refueled in minutes.

But isn’t hydrogen fraught with technological problems? Ogiso does not think so:

“Toyota’s views are a little different. We continued the development of fuel cells. Sure, there were a lot of problems, especially with cold conditions drivability. But at this moment, we have almost cleared all technical issues.”

But aren’t hydrogen atoms so small that they escape any vessel in no time? Isn’t hydrogen so corrosive that it will eat tanks for breakfast? Ogiso looks at me as if I am from Mars.

“No, I don’t think so. We already have 150 hydrogen fuel cell units in the field in Japan, in the U.S. and in Europe, for more than one year, without serious problems. We have not had a car where the gas had escaped in the morning.”

Actually, the only real problem Ogiso is facing with hydrogen fuel cell vehicles is money:

“For us, the only remaining real issue that stands in the way of fuel cell electric vehicles is mass production cost.”

In a way, Toyota is with fuel cells where they were with hybrids in 1995: Big, bulky, heavy and expensive. Just much more expensive than hybrids.

Toyota is working hard on shrinking the size and the cost of the fuel cell stack. Expensive materials such as platinum have been replaced with cheaper ones. Last year, a commercial hydrogen-powered Toyota would have cost $100,000 . A few days ago, Toyota’s EU VP for planning, Alain Uyttenhoven said it could be €100,000.

When I ask Ogiso how much that car would cost in 2015, he squirms  and says that there are estimates, but those are not for public consumption.

When I ask him whether a hydrogen powered car would be an affordable option by 2020, then his worried look morphs into all smiles, and he says with conviction.

“Yes. This is my job.”

Now, you ask, and I ask as well: Where will all that energy come from? Another chart lands on the table. I call it the Tokyo Subway Map of New Energy.

This chart shows gasoline and diesel at a clear disadvantage: Both come from only one source, from oil wells. Biofuel is similarly hampered.  Electricity and oddly enough hydrogen can be made from a multitude of sources.  That is all fine and good. But what about the infrastructure? Ogiso is not concerned:

“I am not worried about the infrastructure. There is a lot of hydrogen available. Once we have cost effective hydrogen cars, the infrastructure will follow.”

What also will follow is Part 3 tomorrow, in which Satoshi Ogiso will spring a surprise on you, and where he will demonstrate that bringing down weight, bulk, and cost of new energy vehicles is no longer a thing of the distant future.

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66 Comments on “Toyota’s Prius Chief Engineer Reveals The Future Of The Automobile. Part Two: What Will We Drive In 10 Years?...”

  • avatar

    Nice “get” to interview this guy. I’m not familiar with how many million barrels of oil we use in transporation today, so I’m not clear on if that second chart is the incremental use over some time in the past (weird that an incremental chart doesn’t start at 0). If it’s gross, then it doesn’t make any sense. We are certainly not going to 8x increase the energy use in 10 years if we are only growing the parc about 50% in the most optimistic case.

    Strange quotes. Were they in japanese and you translated? they have that quality to them were they seem really obvious (like that there is more hybrids in 2020 and multi fuel sources – as Larry Burns at GM has been yapping about for 10 years). His comment about you driving a hybrid and a city EV only makes sense if he assumes you’ll live in Tokyo and have lots of money (enough for two spaces) by then. For the average world, average car owner or even average 1st world car owner, there is no way that hybrids get 50%+ market share in 10 years.

    Hydrogen car costs are a lot stickier than hybrid costs, which are basically mechatronics, a little battery chemistry and some good algorithms. I doubt they’ll fall on the same curve as hybrid costs with volume.

    I’d say IC cars can get much better than 10% improvement if you think beyond the technology. For example, with no technology improvement considered at all, a $6/gallon gas would probably improve the fleet efficiency abotu 20% over time as people shifted to smaller cars and carpooling/carsharing.

    • 0 avatar

      That second chart plugs into the green gap of the first chart. It shows how they project that gap will be filled. As the first chart does not begin at zero, the second one does not either.

      We had a translator, but she did not have much to do. Ogiso was nice enough to answer in English.

      He did not suggest to have two cars. He said “If you can have two cars, then …” If you have only one, he thinks it will be a hybrid or a plug-in hybrid.

      • 0 avatar

        Okay – that explains the chart. Peak oil production in 2020 then.

        I wasn’t so much talking about whether it was one or two cars, but what was the population group he was talking about when he suggested that this would be the norm (which also infers that people who only drive 1 car would be even more likely to have a hybrid). The thought I was trying to express was that outside of Tokyo, especially if the US or Europe is part of the group he’s thinking about, that seems wildly optimistic.

      • 0 avatar

        Just some stats from the EIA website and my conclusions below. I’m not too worried about peak oil production as a result, nor about autos being the vangaurd of a switch in fuel stock.

        World Oil consumption vs. Oil reserves in 1980 (first year of data on their site) = 0.01%

        World Oil consumption vs. Oil reserves in 2008(last year of data on their site) = 0.006% and the curve was a pretty steady decline as you might imagine.

        World NatGas consumption vs. reserves in 1980 (first year of data on their site) = 2.1%.

        That sounds kind of alarming, but:

        World NatGas consumption vs. reserves in 2008(last year of data on their site) = 1.7%.

        So people seem to discover and validate more than is consumed.

        I’m not saying energy isn’t getting more expensive in dollars, but looked at on an ounces of gold per barrel, or the more conervative real oil price rather than nominal, it’s not nearly as dire as it looks.

        Also, with <20% of the world's energy use going to transportation (presmably about half of that in vehicles), changing over the vehicle fleet propulsion would be one of the last places to go after due to the cost. It's one of the first to go after based on life cycles, but I suspect that is more than overcome by the growth in emerging markets powerplants which would switch to the lower cost energies like Natural Gas before car fleets because there's no switch needed. It is just a decision in planning.

    • 0 avatar

      He is so ingrained into the Toyota culture he doesn’t understand how the future opens opportunities to every sized business organization, not just behemoths like Toyota.

      Japan looks around and sees shortages. And why not? They have had a rotten 20 years economically. They just don’t get it.

      • 0 avatar

        “They just don’t get it.”

        I don’t “get it” either, so you’ll have to tell me what “it” is. What is “it”?

        (Satoshi Ogiso’s vision of the future is fairly close to mine, and I’m not a member of Toyota or any large corporation.)

  • avatar
    Dr. Kenneth Noisewater

    Google Fischer-Tropsch: gasoline and diesel equivalents can also come from a multitude of carbon-based sources (coal, natgas, biogas, etc). Additionally, the thorium that gets released into the atmosphere (air or tailings) from burning an average ton of coal contains about 7 times the power of the coal, so theoretically with a LFTR you could extract the thorium from the coal, fission the thorium, and with some of the heat and power from the fission you could Fischer-Tropsch the coal into fuels and still have more electricity generated than you’d have if you’d burnt the coal.

    Liquid hydrocarbons are a particularly handy way of storing H in a relatively safe manner. I’m thinking keeping the existing distribution infrastructure, but putting gasoline/methanol-fuelable SOFCs into cars may be the way to go.

    • 0 avatar

      Yes, but there are three systemic issues you’re not talking about:
      1) Cost
      2) Opportunity cost
      3) Energy return on investment
      No, peak oil isn’t going to collapse our civilization the way the doomers think it will — but it will have a big impact on how we do things, because energy will be less of the cheap one-size-fits-all bonanza that we’ve become accustomed to. Sane and forward-thinking adults will have a lot of things to re-evaluate over the next 15-20 years or so.

      Chief Engineer Satoshi Ogiso seems to have hit the nail on the head, in my opinion. We’ll still have cars, conventional and advanced, and a variety of fuel technologies. And we’ll still have a LOT of conventional cars (see the first graph), but they’ll be squeezed by fuel prices, so people who can afford to pay a little extra up front for a hybrid or electric will probably do so. People who want to drive a Corvette on weekends will still do it, but they’ll probably be driving an AtoB electric car (rather than the ‘Vette) to work during the week, in 2040. Most families will probably have an utilitarian minivan or SUV parked somewhere for the jobs that those particular classes of vehicle good at.

      • 0 avatar

        That’s pretty much where I see personal transportation going in the next 10-15 years as well. Daily drivers will be some sort of Hybrid or EV while while the straight internal combustion relics will stay around for specialized tasks and enjoyment by enthusiasts.

  • avatar

    Fascinating stuff – thanks Bertel!

    The need for a pure EV city commuter and a hybrid “regular” car can be satisfied with something like a Volt – commute in EV mode, and still have range for the occasional road trip.

    I can see it working out something like this:
    -Private cars, parked 90% of the time, used ~mostly~ for short trips: Plug hybrid or range extended EV such as the Volt.
    -Taxi cabs, city police or delivery vehicles, usually on the road and in stop and go traffic: Conventional hybrid, such as the Prius.
    -Vehicles used primarily for highway driving: Conventional ICE, perhaps diesel.

    Of course cars are emotional purchases more than rational ones in many cases – so regardless of propulsion technology they will need to have different styles, prices, brand positioning and driving characteristics to appeal to different buyers.

    I think Ogiso san is probably right when he suggests that small carmakers that can not make the required R&D investments will fall by the wayside, although I expect that *very* small niche automakers will survive – in 10 years I would expect that you could still buy a new Morgan, but maybe not a new Mitsubishi…

    • 0 avatar

      Ogiso did not say that small carmakers can not make the required R&D investments. This is my deduction, but I’d say an obvious one. From a former life, I have a little insight into R&D costs, and I shudder at the thought of having to do all this in parallel in a very short time.

      Ogiso said only the quoted parts.

    • 0 avatar

      This is true. It seems like Toyota is broadly forecasting high energy prices, and is using its enormous RnD muscle to hedge its energy bets. In addition to replacement technologies like Hydrogen and electric, Ogiso seems to see a lot of room for hedging in ICEs themselves, which seems smart.

      If all this RnD is straight up necessary to be most car makers in ten years, maybe Toyota will become kind of like a big semiconductor manufacturer in the modern computer market. Lots of businesses, but only a few manufacturers doing key technology that everybody must buy from.

      • 0 avatar

        If you think about it, energy prices are already astronomical in the JDM by our standards and they’ve faced energy shortages since well before WWII. It’s not a stretch from their perspective to consider a) that they face these problems now b) the rest of world will be in a similar situation soon, so they’d better get to work on fuel-saving technology. Seems pretty reasonable to me.

        We can afford to think of these issues as “in the future” here in the USA, because they are, for us…

  • avatar

    He’s basically saying what financial planners say: diversify your investments. The future of fuels is uncertain, so anyone with an interest in that future (like car manufacturers) must diversify as they plan for that future.

    As a consumer, this translates into having a diverse fleet at home.

    Nice to see a serious discussion of peak oil on this site.

  • avatar
    Hildy Johnson

    Hydrogen will not be big. A few more years of global cooling or flatlining temperatures, and the worry about CO2 will go away (it’s already receding). Then, people will realize that CNG is a lot more straightforward than hydrogen.

    • 0 avatar

      You need to do more than a little fact-checking, there, buddy.

      For a start, this source:'s_atmosphere
      has a handy chart on CO2 “receding” (or not), right at the top, for your convenience.

      • 0 avatar
        Hildy Johnson

        I didn’t mean to say the CO2 is receding – I mean the fear of it is receding. CO2 is rising, the temperatures are not, so people will stop worrying about it.

      • 0 avatar

        Also, Mr. Ogiso didn’t mention climate change as a factor in any of these decisions; his motive was increasing energy prices.

      • 0 avatar

        @Hildy Johnson: “I didn’t mean to say the CO2 is receding – I mean the fear of it is receding. CO2 is rising, the temperatures are not, so people will stop worrying about it.”

        You wish:

        I wish, too. But, the data does not agree with my wishes. The future will be a challenge, but I’m up to the challenge.

      • 0 avatar
        Hildy Johnson

        @ Luke

        Even the IPCC now expects a continuation of the recent flat-lining:

        If this comes to pass, no one will remember Kyoto anymore in 5 or 10 years, and people will simply quit worrying about CO2.

    • 0 avatar

      The source you quote, the “Global Warming Policy Foundation,” gives every appearance of being one of the fossil fuel industry’s many warming-denial PR front groups.

      What’s your agenda for quoting it, Hildy?

      • 0 avatar
        Hildy Johnson

        My “agenda” is to provide a link to a leaked draft of the upcoming IPCC report. It doesn’t matter who leaked it, as long as it is not fake and the IPCC is indeed the source. No paycheck from big oil for me, and I have holes in my socks to prove it.

        Obsessing about peoples’ agendas is not going to make anyone any smarter. Better stick to the facts.

      • 0 avatar

        @Hildy Johnson:

        I’m also skeptical about your source, but I’ll leave that out of this discussion for the moment. As a someone who works in the sciences, two things: “less than predicted” still doesn’t mean “not a big problem over the next century”.

        Second, it’s highly unlikely that we’re going to just forget about climate change, because changes in climate that HAVE BEEN OBSERVED (not predicted, observed) by people who come to meetings that I attend (as a computerman who provides IT services to scientists).

        Of course, you are free to dismiss me on the basis that I must be a member of some sort of vast conspiracy within the scientific community to stay employed (—science—what-s-it-up-to- ) and you’re entitled to your opinion. But, the data shows that there has been and likely will continue to be rapid (in geological time) climate change that cannot be explained by natural cycles. And people with who come by to talk to my bosses are picking it up on their instruments, instruments whose operation I understand and whose output is reliable. Also, I earn my $^#&*@ living, and there is no &$*(#@& conspiracy.

        I doubt I can change your opinion, but I must point out that the climate change issue is unlikely to just disappear. The the most recent three decades worth of observations and, yes, lots of computer model runs (run dozens or hundreds of different ways for each paper, and not blindly trusted by anyone in the scientific community) have refined the picture quite a bit — but the big picture hasn’t changed in my lifetime. It has become more widely (and more correctly) reported in the press, though.

      • 0 avatar


        Your agenda and your actions are at odds. You did not link to a leaked draft, you linked to a spun story based on a BBC news item.

        In fact, the guys that actually DO THE WORK, as opposed to those that blog about it (and, in at least some cases, are paid to misrepresent results), are not only quite concerned about ACC but some are also now confident that they have the data to finger two “weather” events as actually driven by ACC and that would be the recent droughts and floods in Australia and the killer Russian heat wave of 2010.

        There is currently some thinking that the Chinese are simultaneously exacerbating the problem on the one hand (by burning copious amounts of coal, which emits a great deal of CO2) and, on the other hand, staving off a more rapid increase in temps (by burning coal, which emits a fair amount of sunlight-reducing sulfates). The sunlight reduction probably isn’t going to overpower the enhance greenhouse effect of the increased CO2, at least probably not for long. Most other countries that burn a lot of coal use scrubbers to remove the sulfates but the Chinese don’t so as much of that.

      • 0 avatar

        Luke42: ” I must be a member of some sort of vast conspiracy within the scientific community to stay employed…”

        Haha! That reminds me of a memorable post on RealClimate which came from a guy who used to do climate research but took his research and statistical skills to Wall Street and is now making beacoup bucks. If climate researchers are in it for the money, they should be out of it.

        As far as I can tell, climate science, like pretty much every other branch of science, is driven by curiosity. Not conspiracy.

  • avatar

    In the US especially I see CNG becoming the new automotive fuel in the next 5 – 10 years. The cost benefits are already there – relatively simple technology, low cost fuel

    Looking at my current household fuel bills I pay $0.115/ kWh for electricity and $0.55 / therm for natural gas. ~ 29kWh / therm equates to ~ $0.02 /kwH for natural gas. Sure I understand that there are different efficiency in a NG ICE vs an electric battery vehicle but not that equates to 6x price difference.

    • 0 avatar

      It’s the same problem long-term with CNG that we have with oil – it’s a finite resource.

      • 0 avatar

        It’s a finite resource but with much larger know reserves vs current demand and it’s cheap.

      • 0 avatar

        Yes, but again…the finite resource problem kicks in. If it were just “us” – the industrialized world, meaning the United States and Europe (including Russia), we’d probably be fine with CNG. But throw China and India, plus South America, into the mix, and you have skyrocketing demand for fossil fuels of every kind, including CNG.

      • 0 avatar

        @FreedMike: “It’s the same problem long-term with CNG that we have with oil – it’s a finite resource.”

        Yes, but CNG kicks that particular can down the road a generation or two. It’s also an improvement in terms of regular pollution and CO2. Fracking is no picnic, environmentally, but after a few huge mistakes, they’ll probably figure out how to do it without making people’s drinking water flammable.

        I wouldn’t call it sustainable, or a long-term win — but it certainly is good enough for millions of people who have “better things to do”…

        So, yeah, you’re right. But we’ll use it anyway, because people prefer to do things the easy way for as long as they can.

    • 0 avatar

      I agree with FreedMike. It may seem low cost now, but if it becomes “the new automotive fuel in the next 5-10 years” then it won’t be low cost anymore. It looks feasible now because there’s less demand at the moment.

      • 0 avatar

        But we use a lot of NG now for heating and electricity. And new technology (fracking and some related technologies) have made it possible to extract huge volumes of gas from places that were previously considered inaccessible, especially reservoirs far below the Appalachians.

        So, CNG will happen. I don’t claim that I like it, or that it won’t have severe environmental consequences. People who are looking at financial efficiency (without looking at the externalities that aren’t accounted for) will jump on the CNG bandwagon, as soon we have a couple more vehicles and a few more filling stations. I’d really prefer an EV or a PHEV, but even I’ve considered converting one of my vehicles to CNG (I have NG heat in my house so I could refuel at home), but I needed a couple more filling stations along a couple of particular stretches of the Interstate that I travel to see relatives on the holidays.

  • avatar

    This is a fascinating article. Thank you.

    What I find most interesting is the political aspect of this. You see, the “drill baby drill” crowd sees Peak Oil as a myth, promulgated by fanatic, drooling, tree-hugging liberals who just hate cars.

    And, yet, here we have the head of the world’s second largest car manufacturer – one of the largest companies in the world – coming right out and saying that this is no myth. And as countries like India and China continue to develop, this problem is NOT going to get any better.

    Obama haters wonder why he is so intent on alt-energy? THIS is why. He has the same facts Toyota does. We have the resources and technology. All we need is to stop screwing around, kidding ourselves, and listening to idiots like Sarah Palin.

    • 0 avatar

      All we need is to stop screwing around, kidding ourselves, and listening to idiots like Sarah Palin.

      Agreed. But it should be possible for us to decrease our dependence on oil (whether foreign or domestic) and try to mitigate environmental problems without buying into the hyped aspects of peak oil.

      According to the EIA, proven reserves more than doubled between 1980 and 2009. During the same time period, global demand increased by 32%. Which means, of course, that our known supplies of oil have grown far more quickly than has the demand.

      It also helps know that “proven reserves” include just the oil that has been quantified through exploration. There are other sources that are known but not yet quantified (exploration is expensive, and oil producers don’t have an incentive to front-end all of it). Those sources don’t end up in the proven reserves calculation.

      It’s wise for governments and automakers to plan for possible future resource constraints. It’s also quite possible that peak oil may become a problem, some day. We should also consider the possibility that the shift in demand toward China (a nuclear power with a population four times of the US and the potential for becoming the world’s largest economy) could ignite a political struggle that makes it more difficult for the US and other western countries to maintain access to whatever oil is left.

      But the data would suggest that peak oil doesn’t exist today. There are good arguments for conservation, but claiming that peak oil is a problem now is not one of them.

      • 0 avatar

        A lot of what you say is true, Psych. Though, I think you may be a little optimistic on this: sure, there’s a lot of theoretical reserves out there, but are they cheap reserves or expensive ones? If most of it is hard to get and expensive, that still equals permanently higher energy prices. Take the Alberta tarsands, for example. The known reserves are enormous; bigger then Saudi Arabia. But the amount of oil that economically and technologically extractable right now is like 5% of that.

        Another danger to those rosy projections is, weirdly, Saudi Arabia. They make very large claims about reserves, but don’t allow anybody outside the state to verify those claims. If Saudi Arabia was a used car, we’d be walking away from it at this point, since not being able to confirm things means the person has something to hide. This is especially important for cheap oil, since if the Saudis went dry, suddenly there would be a big uptick in oil prices even if demand was stable.

        Anyway, I hate to pick at these nits, since I broadly agree with what you said, especially with regards to the more hysterical doomsayers of peak oil. Still, the whole proven reserves thing doesn’t banish all energy fears.

      • 0 avatar

        If Toyota, which is a massive worldwide corporation that depends on oil to make its products work, not some political group with an axe to grind one way or another, has taken a look at the numbers and has concluded that peak oil is a reality, then I’d say this isn’t overhyped…not one bit.

      • 0 avatar

        If Toyota, which is a massive worldwide corporation that depends on oil to make its products work, not some political group with an axe to grind one way or another, has taken a look at the numbers and has concluded that peak oil is a reality, then I’d say this isn’t overhyped…not one bit.

        This misses the point. Mr. Osigo is an engineer. He isn’t a geologist or a climate scientist, so he doesn’t offer anything definitive for either field of study.

        Toyota and other automakers are not psychics. It is not their job to accurately predict the future. And they don’t need to try.

        What they should do is anticipate a range of possibilities and plan for all of them. Their current portfolio is well positioned to sell in the event that peak oil never happens, so that requires no planning. What they should plan for is what happens if the bad case scenario does occur.

        Toyota is planning for possible disruptions to their business. It’s wise to be prepared for contingencies, but don’t confuse contingency planning with absolute certainty.

      • 0 avatar

        “This misses the point. Mr. Osigo is an engineer. He isn’t a geologist or a climate scientist, so he doesn’t offer anything definitive for either field of study.”
        Exactly…he doesn’t have a political axe to grind, or an ego-driven academic viewpoint to defend. All he’s doing is crunching the numbers that his company is getting. Presumably, if there’s a company out there that doesn’t respond to wild, unsubstantiated theories, it’s Toyota – these guys are conservative as hell.

        If the data indicated that peak oil was a myth, the most prudent business move would be to not spend money developing these new technologies. Why do it if the status quo was going to be the rule for the long run?

      • 0 avatar

        If the data indicated that peak oil was a myth, the most prudent business move would be to not spend money developing these new technologies.

        Again, you’re missing it. It isn’t the job of Toyota to predict whether peak oil becomes a reality. It’s their job to create alternatives for their business in the event that it does.

        TMC is already prepared for the event that peak oil doesn’t happen — they’ll keep selling the types of cars that they sell now — so that requires no preparation.

        TMC is hedging their bets, which is exactly what they should do. If oil plummets in price, then they have large pickup trucks and V8 Lexuses to sell to Americans. If oil rises significantly in price, then they have hybrids and possibly other technologies. If oil remains at status quo levels, then they are prepared for that, too. They are planning for most of the probable outcomes, not betting everything on just one.

        TMC is wisely avoiding the Detroit mistake of putting all of its eggs in one basket. If they wanted to load up on just one future scenario, then they should get out of the car business and go trade oil futures, instead. Again, a smart company doesn’t bet everything on one number, but retains enough flexibility that no number can make them lose.

        But being prepared for the possibility doesn’t mean that it will happen. For the last thirty years, we have located oil more quickly than we consume it. That may change in the future, but that’s the reality of what has happened over the last three decades, despite what you may believe.

    • 0 avatar

      I don’t understand why you object to developing all of America’s energy resources. We have abundant coal, natural gas and oil shale, plus significant amounts of accessible liquid petroleum. We should be developing those resources (as countries around the world are) as well as developing alternatives like nuclear, solar and wind. Still, the market has a better hand on the knowledge problem than some guy sitting in Washington. If an energy technology is promising, it will get venture capital.

      I’m trying to think of a single technology that had its origins in government funding or research that became a viable business that didn’t already have great business potential.

      Nuclear power? You can make money selling electricity. Electronics driven by needs of NASA and the Pentagon? Just look at your phone to see that all those things had business potential all over them.

      GPS and Internet? Maybe no immediate commercial potential at the outset but then their purpose wasn’t to incubate businesses or pick potential winners but rather as weapons. Then, the big bad Americans decided that they were too valuable to use just for weapons and they made them available to the world. What a country!

      I do think there is one thing the government can do and that’s to mandate that all gasoline cars should be fully flex fuel and be able to run on a variety of napthas and alcohols. That would foster a market for new liquid fuels like methanol and and butanol. The technology is cheap and though I don’t like government mandates, I think this one works well with the market. I’m bullish on methanol.

      Also, there’s no reason to slag off Sarah Palin. She’s not nearly as stupid as you think she is nor is Barack Obama nearly as smart as his tuchas lekers think he is. I’m guessing maybe 125 or 130 IQ at most. Probably couldn’t do high level math beyond trig and knows almost nothing about the hard sciences. I’d be willing to bet that he also has very little practical knowledge about things like carpentry or electricity.

      I’d really be interested to see Pres. Obama do a one on one debate with someone like Paul Ryan or Newt Gingrich. Even better, Thaddeous McCotter. Or even better still, David Kirkham, who makes the world’s best Cobra replicas at Kirkham Motorsports. Maybe instead of playing more golf, President Obama could drop in on Dave’s workshop and Dave could show Barack how to shape metal. You can see some of Dave’s metalshaping videos on YouTube. Dave could explain to Barack just what it’s like operating a business with him in the White House. I don’t think that Obama has ever been seriously challenged on any of his beliefs in his life, basically living in a progressive cocoon since his youth. He may have debated around the margins but I doubt he’s ever been pressed on first premises.

      My personal experience with Democratic politicians is that they are very uncomfortable with anyone who challenges their ideology. At press and public events I’ve been treated far more rudely by Democratic politicians than by business people, though I will say that Rep. Gary Peters is a personable fellow and that Debbie Stabenow is a nice, if not very bright, lady.

      Let me put it this way. Satoshi Ogiso is much smarter than Barack Obama and his Ogiso’s own charts say that in 2030 petroleum will still be used for 85% of what it’s used for today.

      • 0 avatar

        Schreiber: “Dave could explain to Barack just what it’s like operating a business with him in the White House.”

        It’s pretty much like operating a business with Bush in the White House. Very little has changed in the last two years. We have some new healthcare guarantees that make very little difference and taxes have been cut twice. The demonization of Obama is ridiculous. The only real difference is that the all-out attack on civil liberties in the name of protecting us from “terrists” has been curtailed.

        Obama is not the smartest guy there is but he’s certainly head and shoulders above Bush. And while Palin hit triple digits on an IQ test (I doubt it), she has spent a lifetime cultivating pride in ignorance. I’d rather have a guy in the White House who’s smart enough to know that he doesn’t know it all than get someone like Palin in there or somebody who views everything through a narrow and simplistic ideooligical lens.

      • 0 avatar

        “I’m trying to think of a single technology that had its origins in government funding or research that became a viable business that didn’t already have great business potential.”

        Of course, this question is deliberately circular. How could any technology, no matter where its funding came from, become a great business if it “didn’t already have great business potential”?

        That said, how about the kick-start that the entire semiconductor/computer industry got as a result of the space program?

  • avatar

    I, for one, except for style and appearance, have never cared for the ultra-powerful belchfire cars of yesteryear or today. All I want is a beautiful, comfortable car I can drive with pride and feel good about. Of course, that has a different meaning for everybody. New methods of propulsion? Bring ’em on! It just has to be affordable, and that seems to be the caveat.

    I’m awaiting part ll.

  • avatar

    Not sure I’ve understood well…Toyota believes that in 2009 when OPEC had to cut production because nobody wanted to buy oil at $35/barrel, the world had a oil shortage issue?

  • avatar

    Great interview, and a exhibit of why Toyota, while maybe not the maker of the most exciting cars in the world, is a terrific asset to the auto industry and buying public.

  • avatar

    to hear an engineer for what is arguably the world’s largest automaker accepting and acting on the idea that we’re already in Peak Oil makes me think there’s some sort of hope for the future. i don’t get how, at this point, there are those out there that still think we can keep powering unlimited growth on limited amounts of oil.

    the way forward is going to involve pain, conservation, and alternate energy sources. since we’re definitely experiencing item #1, i’m glad Toyota understands this. and also used Toyotas will still be immune from depreciation in 2030.

  • avatar

    That last chart looks a lot like our modern computer/mobile ecosystem, tied together by common operating systems, but fragmented and specialized into local niches. I think what that means that gasoline and diesel will still be the backbone, but at the local area, if you have CNG, electric, etc, then that’s what powers short distance transportation.

  • avatar

    Toyota and the rest of the car industry are making a huge mistake in ignoring a far more dramatic development: driverless cars. In fact, a NY Times reporter recently discovered that Google has plans to manufacture its driverless cars currently under development.

    The changes Toyota is discussing don’t fundamentally change things – it’s just a different way of powering the car, without really changing how we use them, or their fundamental construction.

    Driverless cars will change how cars are used. It’s possible that ownership patterns would remain the same with driverless cars. But at the very least, it would enable alternative forms of ownership. That might mean driverless taxis that drive around all day. The Zipcar model is a lot more potent when the car can drive to you, and immediately attend to someone else as soon as you reach your destination. There could impromptu buses routed automatically based on the demands of thousands of commuters. The market for cars could dramatically shrink in volume.

    Cars could be designed for comfort and efficiency, rather than for withstanding collisions. Ultra high reliability would be necessary, to withstand driving fifty or a hundred thousand miles per year as an automated taxi/shuttle.

    A driverless Zipcar arrangement could be adopted very quickly by some niches, eg college students, for several reasons: They only need it occasionally so insurance and ownership don’t make sense, they’re often drunk, they form a dense concentration of occasional consumers in a small geographic area. Increased use of the cars would bring down their per-use price.

    • 0 avatar

      I don’t think anyone’s going to buy a driverless car. Sorry.

      • 0 avatar

        Which is why automakers love to pitch driverless-lite features like adaptive cruise control, lane departure warning and precrash warning systems. Because no one wants them. Hmmm…

        Not many people prefer to stare at the pinto in front of them, easing along at a breezy 5 mph on the 405 during rush hour, when they could be sleeping or reading.

  • avatar

    I agree with him until he brought up hydrogen. H2 only has two advantages over a battery.
    1) It’s quicker to refuel
    2) An H2 tank has higher energy density than a battery, but the gap is rapidly closing.

    If you make H2 from electricity, you need about 3x as much electricity as you would if you had just charged a battery. If you make the H2 by reforming natural gas, you could get almost the same efficiency at a MUCH lower price using a CNG hybrid- and you’d have BETTER packagaing efficiency, too.

    The great thing about CNG is it can be run in dual-fuel vehicles. Charge up your gas adsorption small-tank in your garage at night using municipal line pressure and use that for commuting. Then rely on gas when you need a boost in range.

    You can also boost the compression ratio way up with CNG.

    With all the new drilling and fracking techniques, gas will be an important part of the mix and an affordable fuel for many years. Hopefully, that’ll let nuclear power and batteries close the gap, and then we could switch 100% over to those.

  • avatar

    For citizens, it’s ultimately about the cost of transport. Can increasing mpg keep up with volatile fuel prices to insulate a citizen? I don’t know. What this citizen did was reduce his need for transport by living in a walkable area where major job centers are serviced by public transit from stations and stops within a 1 mile radius of his house.

    The smart plan today is to reduce your need for transport. Buying or creating an asset with a 100 year life that is dependent on $4 per gallon gas in 25 mpg cars is far too uncertain for me to buy. Particularly when that asset is a house accessible only by car.

    People need to be thinking ahead. The range of paths in the future are known. Choose wisely!

    • 0 avatar

      What makes you think that the majority of people will still work in a building separate from their home in the coming years?

      • 0 avatar

        Haven’t I prepared for both?

        And, regarding sprawl, sprawl could be a lot less transport intensive with a little forethought. Sprawl is built for the convenience of builders, and the citizenry likes it better than the alternative. But with a little forethought, sprawl would still have the features the citizenry likes about while reducing the consumption of transport needed to service it.

      • 0 avatar

        @geeber: “What makes you think that the majority of people will still work in a building separate from their home in the coming years?”

        If you’d said “the majority of white-collar knowledge workers”, I would agree with you. But, that’s quite different than the majority of *people*, even if it’s the majority of the people that you and I associate with on a daily basis.

      • 0 avatar

        djoelt1: Sprawl is built for the convenience of builders, and the citizenry likes it better than the alternative.

        If the citizens like one type of layout better than the alternative, it doesn’t matter why it was built. Builders who don’t provide what customers want quickly become former builders.

        djoelt1: But with a little forethought, sprawl would still have the features the citizenry likes about while reducing the consumption of transport needed to service it.

        That works until Retailer X opens a new store in another community, and lots of people like it better than the one near their home, or people decide they don’t want to socialize only with close neighbors (which is what usually happens).

        luke42: If you’d said “the majority of white-collar knowledge workers”, I would agree with you. But, that’s quite different than the majority of *people*, even if it’s the majority of the people that you and I associate with on a daily basis.

        In metropolitan areas, the majority of people who commute are white-collar workers. Companies don’t build factories or warehouses in cities or even inner-ring suburbs anymore. The land is too expensive, the traffic is too heavy, and residents resist the construction of new roads or rail lines in their neighborhoods.

    • 0 avatar
      George B

      As long as access to good public schools is bundled with buying a house in a new neighborhood, people trying to give their children a leg up in life will buy a big house in an edge suburb. Not sure how much work can be done from home, but I would be surprised if commutes became much shorter. If you hate sprawl, let people opt out of both the local public school system and the local property taxes that fund it.

      • 0 avatar

        There are still some of us that actually works for a living, wrenching together the machines that help put oil in your SUV’s. White collar ‘workers’ LOL…

  • avatar

    So there is probably not going to be a 3rd generation Tundra?

    • 0 avatar

      I’m guessing that there will be, it will just be the size of the 1st generation Tundra.

      It looks from where I work that Toyota has a decent share of the chrome and leather-trimmed, high-margin personal use market that they will be none too quick to give up.

  • avatar

    While Ogiso-san may talk about a Prius and an EV in every garage, the part of Bertel’s Peak Oil 2.0 chart below the green area means that petroleum will still provide 85% of the total needs it is filling now. The car of 2030, by Ogiso’s own stats, will most likely run on gasoline or diesel fuel.

  • avatar

    I respect Toyota, and I believe they will be successful for many decades in the future, but this doesn’t pass the sniff test.

    They are wrong about the multi-prong research efforts. Any company that invests in, develops, and sells a working solution–even a single solution–will be fine.

    Hydrogen: The problem with hydrogen isn’t any of the things listed here. (Those are problems, but Toyota is right–they can be solved.) The real problem is where do you get it? If it comes from natural gas, why not just use the natural gas? If it comes from any process that involves electricity, why not just use the electricity? Hydrogen is merely a storage/transport medium for energy collected from some other method. I believe battery/capacitor technology will get to the point that hydrogen is completely impractical (unless we’re talking interstellar space ships).

    Hybrids will be mainstream, but I think that’s already happening. Maybe (but not likely) most cars sold will be hybrids by 2020, but most cars on the road will be traditional ICEs for the next few decades. I do think that commuting vehicles will transition directly to electric.

    There’s no way of telling if their expectations of demand/supply are accurate. It needs to be remembered that the supply itself (or lack thereof) affects demand. Also, there more solutions to gas consumption than efficient cars. Just living half the distance to work cuts fuel use by half. That is the single most effective & typically cheapest solution–it doesn’t involve buying a new car, developing new technology, etc.

    Mazda has a far more sensible strategy. They recognize that gas will be the dominant fuel for the next decade plus. Therefore, they intend to optimize ICEs first & wring every erg out them, then progress to increasing degrees of electrification. The research is more linear and much less likely to result in dead-ends.

    • 0 avatar

      Mazda is small with limited resources, so Mazda’s approach makes sense for Mazda. They can’t research everything, so they place their chips on something.

      As the industry titan, Toyota is pursuing the strategy that makes sense for Toyota. It’s called “throwing a bunch of stuff up against the wall and seeing what sticks.” No matter which technologies emerge as the most viable, they’ll be ready. They can afford to do that.

  • avatar

    @Hildy “Hydrogen will not be big.” …I think it powers THE SUN ! Is that big enough for you ?
    @ Freed mike- Sarah Palin was only the governor of the largest oil-producing state. What are you ? Oh, wait. Chopped liver.

  • avatar

    At the prices these companies are charging, they’re lucky to be selling cars at all. They have to rethink their pricing if they ever want to sell cars with alternative propulsion technology.

  • avatar

    To Redav and others..

    The hydrogen problems you mentioned may ultimately not be insurmountable:

    a) Hydrogen is available from sea water and is in fact the most abundant element on our planet;
    b) It can be obtained by hydrolysis to provide oxygen as well (e.g, for hospitals);
    c) Hydrolysis stations can be operated by wind power or solar power;
    d) Internal combustion of H2 has already been worked out by BMW with their H2/7-series;
    e) It burns cleanly with no CO2 pollution and emits only water vapor as an exhaust product;
    f) It’s equivalent “octane rating” is about 120;
    g) It’s weight is low, allowing an overall lower weight for a car (unlike heavy batteries).

    The neat thing about burning H2 is that the expense of fuel cells, batteries, and much complexity is avoided. However, problems with H2 IC-combustion vehicles are:
    a) H2 does have low density, meaning that range may be limited to 200-250 miles tops;
    b) Dispensing infrastructure in America has yet to be built;
    c) Because of the Hindenberg incident, there is still a “Hydrogen fear”;
    d) Storage could be in liquid or compressed gas forms; but if LH2 is used, the required venting may complicate driving through tunnels and vehicle storage in unvented enclosed buildings.

    Just some thoughts……
    But I honestly don’t believe we have seen the end of Hydrogen IC motor vehicles yet.

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