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Toyota Hybrid fully profitable by 2010

Reuters has reported that Toyota expects to cut production costs for hybrid cars enough to bring profit margins in line with petrol cars by around 2010. Japan’s top automaker has been keen to see the fuel-saving powertrain enter the mainstream since launching the Prius, the world’s first hybrid car, in 1997, but sales have come at the expense of profitability given their high production costs.

But Masatami Takimoto, executive vice president in charge of powertrain development, said cost-cutting efforts on the system’s motor, battery and inverter were bearing fruit, and the cost structure would improve drastically by the time Toyota reaches its sales goal of one million hybrids annually in 2010 or soon after.

If it succeeds, Toyota would be removing the main hurdle preventing rivals from pushing the expensive powertrain, which twins a conventional engine with an electric motor, and likely widen its sales lead as more consumers seek better fuel consumption amid rising fuel costs and environmental concerns.

Toyota is expected to launch a new generation Prius in late 2008 or early 2009, using a lithium-ion battery for the first time. Takimoto declined to confirm the speculation, but added that Toyota’s lithium-ion battery, under development with Matsushita Electric Industrial Co. was technically ready to be mounted on hybrid cars “any time.”