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CNBC ON DIGG

Toyota And Honda Take Cautious Approach With Electric Cars

Published: Thursday, 22 Oct 2009 | 10:55 AM ET

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By: Phil LeBeau
CNBC Correspondent

The Tokyo Motor Show is a case study in the electric car split. Some companies, like Nissan are trumpeting future EV models and talking about the coming age of electric vehicles. Heck, CEO Carlos Ghosn, echoing his comments in Frankfurt, Germany has used the Tokyo Show to announce Infiniti will have an electric model here in the U.S. In the next couple of years. Compare that with the very cautious approach at Toyota and Honda.

In the last couple days both companies unveiled electric cars and talked about the future of EVs. Aah, but unlike Carlos Ghosn, the executives at Toyota and Honda are much more cautious about the future demand for going green. In short, they question how many people will want to drive and electric car, and where they'll drive those vehicles.

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Toyota president Takeshi Uchiyamada said, "I think electricity will play a part but the cost and performance of the battery is insufficient in the lithium ion batteries available today. That's why we think short-distance electric cars will be popular at first. Even then, we don't think they will replace all the cars in side the cities today." That's a polite way of saying; you'll see a smattering of electric cars here and there- mainly urban areas- but don't expect a huge presence of electric cars on the road for many years.

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What about Honda?

President & CEO Takanobu Ito says his firm would consider building a green sports car, but in the meantime, when it comes to Honda rolling out its first EV, Ito says, "We haven't decided on an exact date but my feeling is that we want consumers to be able to experience what Honda thinks will be a fun electric car in the not too distant future."

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So why are the two auto makers who have been leading the industry in developing gas-electric Hybrids not jumping up and down and proclaiming electric cars are coming and we'll have the first ones! Part of the reason is the concern over cost. While the cost of developing lithium-ion batteries is dropping, they are still not cheap. And there are plenty of questions in the industry about when the cost of those batteries will be low enough for car makers to price EV models at a point the public will clamor for them. Coming off two of the toughest years Toyota and Honda have ever gone through, both companies are keeping a closer eye on how they spend their money.

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This doesn't mean Toyota and Honda will ignore electric cars as they start to roll out and become more popular in the years to come. But both companies will eventually be there.