2019 Toyota Prius
As some of the industry appears to be leapfrogging directly past hybrid vehicles, in favor of battery electrics—GM with its canceled Volt, for example—Toyota is making no such move. This morning it’s announced that it will open up its banks of patents related to hybrid systems, royalty-free until 2030.
That applies to nearly 24,000 patents it holds on vehicle electrification-related technologies, but it excludes patents on lithium-ion battery technology, which is currently the preferred battery format for battery electric vehicles.
Of course the move isn’t an act of charity and kindness to other companies. Toyota sees the business potential—in fee-based tech support to other manufacturers who are developing (and selling) electrified vehicles “when they use Toyota’s motors, batteries, PCUs, control ECUs, and other vehicle-electrification system technologies as part of their powertrain systems.”
Toyota plan to share hybrid and electrification patents
The profound change in its attitude toward its own hybrid brain-trust should also help open up its global hybrid supply chain, which isn’t as massive as you might expect in the scope of global automaking. Toyota has sold more than 13 million hybrids to date, and its hybrid systems have revolutionized the green vehicle sector. But globally, Toyota has more than 80 percent of the market for hybrid vehicles, and hybrids only add up to about three percent of the worldwide vehicle market, more than 20 years after the Prius went on sale in its home market.
Battery-electric vehicles are creeping up. They already comprise about 1.5 percent of the market, according to Reuters, citing LMC Automotive data.
Toyota claims that by going royalty-free on patents but providing tech support, it will “further promote the widespread use of electrified vehicles, and in so doing, help governments, automakers, and society at large accomplish goals related to climate change.”
Why are hybrids the almost exclusive domain of Toyota? At least partly, it’s because the carmaker has been relentlessly proprietary over its hybrid technologies and its bank of related electrification patents.
2010 Nissan Altima Hybrid
Various carmakers have made moves on the hybrid sector that have been thwarted—either somewhat, or completely—by Toyota’s hybrid propriety. Ford ended up effectively having to pay Toyota a licensing fee, as part of an accord between the companies, after going down its own development path with a hybrid system and later realizing it infringed on Toyota’s patents.
As the New York Times pointed out in 2004: “Automakers that use any of Toyota’s patents are likely to have a more difficult time making money.”
At that same time, Nissan’s former CEO Carlos Ghosn said that its Altima Hybrid would not be profitable—partly because to licensing agreements that were due to Toyota and limited the push that Nissan ever gave that vehicle.
Fiat Chrysler is probably the only automaker that uses a planetary gear arrangement coming closest to Toyota’s (albeit with the planetary rings and motors in a different configuration) while avoiding the wrath of the Japanese automaker’s legal teams—with the system that’s currently used in the Chrysler Pacifica Hybrid. That carmaker’s representatives, when asked if they’re paying royalties to Toyota, have actually handed out physical copies of the patent filings, which date back to the 1990s, when Toyota’s system was also in the development stages.
While Toyota can no longer completely dismiss battery electric technology, it sees hybrids as a more effective alternative, and one that can continue to grow.
2020 Toyota Corolla Hybrid
Within its own lineup, Toyota is doing what it always promised, democratizing its hybrid technology into ever-more-affordable vehicles, such as the new 2020 Toyota Corolla, which arrives this year with a version of the Prius system.
“We want to look beyond producing finished vehicles,” the company’s executive vice president Shigeki Terashi told reporters, according to Reuters.
Toyota might be right in thinking that there’s more growth potential in hybrids with the patent limitations lifted. At the same time, however, there’s a market wave in battery electrics that Toyota can’t miss. This past year at the Los Angeles auto show, Toyota’s U.S. marketing vice president, Jack Hollis, said that battery electrics aren’t something its customers have been requesting at the dealership.
Meanwhile, third-party data has supported that repeat Prius buyers—the customers that Toyota has long boasted could buy a more expensive car but haven’t—are defecting for the Tesla Model 3 at what should be an alarming rate for the automaker.