Toyota's approach to alternative technology vehicles: The power of diversification strategies

Abstract While the “quality revolution” of the 80's and the “oil crisis” of the 70's dramatically altered the automotive industry, a new and potentially more influential issue is emerging—the pursuit of an environmentally friendly vehicle. This “green car,” or “eco car,” has become the new “holy grail” of automotive achievement and has the world's largest automakers racing to find a solution that satisfies environmental regulations, rapidly expanding new markets, and consumer preferences alike. Toyota Motor Corporation has chosen to follow several paths simultaneously to attain this seemingly elusive goal. Their twin-tiered technological approach focuses on improving the traditional interval combustion engine (ICES) and developing alternative powertrain technologies, including electric vehicles (EVs), fuel cells and hybrids (a combination of the ICE and EV). Toyota's strategy is to establish proficiency, but not dominance, in a number of the possible alternatives to the current automobile. Toyota strategists believe this is the best tactic for dealing with the uncertainty and risk prevalent in the search for the “green car”.