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The team protested that this would be impossible with a normal internal combustion gasoline engine. The team worked feverishly, canceling all vacations and working through most weekends, and divided into two 12-hour shifts, working around the clock. At first, the electric motor's battery was very sensitive to high temperatures, and it would malfunction when heated up by the gasoline engine next to it."For a long time, we couldn't solve that," Ogiso said.Ogiso was one of the original team of about 100 engineers selected by Toyota chiefs in late 1993. "Our only instruction was that it should achieve a fuel-efficiency improvement of 50 percent, and it somehow should be the 'car of the 21st century.' " The insistence on fuel efficiency was highly unusual.At the time, the price of oil averaged below per barrel, Americans were snapping up ever-bigger SUVs, and saving gasoline seemed like a politically correct anachronism."We don't believe carbon dioxide is the same as a pollutant, and for this reason it's not covered under the Clean Air Act," he said, referring to the 1977 law, amended in 1990, that gives California the right to set air-quality standards different from the federal government's rules. N: Quote, Profile, Research) and Toyota Motor Corp. T: Quote, Profile, Research), that have bet on broadening popularity for hybrids, including more powerful six-cylinder models and sport utility vehicles.In fact, Toyota probably would benefit if the new California rule goes into effect in 2009 as scheduled, because its cars produce less emissions than its competitors' cars. "What it comes down to is whether you want to pay for that premium right up front...For years, Toyota recorded solid growth because of its dependable, fuel-efficient cars such as the Camry. Executives at GM, Ford and Daimler-Chrysler derided the hybrids as money-losers and lagged in producing their own models. Hybrids make up only 3 percent of Toyota's overall world sales, but the buzz resulting from their success has added to Toyota's public image as a trend leader.

"Toyota is hypersensitive to the potential for protectionist backlash," Jeffrey Liker said, pointing out that Toyota's exports from Japan to North America are growing fast, reaching 940,000 cars in 2005, up 16 percent from 2004. fuel-efficiency rules, the high mileage of the Prius helps Toyota comply with fleet averages even as it launches gas guzzlers like a larger, beefed-up version of the Tundra, its big pickup. A hybrid version of the best-selling Camry will be released this autumn. And here's why that "successful gamble" could very well be just a lot of hype. type=ousiv&story ID=2006-04-24T203917Z_01_N24388311_RTRIDST_0_BUSINESSPRO-AUTOS-HYBRIDS-DC. XML US hybrid sales mostly slack despite gasoline hike Mon Apr 24, 2006 PM ET By Poornima Gupta DETROIT (Reuters) - U. gas prices have risen nearly a third over the past year without touching off a boom in sales of fuel-efficient hybrid vehicles, some of which are sitting on dealer lots for as long as three months. That poses a problem for car makers including Honda Motor Co. Gasoline prices across United States are nearing a gallon, up from .23 a year ago, driven by a surge in oil prices to record highs. consumers, the economics still favor traditional gasoline-powered cars.In September 1994, the G21 team first heard hints from top executives that it should consider hybrid technology, which had been tainted by its association with an earlier, failed project to build an electric car.That December, management came with a thunderbolt -- instead of a 50 percent improvement in fuel efficiency, the new car would need a 100 percent improvement. In August 1995, Toyota's new chairman, Hiroshi Okuda, came with another thunderbolt -- instead of the previous target date of December 1998, the project would have to be completed by December 1997."What has made this revolution possible is that Toyota is a company with a focus on technology, because we think innovation is the future of our company," Ogiso said in an interview. We are trying very hard, and it is very difficult." Ogiso's humility is typical of Toyota.

Its world headquarters in Toyota City, a quiet industrial city 150 miles southwest of Tokyo, has a deceptively modest demeanor: The nondescript, 13-story building looks like it might house a midsize insurance firm in any American suburb."Toyota is a model company in the field of environmental management and resource productivity," said Ryoichi Yamamoto, a professor of environmental materials design at the Institute of Industrial Science of the University of Tokyo.