NEWYORK Mar. 18 -- Honda Motor Co., Japan's second- largest carmaker, plans to introduce lithium-ion battery-powered hybrid cars as it struggles to narrow Toyota Motor Corp.'s lead in sales of gasoline-electric cars.
Honda plans to use lithium-ion batteries in its Civic compact "within the next two to three years," as well as in its Acura luxury cars and other models, Executive Vice President Koichi Kondo said in an interview.
Honda has failed to match Toyota's success with hybrids, led by the top-selling Prius. Lithium-ion batteries can store as much as twice the energy of nickel-metal hydride batteries that currently power the Prius and Honda's Civic, Insight and CR-Z hybrid models, said Takeshi Miyao, a supply-chain analyst for auto consultant Carnorama in Tokyo.
"Lithium will become a lot more prevalent," Kondo said in a March 16 interview at the company's headquarters in Tokyo. The lithium-ion batteries will be produced with Honda's joint- venture partner, Kyoto-based GS Yuasa Corp., starting in the second half of this year, he said. The venture is 49 percent owned by Honda.
Honda fell 1.5 percent to close at 3,200 yen in Tokyo trading.
"With lithium-ion being used in upcoming electric cars, Honda may be switching to the new technology to compete," said Mitsuru Kurokawa, an analyst at consulting company IHS Global Insight in Tokyo.
Honda's Insight hybrid fell short of the company's global sales target of 200,000 units in the first year after its February 2009 debut. Deliveries totaled 143,015 as of last month.
Toyota's third-generation Prius replaced the Insight as the best-selling car in Japan after its release last year. Toyota sold 27,008 Priuses in February, compared with Honda's 3,517 Insight deliveries.
In the U.S., Toyota sold 7,968 Prius cars last month, compared with Honda's 2,014 Insights. The hybrid version of the Civic sold 346 units. The larger Prius is more fuel-efficient than Honda's hybrids, according to U.S. Environmental Protection Agency data.
Honda Chief Executive Officer Takanobu Ito said in July the carmaker is developing a new hybrid system to be installed in mid- to large-size vehicles. The company will also add a hybrid version of its Fit subcompact later this year.
While similarly sized lithium-ion batteries may cost 30 percent more than nickel-metal hydride cells, carmakers may be able to find savings by using smaller packs because of their higher energy density, Miyao at Carnorama said.
Lithium-ion costs will also decline as technical advances are made and production increases, according to research company Fuji Keizai Group.
Nissan Motor Co. will roll out its first lithium-ion battery-powered car, the Leaf, this year in Japan, the U.S. and Europe. Chief Executive Officer Carlos Ghosn predicts electric vehicles will account for 10 percent of global car sales by 2020.
Fuji Heavy Industries Ltd.'s Subaru unit and Mitsubishi Motors Corp. introduced electric vehicles last year. Mitsubishi will start delivering its 4.6 million yen ($51,000) i-MiEV to retail customers next month.
Toyota plans to begin retail sales of a lithium-ion powered plug-in Prius in two years. The company will also start selling a short-distance all-electric car in 2012.
Separately, Honda's Kondo said he expects overall vehicle demand in the U.S. to rise to between 11 million and 12 million units this year from 10.4 million in 2009. That's still lower than the 13.2 million sold in 2008.
Honda's U.S. sales in the first 10 days of March were up almost 20 percent from a year earlier, Kondo said. For the full month, sales will likely exceed the 13 percent growth posted in February, he said.