For now, Toyota remains dominant in the green vehicle market, but new moves by competitors Nissan and Honda and U.S. automakers show that this is a battle that is only just beginning.

Nissan announced the launch of its new "Leaf" electric car on Aug. 2, and aims to stop using Toyota batteries in its cars from 2011. And on July 13, new Honda President Takanobu Ito said he expects all of his company's vehicles to use hybrid technology by 2020.

Cars using hybrid technology use both gasoline and electricity to run.

Toyota's Prius is the world's best-selling hybrid car, having sold more than 1.2 million units worldwide, and dominates the Japanese market.

"Toyota is very likely to maintain its dominance of the kinds of hybrids that we currently have on the road today," said Bradley Berman, the editor of HybridCars.com. "In July, a single hybrid car, the Toyota Prius, outsold all other hybrids combined. Toyota has a big lead in terms of its hybrid technology, and more importantly, most consumers see Toyota as the leader."

However, for the next generation of cars, the story is different, as both U.S. and Japanese automakers look to catch up: "For the next generation of plug-in cars -- such as plug-in hybrids and pure electric vehicles -- the field is more open," Berman told Xinhua.

"Toyota is not rushing into plug-in hybrids or electric cars, while other companies, most notably Nissan and Ford with electrics, and GM with its series plug-in hybrid design, are trying to take an early lead."

This lead will take time to bear fruit, however, as automakers are yet to make a meaningful impact in Europe, a key market. There, "diesel is the name of the fuel-efficiency game ... and the German companies are strongest in the diesel and clean diesel space. Also, smaller vehicles are more acceptable than in the U.S." said Berman.

All markets remain uncertain, and despite recent positive news in third-quarter financial results, the recession is far from over -- which is bad news for the automakers, after all, who wants to invest in a car when the job market and economy is so insecure?

The future of the market may depend on developing hybrid cars for cheaper:" In terms of cost, I think Toyota is better positioned than Honda so far," said Mitsuru Kurokawa, an analyst with IHS Global Insight. "They can realize economies of scale and cut costs with a wide range of products that use the same hybrid systems. Also, the fact that those hybrid systems will be supplied to other automakers, like Subaru and Mazda, will have a positive effect on cost cutting within a few years."

Questions also remain over the practicality of hybrid cars for many consumers. While they do have a lower fuel consumption, cause less pollution and can lead to tax breaks in many countries as governments look to reduce carbon emissions, there are drawbacks. There is controversy over the benefits of the batteries used in the cars, which may be bad for the environment and can be expensive replace. Also, as with any new type of machine, getting the cars repaired will be more expensive for many years to come. The small size of the cars also has been a turnoff for many U.S. consumers.

"Gas-powered internal combustion engines will continue to be the main powertrain for quite a long time," said Berman. "But given the likely increase in oil prices, and stricter legislation for carbon and other emissions which are certainly coming down the pike, hybrids and other alternatives will continue to gain market share.

"This is all about the next decade, and where car companies want to position themselves -- while focusing on survival in the short term."

However, the future remains uncertain, said Kurokawa: "The hybrid vehicle market is growing more than we ever imagined ( possible a few years ago), so looking at present situation, I can say there is a possibility that hybrids will replace a large part of gasoline/diesel vehicle market. However, the same kind of boom could happen in the electric-vehicle market. So if electric vehicles get popular fast, the presence of hybrid vehicles will be smaller than we expect."

(Xinhua News Agency August 6, 2009)