While the high cost of next generation lithium ion batteries is viewed as an obstacle to adoption of pure electric cars, lithium might be the key to making conventional hybrids more affordable.Bloomberg reported today that Honda—which has focused its hybrid marketing strategy on making hybrids nearly as affordable as gas-powered cars—is swiftly moving to put lithium batteries in the Civic Hybrid and its other hybrids.

Honda hopes that shifting its hybrid battery technology to lithium ion—which packs more power in a smaller space—will help the company gain an advantage over Toyota. In addition to moving to lithium batteries, Honda is planning to increase hybrid production in small and large cars and to introduceAcura luxury hybrids.

Toyota’s recent safety troubles have created an opportunity for other producers of hybrid cars. Honda hybrid sales have been lagging in recent years. Yet, February 2010 sales of the Honda Insight and Civic Hybrid increased by 54 percent and 37 percent respectively, compared to the previous month. Sales of the Toyota Prius dropped by 6 percent in February—although the model still dominates the US and Japanese hybrid markets. Koichi Kondo, Honda executive vice president, told Bloomberg that Honda could put lithium ion batteries in the Civic Hybrid “within the next two to three years.”

By contrast, Toyota believes that lithium batteries do not justify the higher cost, and that current hybrid battery technology—nickel metal hydride—is best suited for conventional hybrids. The company came to that conclusion last fall after conducting three years of “secret tests” on 126 Toyota Priuses equipped with lithium ion batteries.

In a Twist, Lithium Ion Is Cheaper

While similarly sized lithium ion batteries may cost 30 percent more than the current nickel metal hydride batteries, carmakers could use lithium batteries to reduce battery costs by building smaller packs. In an interview with HybridCars.com in December, John German—who worked as an environmental engineer for Honda for 11 years and is now a senior fellow for the International Council for Clean Transportation—said the next wave of lithium ion batteries will help conventional hybrids hit the mainstream.

“Lithium ion batteries will reduce the cost of the battery pack for conventional hybrids, but they’re not going to reduce the cost of the battery pack for plug-in hybrids and electric vehicles,” German said.

German believes lithium ion batteries will alleviate the need for automakers to make hybrids with oversized nickel-based battery packs. The packs are currently sized for delivering enough power rather than for storing sufficient energy. German said, “The reason they’re oversized is that with nickel metal hydride, you’re limited in how fast you can take energy in and out of a battery without causing significant deterioration.” As a consequence, today’s hybrid batteries hold a lot more energy than they need to, and are therefore more expensive than they need to be. “With the new high-power lithium ion batteries, they can cut them down to their actual energy requirements and still get all the power they need,” German said.

Eventually, all carmakers are expected to make the shift to lithium ion batteries for hybrids. If Honda’s strategy works, and other carmakers start using smaller more affordablelithium ion hybrid batteries, the higher purchase price of gas-sipping hybrid gas-electric cars could be slashed, dramatically increasing their popularity."