The recent world Expo in Nagoya signaled Toyota Motor Corporation’s (TMC) emergence as the world’s leading automobile manufacturer and provided a strategic insight concerning its plans to move vehicle transportation from dependence on hydrocarbons to hydrogen. In addition it showed that in pursuing this evolving strategy the long-term role of hybrid vehicles and the use of embedded IT in combination with organizational IT will continue into the hydrogen era.

There are important connections between the IT activities embedded in the automobile and TMC’s well-researched production system, smart design, and globally based automated consumer ordering systems. This is because the efficiencies of these latter systems will enable TMC to continuously reduce the cost of the hybrid engine, fuel cells and embedded IT faster than its competitors, making them not only the industry’s technology innovation leader, but also the continued cost leader too.

TMC’s resulting control over not only the intellectual property related to hybrids on which they will receive expanding revenues as demand for hybrid vehicles grows, but also over the global supply chain in areas such as hybrid engines will cause continuing problems for competitors. The corporate culture that has resulted in TMC’s on-going and well recognized leadership in quality, production efficiency and rapid product development combined with their deep financial resources means these embedded IT product initiatives and their global competitive impact must be taken very seriously.

The automobile has had a long history, actually starting out with electric motors. However the battery life, speed and range of the first electric cars did not keep up with the newly developed internal combustion engine. The need for oil began. Through the 1960’s oil prices were relatively low and global warming had not yet become a hot issue. Thus the automotive industry was not concerned with fuel economy or emissions. As the world “shrinks”, however, countries have come to realize that they cannot survive in isolation. Industrialization has spread throughout the world narrowing the gap between the “haves” and the “have-nots” and increasing the demand for energy and vehicles. Thus the increase in world industrialization has led to large global increases in raw materials and energy demand. World demand for oil is rapidly climbing as China and India compete with the US, EU and Japan for access to the world’s supply.

This high demand along with regional conflicts has driven the price of oil to new records while also increasing carbon emissions. The US must make a choice, pay for the oil at market price, sacrifice their love of the automobile by driving less and smaller cars or develop alternative energy sources. They must also choose whether they want to continue to take the world’s criticism as the leading contributor to global warming. It is unlikely that Americans will give up driving and some may not care what the price is. But as the price climbs the demand for alternatives will increase especially if it begins to affect American’s ability to purchase other products and services as budgets get squeezed by higher gas and other energy costs. Now would therefore seem the time to start developing those alternatives because as oil becomes even scarcer relative to demand, it will be too late. The same logic applies to the consequences of global warming.