DETROIT – While electric vehicles are hogging more than their share of the limelight at the auto show here, Toyota Motor Corp., the world’s leader in hybrid-vehicle sales, remains cautious about the future of battery-powered vehicles.

The Japanese auto maker is tiptoeing along in the electrification movement with its upcoming plug-in Prius hybrid but remains among the more cautious auto makers when it comes to lithium-ion battery technology and the outlook for EVs.

Timing of a full EV to compete with Nissan Motor Co. Ltd.’s upcoming Leaf, Mitsubishi Motors Corp.’s i-MiEV and others remains unclear, officials indicate.

If there’s consumer interest in “a limited-use commuter vehicle, it may be (possible to produce) a complete EV,” says Koei Saga, Toyota managing officer-advanced-technology vehicles and battery development, suggesting fulltime battery power may be limited to small cars for short commutes in crowded cities in Europe or Japan.

But EVs are a tough business case, he says.

“Users will not embrace an environmentally friendly vehicle if there are burdens,” he cautions. “When we consider a vehicle that users will accept, the only option (right now) is a plug-in hybrid.”

For now, Toyota is hedging its bets, expecting the world’s automotive fleet to require a mix of powertrains in 2030 to replace gas-powered internal combustion engines.

It envisions hydrogen-fed fuel cells as the primary power source for commercial vehicles, buses and larger passenger vehicles, with hybrids and plug-in hybrids the powertrain of choice for the more mainstream light-vehicle market.

Full electric power will continue to be limited to short-range vehicles even 20 years from now.

Government policy will help drive this diversification, as various countries shape incentives and regulations around their own energy infrastructures, says Takeshi Uchiyamada, executive vice president-product planning and advanced technology. Regions with strong natural-gas supplies may favor CNG, while others may promote biofuels use or electric power.

However, Toyota appears most bullish on fuel-cell vehicles, which it says will cost less than a battery-electric vehicle if both are designed to provide the same driving range between fill-ups and recharges.

With a hydrogen infrastructure in place, the more economical FCVs could leapfrog EVs in market demand, says Takeshi Uchiyamada, executive vice president-product planning and advanced technology.

Several auto makers recently united on a push to convince governments worldwide to begin to develop a hydrogen production and fueling infrastructure to support FCVs, Uchiyamada notes.

Plans are to put an “improved-type” of FCV into consumer hands in 2015, although Toyota hasn’t decided what that model will look like or what its 1-tank range will be. It currently is fleet-testing its FCHV-advanced FCV, which has a range of 400 miles (640 km) between fill-ups.

The type of vehicle selected “will depend on the region of the country (it is offered) and the number and location of hydrogen fueling stations,” Uchiyamada says.

Toyota’s plug-in Prius, which won’t be available in the retail market for another two years, represents a cautious approach to test the performance, durability, manufacturing consistency and safety of new-generation Li-ion batteries before making the next leap into full EVs.

“We’ve tried to make a vehicle that won’t have any problems,” Saga says of the plug-in Prius, adding Toyota also wants to get the size of the battery pack down for the 2012 retail launch of the car.

While Toyota ultimately could source batteries from outside suppliers, Saga says it is important for the auto maker to maintain its in-house development with majority-owned subsidiary Panasonic EV Energy Co. Ltd.

Auto makers “must fully understand how batteries perform in vehicles,” he says. “Without that, to reduce cost and improve reliability is not possible.”

Other OEs are beginning to recognize this,” Saga adds. “Many auto makers are joint venturing on batteries, mostly for production. But some have started to do joint-venture companies for development. So, they are trying to follow our development style.”

Toyota is focusing on nickel-based Li-ion battery chemistry for its more robust performance in cold climates, Saga says.

A story published Monday by The Blade, a Toledo, OH, daily newspaper, says auto makers are finding EVs lose about 30% of their range in extreme hot and cold climates, citing sources at BMW AG’s Mini and Tesla Motors Inc.

Toyota is targeting a minimum 50% reduction in cost over the next 10 years in its Li-ion cells, from about ¥100/Wh ($1.10) today.

Li-ion batteries for consumer electronics now cost about ¥30/Wh, ($0.33). But Saga says it will be impossible to reach that level with more sophisticated, larger automotive batteries, “so we’re trying to get as close as possible.”

Whatever progress is made on batteries, Toyota will continue to put more focus on internal-combustion engines. Uchiyamada says improvement to IC efficiency – through reduced friction and addition of superchargers and direct injection – is the key to meeting tougher fuel economy regulations in the U.S.

“Most important is to make innovations in combustion efficiency,” he says.

Saga doesn’t expect the internal-combustion engine to disappear ever.

“I think we will never abandon the IC engine,” he says. “Even with the depletion of fossil fuels, maybe hydrogen can be used for normal IC engines. There’s a higher level of convenience compared to fully electric vehicles, and you can produce those cars more cheaply.

“Ultimately, we may see fuel cells offered in parallel with ICs,” he adds. “But we’ll never see a day when ICs disappear.”

dzoia@wardsauto.com