For nearly a century, the auto industry was content to churn out gas-guzzling vehicles that peeled away at the earth’s ozone layer and drained wallets with fuel costs. That changed when Japanese automaker Toyota introduced the first commercial hybrid electric vehicle in 1997. The Prius provided a roadmap for mass-produced, eco-friendly cars for the 21st century, igniting the hybrid vehicle push of the early 2000s and sparking an industry transition to full-fledged electric vehicles.

Previous attempts by automakers to address carbon emissions and fuel efficiency had been incremental. Toyota’s leadership audaciously went for a radical transformation: In 1995, the company committed to deliver a commercially viable hybrid electric-petrol vehicle with double the fuel efficiency of a conventional engine within three years.

A stunned team of designers and production engineers assigned to this task wasn’t optimistic. The industry’s last mass-produced hybrid had debuted in 1917 and flopped. Toyota had only dabbled in hybrid prototypes, and few believed the battery technology was ready. “At the time, we saw the hybrid as a technology that couldn’t be achieved by the start of the 21st century,” project engineer Satoshi Ogiso told Toyota’s Global Newsroom on the 20th anniversary of the car. “The whole team shared that outlook.”

“At the time, we saw the hybrid as a technology that couldn’t be achieved by the start of the 21st century.”

Satoshi Ogiso

Toyota project engineer

Roadblock Ahead

Given the ultra-compressed timeline, Toyota had no time to import external talent, instead sticking with its long-held commitment to keeping development in-house. “We were working off a completely blank slate,” recalled Ogiso. “None of the major components had a track record.”

The Prius team forged an all-in mindset by co-locating in an obeya, or “big room” environment. The goal was to solve problems together, early, before things steered off course, like a research lab. “We started by assembling the basic parts and testing them. Each one was tested on a test bench, and then we incorporated computer programs,” said Ogiso. They would troubleshoot each discrete problem. With hundreds of new components and tens of thousands of parts, the work was tedious. Yet after 49 days, an initial prototype was operational.

But it didn’t perform well. The prototype’s fuel efficiency was actually worse than the company’s gasoline-powered Corolla sedan, drivability was lousy, and the battery systems and powertrain were unreliable. Then things got worse: Leadership announced that the Prius debut would coincide with the 1997 United Nations Framework Convention on Climate Change in Kyoto, Japan—a year earlier than scheduled.

How could a clunky test car become a street-ready bestseller in less than two years? The team turned to a development method called simultaneous engineering to speed up processes, Ogiso said. “It was a way to solve many issues at the same time.” Using a genba, or on-location working model, the team identified design issues before they turned into production issues. “We collaborated with the production engineering divisions to ready the car for mass production, even from a stage where the car wasn’t operating properly,” Ogiso said.

Unexpectedly, the compressed schedule became an advantage. Senior staff lacked the time or knowledge to stymie original ideas, recalled Takeshi Uchiyamada, Toyota’s chief engineer at the time. “Nobody knew what to do so they couldn’t interfere. The people given the task had to think on their own and find a solution.”

The team hit its delivery goal, releasing the Prius just in time for Kyoto. The car achieved a 560-mile (901-kilometer) driving range and 58 miles per gallon (25 kilometers per liter) combined fuel economy. That was 41 miles per gallon (17 kilometers per liter) better than the average fuel economy for vehicles in the United States in 1997. It cut carbon dioxide emissions to 183 grams per mile (114 grams per kilometer). Plus, the price tag was below initial estimates. With a marketing slogan of “just in time for the 21st century,” Prius saw its sales take off, tripling Toyota’s original projections.

Since then, Toyota has sold more than 10 million hybrid vehicles, with continued innovations stemming from the Prius. It has ushered in a sequence of advancements in lithium ion battery design, regenerative braking, solar-powered cooling, computer-aided drivetrain systems and injection molding with plant-derived plastics—all of which have become hallmarks of electric vehicles.