Toyota, rightly or wrongly, is widely considered the greenest automaker, and the company hopes to solidify its hold on the title and move beyond oil through a sweeping plan to produce cleaner, more efficient cars – beginning with a plug-in hybrid it will produce by 2010.

It's no secret Toyota's been working on a plug-in hybrid to compete against the forthcoming Chevrolet Volt, but Wednesday's announcement sets a firm deadline and makes it clear Toyota has no plans of ceding the green mantle to General Motors. It also underscores how quickly the race to build a viable mass-market electric car is heating up.

The company's ambitious "low-carbon" agenda includes cranking out 1 million hybrids a year and eventually offering hybrid versions of every model it sells. In the short-term, Toyota says it will produce more fuel efficient gasoline and diesel engines and push alternative fuels like cellulosic ethanol and biodiesel. It's also pumping big money into lithium-ion batteries. With fuel prices going through the roof and auto sales going through the floor because of it, Toyota president Katsuaki Watanabe says the auto industry has no choice but to move beyond petroleum.

"Without focusing on measures to address global warming and energy issues, there can be no future for our auto business," he told reporters in Tokyo, adding, "Our view is that oil production will peak in the near future. We need to develop power train(s) for alternative energy sources."

Watanabe's reference to peak oil echoes that of GM CEO Rick Wagoner, who in explaining the company's decision to shut down four truck factories said rising fuel prices and mounting demand for efficient cars are "structural, not cyclical." In other words, the two biggest automakers in the world realize petroleum's days are numbered.

That's not to say the wells will run dry anytime soon or the bulk of Toyota's cars won't rely upon internal combustion for many years to come. "People often ask us whether the vehicles of the future will be hybrid vehicles or clean diesel cars or electric vehicles," Watanabe said. "Our answer is that it will not be one technology because energy situations vary from one market to another."

Still, Toyota is betting heavily on batteries to increasingly augment gasoline. The world's leading producer of hybrids – worldwide sales of the Prius recently topped 1 million, 10 years after its introduction – wants to stay there by producing that many hybrids each year "as early in the 2010s as possible." Looking further into the future, Watanabe says Toyota will introduce hybrid versions of every car in its line-up sometime between 2020 and 2029.

Reaching those goals will require bringing down the cost of lithium-ion batteries, which currently cost $1,000 per kilowatt hour, according to Tom Turrentine of the Plug-in Hybrid Electric Vehicle Research Center at UC-Davis.

Toyota is joining longtime battery partner Matsushita Electric Industrial Co. in launching a program to develop batteries it says will outperform lithium-ion batteries. It's assigning 50 engineers to the project, according to Reuters, and plans to begin producing batteries next year. Full production is slated for 2010, although Toyota isn't saying how many it might build. It also plans to continue building the nickel-metal hydride batteries it currently uses in hybrids.

The third-generation Prius, due next year, will use NiMH batteries. The plug-in hybrid coming in 2010 will use lithium-ion batteries and will "be geared toward fleet customers in Japan, (the) United States and Europe," the company said. There's no word on when it might be offered to the rest of us, but Toyota promises to "accelerate development of small electric vehicles for mass production."

Toyota isn't giving up on internal combustion, though. It's already revamping its engines to make them more efficient, developing 1.3- and 2.5-liter engines that will propel much of its line-up by 2010. The smaller of the two is fitted with a start-stop system to maximize fuel economy. Toyota also plans to roll out a six-speed manual transmission this fall. It's also working with outside partners to develop cellulosic ethanol from yeast and diesel fuel from biomass. And, like everyone else in the industry, Toyota pushing hydrogen and its FCHV-adv fuel-cell vehicle.

Photo: Flickr user unumediastudio.