Final Inspection

Toyota’s Shift to Hydrogen From Battery-Electric Jolts Industry

When the world’s largest producer of gas-electric hybrids decides to take the road less traveled, you can bet on a seismic shift in the industry’s market focus to fuel cells.

I’m always amused when watching a fictitious tale on TV where everyone drives a Toyota Prius to reflect an environmentally advanced society. Syfy’s “Eureka” comes immediately to mind.

Arguably, the Prius’ unique styling is universally recognized as a hybrid-electric vehicle, although film makers give an occasional nod to other low-emissions cars such as the more advanced Chevy Volt and most recently BMW’s sporty i8 plug-in hybrid on the new CBS alien drama “Extant.”

Yet, if Toyota has its way, the current Prius soon may be relegated to the past as the automaker rolls out its first commercially viable hydrogen fuel-cell vehicle next spring, hoping to achieve similar mass-market acceptance by car buyers. But there will be bumps in the road.

Not everyone agrees that FCVs are ready for prime time, pointing to the high manufacturing cost, lack of hydrogen-refueling infrastructure and prohibitive vehicle price tag – say $50,000 for starters.

Nor is Toyota the first automaker to produce FCVs: General Motors, Ford, Nissan, BMW, Mercedes, Volkswagen and Hyundai, among others, long have had demonstration fleets, some offering vehicles for lease, with the shared view the technology is the industry’s future.

The most recent is Hyundai, which leased its first Tucson hydrogen fuel-cell CUV in the U.S. in June, confining availability to three dealerships in California. Although there is consumer interest, a Hyundai executive tells WardsAuto finding hydrogen fueling stations is problematic, with only nine in the state.

Toyota appears to be in a bigger race with Japanese rival Honda. In a delicious irony, Honda already had an electric hybrid on the road in Japan before the Prius officially debuted on Dec. 10, 1997, and its purpose-built FCX Clarity fuel-cell powered sedan has been available for lease to the public, including the U.S., since 2008.

Toyota up to now has expressed little interest in the FCV movement toward cars, despite the unveiling of its latest concept at the 2013 Tokyo auto show and even though it has been testing hydrogen-powered passenger vehicles for the past six years.

Indeed, the automaker long has differed from Honda in the belief that the technology’s greatest medium-term potential was for long-haul trucks and buses, where stack and other core components were comparatively lower in relation to total costs than for cars.

Which is why the recent breakup of Toyota’s partnership with luxury EV sports-car maker Tesla to build electric cars in California took many by surprise. But the Japanese automaker’s growing conviction that fuel cells also are a viable zero-emissions technology for cars clearly has put it at odds with Tesla.

Jilted Tesla chief Elon Musk, who also is the co-founder of SpaceX that develops and manufactures rockets and spacecraft, is quoted in a published report as saying hydrogen, a highly flammable element when not handled properly, is suitable for an upper-stage rocket, but not for cars.

However, the same could be said for electric battery packs.

So what’s the big deal about Toyota’s crossover to hydrogen? Momentum. When the world’s largest producer of gas-electric hybrids decides to take the road less traveled, you can bet on a seismic shift in the industry’s focus to fuel cells.

Especially when Toyota is getting the jump with a little help from its friends, just as it did with the Prius. The Japanese government announced in June the country’s new growth-strategy plan calls for tax breaks and subsidies of at least ¥2 million ($20,000) for each buyer of the new FCV in 2015 to help fast-track introduction of the car.

The ruling Liberal Democratic Party envisions that by 2025 the price of fuel-cell cars will be competitive with gas-electric vehicles. The administration also aims to cut the cost of building hydrogen fuel stations in Japan, hoping to have 100 structures in place by 2016, up from the current 17.

Such moves not only will bolster both Toyota and Honda, which plans to launch sales of a new FCV next year as well, but also will support Prime Minister Shinzo Abe’s ambitious (and perhaps misplaced) economic policy of reviving Japan’s status as an automotive powerhouse.

Toyota executives and engineers tell Reuters the automaker is willing to sell its new “2015 FC” car at a loss for some time to popularize the technology, just as it did with the Prius that now accounts for 14% of its annual global sales.

As a result, they say, car buyers in environmentally friendly markets such as California may be able to purchase the 2015 FC for about $30,000-$40,000 after government subsidies, if Toyota management decides on such a pricing strategy. The automaker has said it will bring the car to the U.S. in 2015.

Despite this, it is unlikely battery-electric vehicles will be abandoned by the industry anytime soon, especially considering the huge investment in the nascent but slow-selling segment and the admission by most automakers that EVs are considered placeholders.

And there is still the great debate over whether hydrogen fuel cell or battery electric is the best low-emissions technology: the production of hydrogen releases greenhouse gases while electricity generation uses mostly carbon-based fuels.

The other argument is that while EVs cost less, FCVs can run five times longer and fill a tank 10 times as fast.

Others say a more sensible scenario, and the most likely one, is not to pick one over the other. Rather, automakers should diversify their portfolios by offering a greater choice to consumers seeking engines that are easier on the environment, despite the enormous cost of such technological advancements and the small return.

Some things won’t change, of course. The egg-shaped Prius will continue to star in science fiction films. The only difference may be the hydrogen fuel-cell stack lurking inside.

Discuss this Blog Entry 2

on Aug 6, 2014

"the production of hydrogen releases greenhouse gases while electricity generation uses mostly carbon-based fuels."

The production of hydrogen is mostly going to be electrolysis machines on-site. This will just require a mediocre amount of water, and then of course, electricity.

The huge benefit in this method is the upgrades for transmission-> grid will only be limited to where the fueling stations are (vs. the BEV paradigm will need the entire grid beefed up, everywhere). A lot of these stations can even be put close to transmission sources to minimize that need all together.

The other enormous plus for generating hydrogen is that is can be pumped up during the night hours. One of the hugest problems with wind energy is it tends to come (and peak) during the hours in which energy trades for the least. Because wind energy can cause late night power rates to easily run as low as $20/MWh, wind loses any economic benefit, and can easily lose money if the energy has to be dumped.

If we start making great use of all of this excess power, the rates during the night can get driven up, making wind energy economical for investment, and which then the hydrogen production can get ramped up even more.

The ENTIRE transportation sector could get run off of wind power this way.

on Sep 5, 2014

This is a failure of EPIC proportions. There are all of 9 fuel stations in California and they will get hydrogen from reformed natural gas, not solar or wind. Electrolysis wastes 20 - 40% of the energy and the fuel cells waste an additional 20 - 40% of the energy. Batteries are 95% efficient. Run outta hydrogen and you run outta luck. EVs can be charged anywhere there is electricity.
Hydrogen cars are a gift to the natural gas industry. EVs are the future or PHEVs. Ask yourself if you would switch from a gas car with 14,000 gas stations in California, for a vehicles whose fuel costs as much and has a huge carbon footprint and only 9 places to get fuel!

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What's Final Inspection?

WardsAuto editors share insights and observations on the global auto industry.


David E. Zoia

As Editorial Director, I oversee much of what goes into, enjoying a ringside seat that lets me observe up close just about every facet of the industry worldwide. I have covered the...

James M. Amend

James Amend is an associate editor at, covering day-to-day business and product news at General Motors. He also leads coverage of regulatory and environmental issues, as well as the...
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