Japan’s Backing To Fuel-Cell Cars Could Benefit Toyota’s New Model – Forbes
Toyota Motor Corp will start building a new fuel-cell vehicle in December this year, earlier than previously planned. The Japanese automaker first revealed plans for the vehicle, a four-door Sedan, at the Tokyo Motor Show last year. In 2010, Toyota contracted Tesla to supply all electric power trains for use in its future cars and SUVs. The company started the use of these power trains in the $50,000 RAV4 SUV. However, sales of the car have been poor and Toyota terminated the deal with Tesla Motors earlier this year, but the company is keeping its 3% stake in Tesla for the time being. The termination of the deal with Tesla and the announcement of the fuel-cell car signals a shift in Toyota’s strategy with respect to alternative vehicles.
The Japanese government is planning to offer strong assistance to help fuel-cell vehicle technology achieve commercial viability as Toyota Motor Corp and Honda Motor Co prepare to launch hydrogen-powered cars next year. In this analysis, we list out the ways in which Government regulation in Japan can help drive a push towards hydrogen-powered vehicles.
Incentives On Offer
Toyota is one of the leaders in the alternative vehicle market. Hybrids account for 14% of the company’s current sales, which include the world’s highest selling hybrid, Toyota Prius. As far as fuel-cell technology is concerned, the company first faced problems in getting the technology to work and then in lowering the manufacturing cost to a level that could keep pricing competitive. After 20 years of efforts, the company seems to have finally found a solution: through design improvements, such as the use of coils that make the motor more powerful, they have managed to make a car that is smaller and cheaper. Despite these improvements, Toyota can still only sell the car at a loss until the technology becomes popular enough so as to be commercially viable. Additionally, even though fuel-cell vehicles have nearly five times the range of EV’s and take only 10 minutes to fill up, lack of a proper fueling infrastructure will be an impediment to successful commercialization of the technology. To this end, the governmental push for the popularization of fuel-cell vehicles can be of great help to Toyota. The following steps are being undertaken by the Japan Government for the commercialization of hydrogen-powered vehicles:
- To cut costs of building a charging station to around $2-$2.5 million by 2020.
- To have around 100 hydrogen stations operational by March 2016.
- A number of policy recommendations are being complied in order to boost hydrogen use.
- Has set a sales target of 40,000 vehicles by 2020 and 400,000 vehicles by 2030.
- Considering subsidies and tax-breaks in order to support the technology.
- Excluding subsidies, the car can be priced as low as $69,000. The Prius plug-in hybrid is priced at $21,600 currently. The Government is planning to bring the cost of the car down to ~$20,000 after subsidies by 2025.
In 2005, Japanese automaker, Honda Motor Corp., became the first company to offer a fuel-cell vehicle with the FCX Minivan. The vehicle was available for leasing in Southern California, where fast-fill hydrogen fueling stations are present, but the technology failed to take off with only 24 units leased in total. Honda tried again with the FCX Clarity in 2008, but between 2008 and 2010, only 20 units were leased in Europe and Japan. Korean automaker Hyundai has also released its fuel-cell vehicle, Tucson (known as ix35 in Europe). The company is offering 1,000 cars for $500/month for 36 months and a down payment of $3,000. Clearly, the company is willing to sell the car at a loss and the reason for that might be the $130,000 in zero emission vehicle credits per car on offer from the state of California.
The poor sales of fuel-cell cars are mostly attributable to the problems fuel-cell technology is currently facing. It is extremely costly to set up new charging stations for these vehicles. Even the current stations face drawbacks as charging pumps require a lot of downtime after each charging session to be ready for the next one. Given the complexity of fuel-cell technology and the trade-offs involved in choosing hydrogen over natural gas as fuel, the amount of money required to build a sufficiently large number of refueling stations in order to make the car commercially viable, involves making a big bet on a technology that might even fail. With these worries in mind, it is only possible to think of Toyota’s new fuel-cell car as being intended to generate more ZEV credits in the near term instead of selling numbers meaningful enough for the bottom line.
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