Toyota And Honda Key Players In Japan’s Move To Lead in Fuel Cells and Hydrogen

Japan is counting on hydrogen and fuel cells to cut carbon emissions and oil imports – and Toyota and Honda are going along for the ride.

The Japanese government aims to see 800,000 fuel cell vehicles on its roads by 2030, being fueled by a national network of 900 hydrogen stations. That would shoot up from about 1,700 fuel cell vehicles and less than 100 hydrogen stations in place now.

The country’s grand vision, which was launched in a 2014 blueprint, ties into a much larger transformation that would include mini hydrogen production plants at homes and businesses, a carbon-free hydrogen manufacturing process, and eventual cost reduction in vehicle and fuel prices. If things move along fast enough, it could make Japan look impressive at the 2020 Summer Olympics in Tokyo.

The nation imports nearly all of its oil from other countries, and would like that dependency to disappear. There’s also several sources to extract hydrogen from domestic fuels like natural gas, coal, biomass, solar or wind power, nuclear power, and hydroelectric stations.

Japan could become the world’s epicenter of hydrogen and fuel cells.

“This is where Japan is different from other countries,” said Hiroshi Katayama, deputy director for advanced energy systems at Japan’s Ministry of Economy, Trade and Industry, the government agency heading the drive. “I think Japan is in the lead.”

Toyota and Honda see mass production of these new alternative powertrains as significant as the role they played bringing hybrid cars to the global market in the early 2000s. If Japan’s national campaign takes off, it could nudge out competitors like Hyundai and other manufacturers working on fuel cell vehicles, specifically Daimler, General Motors, Nissan, and BMW.

It could also mean taking big losses, especially if their production facilities scale up to make several thousand fuel cell cars a year and they aren’t sold at a profitable level.

To take a look at where it stands, Automotive News published sales data from the global three automakers offering production-level fuel cell passenger cars.

Since launching the Hyundai Tucson Fuel Cell (called ix35 outside the U.S.) in 2013, the company has sold 782 vehicles. Europe has been the largest market with 430 units sold, followed by North America at 203, the home market of South Korea at 148, and one ix35 sold in another market.

Toyota launched the Mirai in 2014 with 1,600 sold so far in Japan, 1,300 in the U.S., and 100 in Europe. The total comes to 3,000 sold.

Honda started selling the Clarity Fuel Cell last year, with 217 sold so far. That breaks out to 140 units sold in Japan and 77 in the U.S.

Earlier this month during the New York International Auto Show, the company unveiled all-electric and plug-in hybrid variations of the Clarity.

The challenges being faced by Toyota and Honda are similar to other alternative powertrains on the global market. It also shows the level of investment governments and corporate partners in Japan, South Korea, the U.S., and Europe are needing to make for the fuel cell technology to become broadly accepted.

More capital and know-how must be invested to reduce the technological limits, the relatively high purchase price of the vehicles, regulatory structures, and how to break through consumer reluctance.

“This is a very challenging goal,” said Yoshikazu Tanaka, chief engineer of the Mirai fuel cell sedan. “But we need to keep pushing ourselves toward the ambitious creation of a hydrogen society.”

Government and industry are working together with generous subsidies and commitment from companies to support the Japanese government’s plan. The government is funding hundreds of millions of dollars into hydrogen stations, covering as much as two-thirds the cost of each fueling station. The cost of the hydrogen used to fuel up is also reduced for consumers through government subsidies.

The national government gives out about $17,960 in subsidies for buyers of fuel cell vehicles. Local governments also contribute, with Tokyo giving out another $8,980 to buyers.

Consumers need to be educated about the incentives beyond the $64,972 sticker price (including a consumption tax) for a Mirai in Japan. In the U.S., it sells for $57,585, including shipping, before incentives.

The Japanese government wants to provide all the support it can to meet lofty targets. The national plan wants to see 40,000 fuel cell vehicles in operation by 2020, then 200,000 by 2025 and then a giant leap up to 800,000 by 2030.

SEE ALSO:  Hydrogen Fuel Cell Car Drivers Can Fuel Up at ‘Toilet-to-Tank Filling Station’ in Japan

Toyota’s experience with hybrids has been much different. It took nine years after the launch of the Prius in the Japanese market during 1997 to reach the 500,000 hybrid vehicles sold mark. That covered global sales, multiple Toyota and Lexus hybrid models, and the lack of a new fueling infrastructure required by other alternative powertrains.

Beyond the heavy duty fuel cell truck Toyota is testing out in the ports of Los Angeles and Long Beach, the company hasn’t talked about launching other new fuel cell passenger cars.

Toyota acknowledges that multiple models and much higher production output will have to be put in place for targets to be met in Japan.

“To achieve that goal, we will have to sell 30,000 to 40,000 units of FCVs per year, from 2020 to 2030,” Tanaka said. “I don’t think we’ll be able to achieve the target with only the Mirai.”

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