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Hydrogen Cars: Toyota Aims to Become the Next Tesla

Toyota (TM) is planning a launch of “society changing” hydrogen cars, which came as a shot across the bow of Elon Musk’s Tesla (TSLA), this week. However, hydrogen-fueled vehicles are not likely to deal a knock-out blow to competitors, which means TM’s attempt to outflank TSLA may fail in the short term.

toyotaTM plans to debut its new Fuel Cell Vehicle (FCV) in Japan next spring, adding select U.S. and European markets later next year. What’s more: Toyota has thrown down the gauntlet to Tesla over what clean technology will fuel future vehicles.

TM is betting big on hydrogen, which seems like a logical bet since Tesla walked away from its RAV4 deal earlier this year. Since then, TM decided to go big with Toyota hydrogen cars — and TSLA’s Musk has said that hydrogen fuel cells can’t compare to the energy output of lithium ion batteries. At a forum in Germany last fall, Musk used a colorful metaphor when giving his assessment of hydrogen cell technology, as DailyTech reports here.

So who’s right about the future of hydrogen cars, Toyota or Tesla?  Here are three pros and three cons for the technology:

Hydrogen Cars — Pros

The ‘Zero Emissions’ Pitch: Toyota hydrogen cars have the potential to be a game changer in the quest for clean vehicles because no fossil fuel is involved in any stage of generating power. After all, EVs run on fossil-fueled electricity and hybrids do produce carbon emissions — albeit at a much lower rate than traditional gasoline-powered vehicles. Conversely, hydrogen cars suck outside air into a hydrogen-filled tank — the resulting hydrogen-oxygen reaction generates electricity.

Free and Easy: Hydrogen cars do not produce toxic gases or other harmful effects. After all, the small cloud coming out of the tailpipe is only comprised of a little heat and water vapor. Hydrogen cars also are clean, comparatively easy to maintain and a viable alternative for driving short distances.

Hydrogen Cell Vehicles Are In Broad Use Today. Although we’re only at the beginning of the consumer hydrogen car discussion, such vehicles have been a part of fleet and transit operations for some while. The Department of Energy awarded Fedex (FDX) $3 million to develop hydrogen delivery trucks that can travel up to 150 miles before refueling. FDX plans to test 20 such vehicles in Tennessee and California. In 2012, the Greater Cleveland Regional Transit Authority teamed with NASA’s Glenn Research Center to pilot a hydrogen bus. Even Lowe’s (LOW) has begun using hydrogen-powered forklifts at its regional distribution center in Rome, GA.

Hydrogen Cars — Cons

Safety Remains An Issue: Just because Toyota hydrogen cars won’t emit noxious fumes doesn’t mean there are no safety concerns. Hydrogen is highly flammable, and hydrogen fires burn hotter and are more difficult to contain.

Sticker Price, Refueling Are Big Issues: Industry insiders expect the Mirai sedan’s price tag to be the U.S. dollar equivalent of $69,000 — that’s a very big nut to crack for car buyers now. Plus, the refueling infrastructure well behind that of electricsand nowhere near ready for prime time.

Competition and Performance: Toyota isn’t the only player in the hydrogen fuel cell game: Earlier this summer, Hyundai debuted its hydrogen-powered Tucson crossover. Honda (HMC) is also moving into the space with the hydrogen FCX Clarity.  Still, consumers are unlikely to fully embrace fuel cell vehicles in the near future — at least until refueling infrastructure increases and prices fall.

Toyota Hydrogen Car — Bottom Line

Toyota hydrogen cars aren’t a Tesla-killer, and hydrogen fuel cell technology is unlikely to supplant EVs and hybrids any time soon. TM’s strategy to leverage innovation to grow has delivered strong results in the past — the Prius’ sales record is proof of that.

But innovative technology alone is not enough to spark a radical shift from one clean technology to another — and in that regard, hydrogen cars are not ready for prime time.

As of this writing, Susan J. Aluise did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2014/09/toyota-hydrogen-cars-fcv/.

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