Toyota and Honda Get Massive Backing for Fuel Cell Vehicle Launch

2015CES_Toyota_006 Mirai
Source: Toyota

As is the case with battery electric vehicles, hydrogen cars will need a huge boost in fueling infrastructure to become viable in the mainstream. With the announcement of a $385 million government investment in Tokyo hydrogen stations and car incentives, it appears fuel cell vehicles will have their coming-out party at the 2020 Olympics. Suddenly, the EV technology derided as “fool cells” appears it could have a huge payoff for automakers like Honda and Toyota.

Countdown to Tokyo 2020

According to Bloomberg, Japanese Prime Minister Shinzo Abe received a Toyota Mirai and almost immediately declared the technology ready for its closeup. Saying it was time for “a hydrogen era,” Abe’s administration is backing it up with a 45 billion-yen ($385 million) investment in hydrogen fueling stations and vehicle subsidies over the next five years.

By the time Tokyo hosts the 2020 Olympic Games, there will be 35 hydrogen stations and as many as 6,000 fuel cell vehicles in the Tokyo metro area, Bloomberg reports. (Toyota announced January 22 it would quadruple production of Mirai by 2017.) This movement is intended to help the country move away from risky nuclear power sources after the disaster of 2011 rattled Japan. It just so happens the country’s largest automakers are the two biggest boosters of the new automobile technology that combines hydrogen gas and electric motors.

Looking at the Japanese government’s investment, the support for hydrogen infrastructure and vehicles exceeds that of China or the U.S. on behalf of electric vehicles, according to Bloomberg. For a technology Elon Musk has ridiculed and derided as “fool cells,” such government backing could turn the tide for hydrogen-powered cars. Still, questions remain about the environmental impact of fuel cells, not to mention the obstacles to their viability outside Japan.

Honda FCV fuel cell Scott Olson/Getty
Scott Olson/Getty Images

National security plus national interests

There is real power in the convergence of a national government and its key industries. We saw it in the U.S. government’s auto industry bailout, but it was also evident in the Advanced Technology Vehicle Manufacturing (ATVM) loans that allowed Tesla to scale up its operations. In this case, Japan’s major investment in hydrogen fueling and cars allows the country to address a national security concern while supporting two of its biggest corporations.

Fuel cell vehicles promise to have the eyes of the world on them with the 2020 Tokyo games as their backdrop, but the industry is already buzzing with hydrogen car activity. Take the lineup at the Los Angeles Auto Show. Volkswagen, Honda, Toyota, and Hyundai all had fuel cell vehicles on display, and Toyota’s announcement it was offering up Mirai patents for royalty-free use was headline news.

Some writers and auto enthusiasts have criticized the Mirai’s looks, but it’s useful to remember how well the Prius — never considered a looker — has dominated the hybrid field for over a decade. When Toyota’s fuel cell car got its initial price in Japan ($63,000) and the U.S. ($57,500), it sounded expensive, but incentives promise to be huge for the budding technology. U.S. incentives could add up to $13,000 should federal tax credits be renewed by the time the Mirai is released, while Japan will also subsidize the cars heavily. On this side of the Pacific, fuel infrastructure is almost nonexistent at 13 hydrogen stations nationwide.

In Japan, the convergence of government support and power of two dominant automakers will give Toyota and Honda a jumpstart in the race to the world’s next big vehicle. (It certainly worked for the Prius.) Toyota’s ability to increase production efficiency with the Mirai is worth noting as well. From an original cost of $1 million per prototype 10 years ago, current production costs give Mirai a realistic price for modern consumers.

If emissions can be kept down during the production of hydrogen fuel cells, these vehicles may also become the world’s greenest cars (tailpipe emissions amount to water vapor). There’s a long way to go, but that hardly sounds like “fool cells.”

Note: This article was updated to reflect the fact fuel cell vehicle incentives will total $13,000 only if the federal tax credit is renewed.