Here’s Why Toyota Is Focusing On Hydrogen Fuel Cells For Clean Energy Vehicles

by Trefis Team
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With the changing landscape of the automotive industry, most players are accelerating their plans to launch electric vehicles (EVs) as regulators look to fight increasing pollution with clean energy zero emission vehicles. Companies such as General Motors are investing heavily on battery technology to launch cheaper and better electric vehicles. However, Japanese automaker Toyota Motors (NYSE:TM) is focusing on hydrogen fuel cell vehicles with its Mirai brand. While the company has sold only 4,000 Mirai fuel cell vehicles since 2014, it has an ambitious target of selling 30,000 of these vehicles by 2020. These vehicles are expensive and currently priced at $52,500 (much higher compared to the $30,000-$35,000 price range of GM’s Chevy Bolt and Tesla’s Model 3). However, their higher range gives them an edge over electric vehicles. A hydrogen fuel cell vehicle can go 312 miles (higher than the 300 miles range of Tesla’s Model S and much higher than other EVs) per fueling, and does not need heavy batteries for this range.  However, technology improvements in the EV space are likely to take this competitive edge away. Tesla has already unveiled its Roadster model which has a driving range of 620 miles, much higher compared to the 312 mile range of Mirai.

Most automakers are not in favor of the hydrogen fuel cell technology and are focusing on EVs – which is believed to be a simpler technology. This has ensured that there are enough EV charging stations in most countries. Japan has 91 hydrogen stations and is aiming to increase this number to 320 by 2025. The country already has 28,000 charging points for electric vehicles. Similarly China – where the maximum demand for EVs is likely to come from, has 215,000 charging points and only 5 hydrogen stations.

Toyota Motors is one of the few players who is confident about the success of hydrogen fuel cells and technological breakthroughs in this segment can give them a huge competitive edge. It is banking on the fact that electricity might not be a viable power source in several countries, including Japan, and if hydrogen fuel cell vehicles can be competitively priced, they can compete effectively with EVs in these regions. While currently Toyota Motors is standing out in the clean energy vehicles segment and appears to be taking a huge risk, it is early days to conclude whether this gamble will pay off or not.

Click here to see our detailed analysis for Toyota Motors.

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