Unclear future for transport – electric or hydrogen cars?

TOKYO, 18 Sept 2019: 

Buses may not be the most glamorous mode of transport but at the 2020 Tokyo Olympic games, they will represent Toyota Motor Corp’s best bet for wider acceptance of hydrogen power – technology so far eclipsed by electric vehicles (EVs).

Japan’s biggest automaker plans to roll out 100 hydrogen fuel cell buses to shuttle visitors between venues, a stepping stone to a big ramp up for the Beijing Winter Olympics in 2022.

There, more than 1,000 buses are planned in partnership with Beiqi Foton Motor Co, said people familiar with the project – which aims to make the most of a push by China to start adopting the zero-emissions technology.

The plans to promote hydrogen with its exclusive Olympic ‘mobility’ sponsorship deal – one Toyota holds until 2024 – underscore its determination to keep backing the technology. That’s despite an increasing number of electric cars on the road and Toyota’s own efforts to speed up EV development.

But its reliance on buses for hydrogen publicity also highlights the lack of traction for its fuel cell cars, and the risk that hydrogen-powered transport may never be more than a niche market despite a quarter century of development and Japanese government backing.

Toyota has sold fewer than 10,000 of the Mirai, a fuel cell sedan it touted as a game changer at its launch five years ago. Costing consumers about ¥5 million (US$46,200) in Japan after subsidies, it is one of three fuel cell cars available to consumers. Hyundai Motor Co sells the Nexo, while Honda Motor Co Ltd leases out the Clarity.

By contrast, Tesla Inc sold 25,000 of its all-electric Model S sedans in its first year and a half.

The disappointing Mirai sales reflect insufficient refuelling stations, consumer worries about resale values and concerns over the risk of hydrogen explosions. A hydrogen tank blast in South Korea that killed two in May was followed by another at a Norway hydrogen station in June.

“Hydrogen still has this image of being dangerous – that it might explode – and our aim with the Olympics is to erase this image,” said Masaaki Ito, Toyota’s general manager of its Olympic and Paralympic division.

The company will also provide 500 Mirai sedans to ferry officials between venues at the Tokyo Olympics. “We want to expose the technology to as many people as possible.”

Toyota, which is also developing fuel cell delivery trucks and big rigs, has not disclosed how much money it has poured into the technology but it has been emboldened by support from the Japanese government, which sees hydrogen as a key way to reduce its reliance on oil.

Both envision a “hydrogen society” where homes, trains, ships, and even lunar rovers can be powered by fuel cells that turn the invisible, odourless gas into electricity.

The city of Tokyo, which will showcase the Olympic village for athletes as a hydrogen society in miniature, is buying most of the buses for its Toei municipal transport service, with 15 already in operation.

Unlike cars, buses have fixed routes, making it easier to plan fuelling stations and give them a shot at being profitable.

Local and national government subsidies cover 80% of the cost, bringing them in line with the ¥23 million price tag for a regular diesel bus, a Toei representative said.

But lofty government goals remain unmet. Three years ago, Japan declared that by 2020 it wanted 40,000 fuel cell vehicles on the road and 160 hydrogen fuelling stations in operation.

Today, just 3,400 fuel cell vehicles have been sold in Japan and it has 109 hydrogen stations.

Though vital for fuel cell cars to catch on, the stations are not easy to build, costing five times as much as a gasoline stand. Due to stringent safety regulations, they also require large plots of land which are in scarce supply.

Yet for all the slow progress, some analysts don’t fault Toyota’s pursuit of hydrogen power, pointing to China’s backing of the technology and its vast auto market.

“China is actually moving ahead a lot faster and although they suffer the same issue with lack of refuelling infrastructure, China has shown in the past that they can get infrastructure done pretty quickly,” said Janet Lewis, head of Asian auto research at Macquarie.

For the Beijing games, Toyota will supply powertrain components for the Foton buses. They will be emblazoned with “Powered by Toyota” branding during the event, the sources said.

Toyota said the number of fuel cell buses for the Beijing Olympics has not been decided and that branding would be up to Foton. Toyota has similar deals with Higer Bus Co and China FAW Group Corp.

The project with Higer will likely have a fleet of 20 buses ready for deployment in early 2020 whereas FAW plans to have its first prototype ready by the end of the year, said Audrey Ma, a director at Shanghai ReFire Technology Co, which is doing the system integration.

Outside of China, the only other similar deal Toyota has announced is one to supply fuel cell systems to Portugal’s Caetanobus.

Although the technology remains unprofitable, Toyota says costs will fall with scale. It is building new fuel cell stack and hydrogen tank factories so it can lift production of fuel cell vehicles to 30,000 a year.

 China, Japan and South Korea have set ambitious targets to put millions of hydrogen-powered vehicles on their roads by the end of the next decade at a cost of billions of dollars.

Critics argue hydrogen fuel cell vehicles (FCVs) may never amount to more than a niche technology. But proponents counter hydrogen is the cleanest energy source for autos available and that with time and more refuelling infrastructure, it will gain acceptance.

China, far and away the world’s biggest auto market with some 28 million vehicles sold annually, is aiming for more than a million FCVs in service by 2030. That compares with just 1,500 or so now, most of which are buses.

Japan, a market of more than 5 million vehicles annually, wants to have 800,000 FCVs sold by that time from around 3,400 currently.

South Korea, which has a car market just one third the size of Japan, has set a target of 850,000 vehicles on the road by 2030. But as of end-2018, fewer than 900 have been sold.

Hydrogen’s proponents point to how clean it is as an energy source as water and heat are the only byproducts and how it can be made from a number of sources, including methane, coal, water, even garbage. Resource-poor Japan sees hydrogen as a way to greater energy security.

They also argue that driving ranges and refueling times for FCVs are comparable to gasoline cars, whereas EVs require hours to recharge and provide only a few hundred kilometers of range.

– Reuters