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Why Toyota and GM Are Pushing Fuel-Cell Cars to Market

Falling costs are making fuel-cell vehicles look like a plausible alternative to conventional cars.

Hydrogen-powered vehicles have been out of the spotlight for years, but they’re about to make a surprising comeback. Toyota says it will unveil a hydrogen fuel-cell-powered sedan later this year that will go on sale in 2015; several other automakers, meanwhile, have announced partnerships to commercialize the technology (see “Ford, Daimler, and Nissan Commit to Fuel Cells”), including GM and Honda, which announced such a collaboration this week.

Toyota fuel cell vehicle
Pricey prototype: Toyota says it’s about to come out with a fuel-cell vehicle that cost one-twentieth as much as this test vehicle.

While many challenges remain for hydrogen vehicles, in recent years researchers have made big improvements in the oft-maligned technology, including greatly lowering its cost. As a result, fuel-cell vehicles look poised to play a significant role in meeting ambitious vehicle emissions regulations, particularly in places such as California.

“GM, Toyota, and a couple of other automakers have done a lot of great work. Fuel cells are getting close to being viable, closer than most people might think,” says Brett Smith, co-director for manufacturing, engineering, and technology at the Center for Automotive Research, a nonprofit in Ann Arbor, Michigan.

Fuel-cell vehicles were once the darling of the Bush administration—President Bush called for $1.2 billion in funding for the technology in his 2003 State of the Union address. They emit only water vapor and could be as convenient as conventional cars, since they can be refueled in the time it takes to fill a gas tank and have a similar driving range. But fuel-cell vehicles proved extremely expensive, and would require a massive investment in hydrogen filling stations to be practical. There have also been questions about just how environmentally friendly hydrogen fuel-cell vehicles actually are: while the cars themselves don’t emit carbon dioxide, hydrogen is produced from natural gas, a fossil fuel, in a process that releases large amounts of carbon dioxide. Hydrogen can also be made using solar and wind power, but that process is inefficient and expensive.

As the challenges with the technology became more apparent, interest waned (see “Hype about Hydrogen”), and Bush started emphasizing biofuels instead. In 2009, the Obama administration cut funding for fuel-cell vehicle R&D. The energy secretary at the time, Steven Chu, said it would take a miracle for fuel-cell vehicles to succeed. (Actually, he said it would take four. See “Q&A: Steven Chu.”)

But miracles do happen. Since 2009, the costs involved with fuel-cell vehicles have fallen. The prototypes that GM and Toyota built a few years ago cost well over $1 million each. Now Toyota says its goal is to sell its fuel-cell sedan for less than $100,000. Costs fell as Toyota found ways to reduce the number of parts in its fuel-cell system and to decrease the amount of costly platinum needed. The company says it’s pushing hard on R&D for manufacturing technology, among other things, to lower costs still more ahead of the 2015 launch.

Chris Hostetter, vice president of strategic planning at Toyota Motor Sales, U.S.A, says the sedan might go for as little as $50,000, which would make it cheaper than Tesla’s Model S electric vehicle, which has a similar range (other electric vehicles are cheaper, but require frequent recharging). “We may surprise people with the advances we’ve made,” Hostetter says.

“Costs have come down at a pretty steady rate,” says Daniel Sperling, director of the Institute for Transportation Studies at the University of California at Davis and a member of California’s Air Resources Board, which oversees vehicle emissions regulations. “Most people in the auto industry think that, once in large-scale production, cost won’t be a barrier.”

A careful look at the emissions of competing technologies such as electric vehicle and conventional cars shows that fuel-cell cars have significant environmental benefits, even when the hydrogen is made from natural gas. In May, the U.S. Department of Energy released its most recent analysis of the expected total carbon dioxide emissions from fuel-cell vehicles in 2035, including the emissions associated with making hydrogen from natural gas, compressing it, and transporting it. The analysis shows that the cars will emit less than half as much carbon dioxide as conventional gasoline-powered vehicles do now. They would also release less carbon dioxide than electric vehicles when electric vehicles are charged in parts of the U.S. that rely heavily on coal power. However, electric vehicles look better in places like California—which uses little coal—and in a hypothetical future when they’re charged exclusively with sources such as wind and solar power.

Fuel-cell vehicles could also be a boon to renewable energy by helping to address their intermittency. One option being considered in Germany is to use excess wind power generated at night, when demand is low, to electrolyze water, making hydrogen (see “Hydrogen Could Be Key to Germany’s Energy Plans”). Sperling says using hydrogen as a way to store excess renewable energy makes sense. He also notes that there are other promising routes to low-carbon hydrogen production in development, such as engineering plants to produce hydrogen from sunlight directly, although those are in early stages of development.

But the biggest challenge to fuel-cell vehicles remains a lack of hydrogen filling stations. Unlike electric vehicles, which can be recharged at home, hydrogen vehicles will require a network of filling stations. Some suggest that even a few filling stations in a city would be enough to encourage people to buy the vehicles, but Smith is skeptical. If there were only four filling stations in city, he says, drivers may need to go 10 to 15 minutes out of their way to fill up. “I’m not going to do that when I know there’s a gas station on every corner,” he says.

Automakers are well aware of this potential stumbling block. Toyota is currently working with governments and businesses in an effort to get more hydrogen fueling stations installed before it starts selling its fuel-cell vehicles. “Infrastructure is something we’re anxious about,” Hostetter says.

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