Without Enough Incentives, Toyota’s Hydrogen Sedan Will Be A Tough Sell, Admits Exec

Last week, Toyota unveiled the production version of its first mass-produced hydrogen fuel cell vehicle. With seating for five adults and an expected range of around 350-400 miles on 12 pounds of hydrogen, the as-yet unnamed vehicle will go on sale next spring in Japan priced at ¥7 million. 

Toyota knows it needs governmental support to sell its FCV Sedan

Toyota knows it needs governmental support in the form of purchase incentives to sell its FCV Sedan

But while Toyota might be bringing the hydrogen fuel cell car to the U.S. and Europe this time next year, Toyota executives are admitting that without help from national and local incentives, buyers just won’t be flocking to buy it.

Talking with Automotive News (subscription required) Toyota’s Mitsuhisa Kato, executive vice president in charge of the company’s r&d department, admitted that Toyota has no idea what type of incentives governments around the world will offer to those buying its fuel cell sedan.

What he does know, however, is that the fuel cell incentives need to be higher than those offered to electric vehicles to entice buyers in and offset its high sticker price.

Currently, Japan offers up to ¥850,000 ($8,300) in incentives for those buying a zero emission electric car, depending on its price and specifications. Applying the same incentive to Toyota’s FCV would result in a sticker price of ¥6.15 million ($60,662) — still too expensive for most car buyers to consider when there are cheaper zero-emission or partial zero-emission alternatives.

In the U.S., the challenge facing Toyota is the same. Due to limited hydrogen filling station infrastructure, California is really the only state where hydrogen fuel cell vehicles can even be sold. Even then, of the twelve public hydrogen refilling stations in California, nine are located in southern California, making longer-distance trips difficult.

Like Japan, incentives for hydrogen fuel cell vehicles in the U.S. aren’t as high as Toyota would like. Under the California Clean Vehicle Rebate Project, those buying or leasing hydrogen fuel cell cars are eligible for a $2,500 rebate on top of a $4,000 U.S. Federal tax credit for light duty hydrogen fuel cell vehicles.

In Japan, Toyota says it needs more than the ¥850,000 incentive offered to EVs.

In Japan, Toyota says it needs more than the ¥850,000 incentive offered to those who buy EVs.

While it’s worth noting that hydrogen fuel cell cars earn double the Zero Emission Vehicle (ZEV) credits that electric vehicles do under the Californian ZEV mandate, the extra manufacturer credits don’t affect vehicle price. If we assume a pre-incentive price for the Toyota FCV somewhere around the $70,000 mark before incentives, would-be fuel cell vehicle owners would still be saddled with a $63,500 sticker price after incentives.

For $430 less, it’s possible to buy an entry-level Tesla Model S with 60 kilowatt-hour lithium-ion battery pack and optional supercharging capability. While range might not be quite as good per charge in the Model S as the Toyota fuel-cell vehicle, it is at least possible to travel from one side of the U.S. to the other in the Model S, something impossible in a hydrogen vehicle.

One option for Toyota would be to follow Hyundai's lead, and lease rather than sell its FCV

One option for Toyota would be to follow Hyundai’s lead, and lease rather than sell its FCV

The state of California has committed to building at least 100 hydrogen filling stations by 2024, and fuel companies are reportedly preparing themselves to add hydrogen fuel pumps to their existing filling stations. But as Kato admits himself, “the states which have appropriate infrastructure are very limited.”

Toyota’s likely sales path outside of Japan is to offer leasing, rather than outright purchases, to a limited number of wealthy individuals who occupy positions of power or influence. While Toyota says its fuel cell sedan isn’t a compliance car, unless sticker price is massively reduced, incentives soar, and fuel becomes ubiquitous, that’s exactly what it will be.

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  • CDspeed

    It’s ugly, expensive, only fuel-able in very very very few cities around the world, and will keep you spending your hard earned money at the pump. Not to mention having to carry a highly pressurized tank around with you, a failure of the tank would be rare but not entirely impossible. Yeah I’ll take any electric or plug-in car over this.