Japan’s $20,000 Hydrogen Fuel Cell Subsidies Make EV Tax Credits Look Tiny

Plug-in vehicle incentives, usually funded for by central government, are a fairly common way for Governments around the world to encourage people to dump the pump for good and get behind the wheel of an electric car. Depending on where you live, incentives can take the form of anything from an income tax rebate (U.S.) to an instant discount off the car’s sticker price (UK) or even perks like zero sales tax, free parking, and the ability to drive in bus lanes (Norway).

Prime Minister Abe says Japan will offer its citizens at least ¥2 million in subsidies if they buy a H2 vehicle.

Prime Minister Abe says Japan will offer its citizens at least ¥2 million in subsidies if they buy a H2 vehicle.

On average, depending on the country you live in, such incentives have a real-world value of between $5,000 and $10,000, attracting a fair deal of criticism from various political groups accusing their respective governments of using taxpayer money to fund tax breaks and car subsidies for the rich.

Yet a new green car subsidy being considered by the Japanese Government for those willing to buy a hydrogen fuel cell car makes all current electric car subsidies look tiny in comparison.

As Reuters reported earlier this week, Japanese Prime Minister Shinzo Abe said that his government will offer at least ¥2 million ($19,700) in subsidies to anyone buying a hydrogen fuel cell car like Toyota’s soon-to-launch, as-yet unnamed FCV sedan.

The subsidies would mean that the net cost to Japanese consumers for Toyota’s first mass-produced fuel cell car would drop from ¥7 million ($69,042) to Y5 million ($49,304). To put it another way, that’s equivalent to cutting the mid-sized sedan’s price by 29 percent — or nearly a third.

Norway is known for its pro-electric car incentives, but they are tiny compared to Japan's H2 program.

Norway is known for its pro-electric car incentives, but they are tiny compared to Japan’s H2 program.

“This is the car of a new era because it doesn’t emit any carbon dioxide and it’s environmentally friendly,” Prime Minister Abe said on Friday. “The government needs to support this.”

At the end of last month, Toyota’s Mitsuhisa Kato, executive vice president in charge of the company’s research and development department, told Automotive News that Toyota needed governments around the world to offer substantial incentives in order to help sell its fuel cell sedan. Admitting that the car’s ¥7 million sticker price would put some buyers off, Kato said the Japanese government would need to offer more than the ¥850,000 ($8,300) incentive currently offered to plug-in car drivers.

While Toyota’s Hydrogen Fuel Cell Sedan is expected to go on sale in its domestic market of Japan early next year, Toyota has admitted that it only expects between 5,000 and 10,000 cars to be sold globally.

While that’s far less than the half a million plug-in cars on the roads of the world today, the kind of incentives Toyota is asking Governments to give its early-adopting fuel cell vehicle customers could equate to more than $197 million in pro-hydrogen rebates — assuming governments around the world offer incentives on par with Japan, that is.

Prime Minister Abe likes plug-in cars as well as hydrogen fuel cell cars, but H2 gets the bigger discount.

Prime Minister Abe likes plug-in cars as well as hydrogen fuel cell cars, but H2 gets the bigger discount.

In the U.S., that’s equivalent to offering the $7,500 Federal tax rebate to 26,266 new plug-in owners. Or to put it another way, more than 2.6 times the number of zero emissions vehicles on the road than would be possible under a $20,000 hydrogen rebate program.

While Japan is the first to step up to the plate in offering H2 rebates for plug-in car owners, it’s likely we’ll hear from other Governments around the world as Toyota’s H2 launch date draws nearer.

What do you make of Japan’s fuel cell incentive? Do you think $20,000 is too much of a discount? Would you buy a fuel cell vehicle if you were able to get that kind of discount?

Leave your thoughts in the Comments below.

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