Toyota To Launch Hydrogen Fuel Cell Sedan in Japan Next Week, But Faced With €100,000 Loss Per Car in Europe

It’s official. Following on from the many sneak peaks and press conferences Toyota has already given on its plans for hydrogen fuel cell technology, the Japanese automaker will be holding its official launch ceremony next Tuesday in Tokyo for its first mass-produced hydrogen fuel cell car — the 2015 Toyota Fuel Cell Sedan.

On Tuesday, Toyota will officially launch its upcoming 2015 Fuel Cell Sedan -- but how much money will it lose on each car?

On Tuesday, Toyota will officially launch its upcoming 2015 Fuel Cell Sedan — but how much money will it lose on each car?

Back in June, Toyota held a press conference to announce the car’s  ¥7 million ($60,400) domestic market sticker price and give journalists a first glance of the vehicle’s final exterior design. Beyond that however, Toyota kept final details about range, performance and interior specification close to its corporate chest. Tuesday’s event, which Toyota will stream live to the Internet, is expected to change that, giving the world the first real look inside the upcoming vehicle.

In what must be one of the longest launch cycles we’ve seen for any car, we’re sure Toyota will use Tuesday’s official Japanese-market Fuel Cell Sedan launch ceremony to reiterate the massive incentives awaiting anyone in its home market who decides to buy a Fuel Cell Sedan.  These incentives — as much as ¥3 million in some prefectures — bring the price of the Toyota Fuel Cell Sedan in line with many other alternative-fuelled vehicles, including the 2015 Nissan LEAF, making for some pretty tough competition in the Japanese green car marketplace. If Toyota can produce and sell enough vehicles at a large enough economy of scale  to make up for the big costs associated with pushing hydrogen fuel cell technology, it may even turn a small profit in its domestic market.

Yet outside of Japan, where Toyota has yet to secure anywhere near the incentive levels promised by Japanese Prime Minister Abe, things could be very different indeed.

That’s a fact not missed by former President of the European Parliament Pat Cox, who warned yesterday that Toyota could lose somewhere between €50,000 and €100,000 ($66,000 and $133,000) on each and every Fuel Cell Sedan it sells in Europe next year.

He made the remarks earlier today during a presentation at the 2014 Michelin Challenge Bibendum in Chengdu, China in which he outlined just how much money would be needed to build a full and functioning hydrogen fuel cell network capable of supporting hydrogen fuel cell cars.

Hydrogen fuelling stations still remain the biggest hurdle, says Pat Cox.

Hydrogen fuelling stations still remain the biggest hurdle, says Pat Cox.

As our friends over at Autobloggreen detail, Cox was detailing the specifics of the recent EU Directive 2014/94, which requires each member state in the EU to develop its own policy frameworks to facilitate a national switch away from fossil fuels and towards a number of different alternative fuels. With member states expected to submit their individual plans by 2016 and then implement them by 2025, there’s still some time to go before the actual installation of infrastructure goes ahead, although we should note that some infrastructures — like electric vehicle recharging networks — are already being implemented by many EU member states.

While the standard doesn’t call on countries to develop hydrogen refuelling networks specifically — other fuel types are also allowed — Cox said that the lead time of the directive is down to some significant problems with hydrogen fuel cell technology. Namely, he said, despite the EU spending more than €550 million on hydrogen-related and fuel-cell vehicle research projects, there still wasn’t a cheap way of building refuelling stations.

“One can count up to one million euro per refuelling station at the moment, and also the very high cost of vehicles,” he said. “The first-mover cost is not the first-mover advantage, but the first-mover disadvantage and high risk.”

At the moment, there are just 27 publicly-available hydrogen fuelling stations across the entire EU, many of which are in unusual places , like Honda’s recently-upgraded Hydrogen refuelling station at its Swindon production facility in the UK, more than five miles from the nearest motorway. This is in stark contrast to more than 1,300 CHAdeMO DC quick chargers, 500 Combo CCS chargers installed in Europe, 100 Tesla Supercharger stations and many thousands of ordinary Type 2 charging stations.

Cox: Governments in the EU have already invested €550 million in H2 technology.

Cox: Governments in the EU have already invested €550 million in H2 technology.

Making a loss on a new vehicle technology is something Toyota is more than willing to do: back in 1997 when it launched the first-generation Toyota Prius hybrid, Toyota made no money on the tiny sedan. In fact, it took many years — well into the Prius’ second-generation incarnation — before Toyota truly turned a profit on both the Prius nameplate and its hybrid technology.

But in the case of the Prius hybrid, Toyota didn’t require a new infrastructure to be built in order to achieve success. In the case of the Fuel Cell Sedan, it does. Moreover, the costs associated with building hydrogen refuelling stations pale into insignificance against the losses Cox claims Toyota will make on each FCV it sells. At an expected price of somewhere around €50,000 per vehicle, Cox said that Toyota will be “probably taking a hit of €50,000 to €100,000 per unit in order to achieve that roll-out.”

And with governments reticent to invest beyond the first few tentative years of the technology, hydrogen fuel cell vehicles could face an even more severe form of the same paradox we’ve seen in recent years with electric cars. Namely, that consumers won’t buy them until the infrastructure is in place and is reliable — and businesses won’t invest until they’re confident of a return on their investment and a large enough market to guarantee that.

Is hydrogen fuel cell technology doomed? Is Pat Cox correct? Or will other forces come into play to ensure hydrogen fuel cell technology takes off.

And just how much will Toyota lose on every new Fuel Cell Sedan it sells in the first few years?

Leave your thoughts and predictions in the Comments below.

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