Despite Federal H2 Tax Credits Ending, Toyota Seems To Expect Them for 2016 Mirai Fuel Cell Sedan

At the end of last year, the U.S. federal government decided not to renew the $8,000 federal tax credit for those purchasing hydrogen vehicles. Despite being offered for several years, that particular tax credit — unlike the far more popular federal tax credit for all-electric and plug-in hybrid vehicles — had only been useful to a handful of buyers since to date, the only hydrogen fuel cell vehicles ‘on sale’ have been small lease-only test-fleets of hydrogen fuel cell cars in the state of California.

Toyota wants there to be a level playing field between EVs and H2.

Toyota wants there to be a level playing field between EVs and H2.

Yet with an MSRP of $57,500 before incentives the 2016 Toyota Mirai fuel cell sedan was priced by Toyota with an expectation that those now-expired $8,000 of federal tax incentives would be renewed, lowering its sticker price in pro-hydrogen fuel cell states like California to $44,500 after state and federal incentives. Fuel included.

More importantly for Toyota, it would have put the Mirai at a price point well below that of the entry-level Tesla Model S 60 electric car, a car made by its former electric car partner and now arch nemesis Tesla Motors.

Yet as our friends at Autobloggreen explain, Toyota seems to be pushing on with its sales pitch for the Mirai as if the federal tax credits for hydrogen fuel cell vehicles were still in place, promising that the futuristic four-seat car will be available for under $50,000 when it goes on sale in California later this year.

To ensure that happens, Toyota executives are aggressively pointing out the unfairness of offering an incentive for plug-in cars but not for fuel cell vehicles while presumably working extremely hard to lobby the U.S. government to restart the now-expired tax credits.

Having successfully lobbied the Japanese government to offer more than $20,000 in incentives to each and every new domestic Mirai customer, Toyota seems optimistic it can arrange similarly large incentives in Europe and the U.S.

In Japan, up to $20,000 of incentives are available for each hydrogen fuel cell customer. Not so in the U.S. or Europe.

In Japan, up to $20,000 of incentives are available for each hydrogen fuel cell customer. Not so in the U.S. or Europe.

“We think that the federal credit expiration last year puts [hydrogen] customers in a fairly disadvantageous postion,” said Nihar Patel, vice president of North American Business Strategy for Toyota at the recent 2015 Washington Auto Show. “We believe that this inequity needs to be fixed.”

His colleague Robert Wimmer, Toyota’s director of Energy and Environmental Research, Technical and Regulatory Affairs, agrees. “[The Mirai] being a ZEV and battery electrics also being ZEVs, we just want to make the playing field as level as possible.”

Curiously, no-one has pointed out that while both incentives were operating, the playing field wasn’t quite as even as it might have been: fully-electric cars attracted a $7,500 federal tax credit, while hydrogen fuel cell vehicles attracted $8,000 in federal tax credits.

It’s unclear if this inequality would be addressed if or when hydrogen vehicle federal tax credits were to be reintroduced.

Previous federal incentives allowed Honda to lease its FCX Clarity to customers in California at reduced rates.

Previous federal incentives allowed Honda to lease its FCX Clarity to customers in California at reduced rates.

Of course, it’s highly unlikely that Toyota is the only automaker working its lobbyists hard in Washington D.C. to ensure that federal tax credits are reinstated for hydrogen fuel cell vehicles before the end of the year. As well as Toyota, fellow Japanese automaker Honda plans to introduce its own hydrogen fuel cell sedan later this year, while South Korean rival Hyundai is already leasing its Tucson FCV SUV to customers in California.

Meanwhile, we’ve seen hydrogen demonstration vehicles from Audi and its parent company Volkswagen in recent months, and BMW is rumoured to be working on its own hydrogen fuel cell vehicle for launch some time in the near future.

The question now is this: will Capitol Hill bow to the desires of hydrogen fuel cell supporters, or leave the door closed for this fledgling, expensive technology? And more importantly, if it does, what will that mean for Toyota, Honda, Hyundai and the as yet woefully underdeveloped hydrogen refuelling infrastructure in the U.S.?

Leave your thoughts in the Comments below.

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  • Tim Martin

    As a US taxpayer, I for one would like to see a detailed plan, based on Science facts on how H2 will be viable. I want them to lay out how and why they expect H2 to be cost effective, available, and demonstrate an efficient, yet clean, production method. Also give some vision of how they expect the infrastructure to grow at pace. I think this is a reasonable request before we consider putting our tax money back into H2. I would willing to help fund further research but not to fund full production till these questions are answered.

    • Jun

      Hmm. Points taken. Due diligence is needed. Though, it is questionable if other subsidies and credits currently given to other industries would fare in such investigation. Thus, it is “do it right, or don’t do it at all” principal (database engineers call it “atomicity”) is needed here. Either check all the credits in effects now AND new credits being considered at the same time with the same vigor, or don’t check neither. I don’t mean it in a negative or destructive ways, either approach has merits but just don’t do one and not do the other: I mean – there are certain benefits to giving tax benefits to new unproven ideas, it is not without merit, and there are certain societal benefits to keeping existing industry going, status-quo. nnIt is a good ides to check things once in a while, but if you do, check both new and old, give it all a holistic review. Either that, or don’t do any review at all and save everyone a red tape, get the money fast to where needed without wasting money on doing the review (such research isn’t free, now you have this business of worrying about if the expense of such study is justified). i.e. is $10 thrown at H2 any more or less evil than $10 thrown at making ethanol to be mixed in gasoline? is $10 thrown at EV charging station any more or less evil than $10 to explore a better fracking technology? (they can claim R&D credit like any business, as you know.)

  • Kerry Carter

    Let’s hope that this is one time the Government sees this as to a high price lab experiment and just keep it mothballed. Give it to the Battery Electrics and build the less expensive infrastructure for them. Hybrids should not be renewed either for there larger overall foot print and there established,at least for now till the Battery Electrics takeover!

  • D. Harrower

    Sorry Toyota. Throwing all your resources into an expensive, unproven technology also means footing the bill. If it’s as great as you say it is, this should be well within your means. Isn’t it a bit presumptuous to expect massive government investment sight-unseen? This isn’t Japan.