When it makes its U.S. market debut in California this fall, the 2016 Toyota Mirai, Toyota’s first ever production hydrogen fuel cell vehicle, will do so with a sticker price of $57,500.
Set by Toyota in an attempt to encourage people away from plug-in hybrid and fully-electric cars, that sticker price is intentionally lower than that of the Tesla Model S electric car, the only other zero-emission vehicle on sale in the U.S. to offer a range in excess of 250 miles per refuelling. While that price is competitive however, it also represents a massive loss for Toyota on each and every vehicle since it costs Toyota — based on it’s own figures — an estimated $50,000 to produce each and every fuel cell stack at the heart of each Toyota Mirai. And that’s before you account for any of the other components which make up the hand-built car.
Despite previously admitting that further reductions in costs will be tough to achieve however, Toyota’s executives are now eagerly talking about a future where hydrogen fuel cell cars are priced to compete against gasoline and diesel-powered vehicles.
How quickly it will occur however, is a matter of great internal debate. What’s more, we think it’s likely that battery electric vehicles will reach price parity with internal combustion engine vehicles first.
Talking with Automotive News at the recent Geneva Motor Show, Katsuhiko Hirose, Toyota’s project general manager for hydrogen fuel cell development, said that Toyota’s end-goal is to produce hydrogen fuel cell vehicles that compete on an even playing field with internal combustion engined vehicles, both in terms of purchase price and running costs. At the moment, he said, Toyota is aiming to produce a next-generation FCV that will cost the same as a modern diesel.
“That is a question, but once we made it for the market, huge pressure [to reduce cost] came from our chairman or president,” he said when asked about an expected timeframe for these reductions in costs.
“We say, ‘it may take 15 years.’ Their order is: ‘You do it in half.’ That is normal communication, then we try to extend it, and they try to shorten the target time,” he continued, hinting that Toyota’s board of directors and its engineering teams are perhaps at odds over the true length of time such price reductions could take.
Back in November, Hirose’s colleague Yasuhiro Nonobe had said that while Toyota had managed a massive 95 percent reduction in costs between its previous and current generation FCV technology it was likely that further reductions in cost for a 2020 model-year FCV would be in the order of two-thirds to three-quarters the cost of the Mirai’s fuel cell technology.
Even at that best-case estimate, a 2020 model-year Toyota FCV would still have a fuel cell stack inside which cost approximately $12,500 to make.
That’s far from the parity with internal combustion engine technology Toyota is aiming for.
By 2025, optimistic analysts say that lithium-ion battery technology will cost around $160 per kilowatt-hour to produce, with pessimistic ones looking at a price nearer to $200 per kilowatt-hour. Tesla’s own Gigafactory is hoping to hit a price of $100 per kilowatt-hour in under ten years, and some of its rivals — most noticeably General Motors, Nissan and Volkswagen — all have plans for new battery packs with energy densities that match Tesla’s current vehicles to make 200-300 mile range the norm rather than the exception.
The speed of evolution of these changes, not to mention the sheer number of companies working to revolutionise battery technology, makes it likely that reduction in price will occur first for electric vehicles rather than hydrogen fuel cell vehicles.
We note too, that it took Toyota more than ten years to break even on its revolutionary Prius hybrid technology.
For it to break even on hydrogen fuel technology in less, Toyota would need the kind of market explosion that we’ve seen electric cars experience in the past twelve months. Based on Toyota’s own production estimates for the next few years, it won’t be producing enough hydrogen fuel cell vehicles to make that happen.
As regulatory pressure pushes automakers towards producing more zero emission vehicles, we’re sure the cost of both battery electric and hydrogen electric vehicles will dramatically fall. From where we’re looking however, Toyota and its hydrogen fuel cell technology has a lot of catching up to do before it can even contemplate market parity with traditional fuels.
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