Last October, Toyota Motor Corp. sold its remaining shares in Californian automaker Tesla Motors. The sale coincided with the end a multi-year partnership on electric vehicle drivetrains in which Tesla provided Toyota with battery packs and drivetrains for its limited-production RAV4 EV ‘compliance’ car.
Ever since, Toyota has not missed an opportunity to dismiss electric vehicles — and Tesla hasn’t missed an opportunity to criticise fuel cell cars. Now, there’s no love lost between the two firms.
But just as Tesla Motors [NASDAQ:TSLA] relied on money earned from the sale of its shares to fund the development and early production of its Model S electric sedan, it now seems that Toyota Motor Corp. [NASDAQ:TM] is about to do the same thing to fund development of its hydrogen fuel cell technology.
Despite having their differences, both need investors willing to take a gamble on each company’s very different response to peak oil, climate change, and the need to find an alternative to our fossil-fuel economy.
As Bloomberg reported yesterday, Toyota is looking to create a new type of unlisted share that will be sold for at least a 20 percent premium over common equity and prohibited from being traded for five years.
For those willing to invest, Toyota says it will offer a stepped-up dividend payout per share and the option to sell the shares back to Toyota at issue price or convert them to common stock.
The idea? To gain long-term investors willing to help it bring its next-generation hydrogen fuel cell technology to market, raising an estimated ¥ 500 billion ($4.2 billion) for the company in the process.
It’s a clever move and one which could give Toyota the money it desperately needs to bring more affordable hydrogen fuel cell technology to market — all without affecting the bottom line of its mainstream operations.
As we reported earlier this week, Toyota’s first production hydrogen fuel cell vehicle — the 2016 Toyota Miria fuel cell sedan — is already facing a massive waiting list due to its costly and time-consuming construction process. With each fuel cell stack in each car estimated to cost around $50,000 to hand-build and Toyota limited by the LFA Works facility where the car is made to just 3,000 cars per year, the Mirai is never going to break even.
Like its first-generation Toyota Prius hybrid however, Toyota views the Mirai as the car that will start a revolution and eventually recoup its massive hydrogen fuel cell research and development budget.
And here’s the problem. The Toyota Prius gasoline hybrid took more than a decade and three model revisions to reach a breakeven point for Toyota. What’s more, Toyota’s Prius didn’t require a completely new refuelling infrastructure since it ran on gasoline like every other internal-combustion engine gasoline car being made. It just used less.
To bring a mass-market hydrogen fuel cell sedan to market, Toyota not only needs to make the technology inside a hydrogen fuel cell car easier and cheaper to make, but support the building of hydrogen filling stations so that its customers have somewhere to fill up.
For that, it needs a guaranteed investment for the next five years, tying in with its plan to introduce its second-generation hydrogen fuel cell car to the world in time for the 2020 Olympics in Tokyo.
“Toyota wants to have more stable individual investors,” said Kazuyuki Terao, Tokyo-based chief investment officer at Allianz Global Investors Japan Co. “The point here is Toyota guarantees the principal. The company should be able to build win-win relationships with investors through this.”
Pending approval at Toyota’s annual shareholder meeting in June, Toyota will begin by selling as many as 50 million its so-called “Model AA” shares, which were named in memory of Toyota’s first passenger car. Locked in for five years, Toyota hopes that the shares will encourage investors to end a rising trend towards short-term investments, which tend to cause stock prices to wildly fluctuate and can even put off some longer-term investors.
Additional share sales haven’t yet been decided upon, but Toyota says it expects them to happen more than once a year.
Backed by underwriter Nomura Holdings, those who buy the shares will find that Toyota will pay a 0.5 percent dividend on shares for the first year, increasing by 0.5 percent every year to a maximum of 2.5 percent. Additionally, shareholders will gain voting rights in the company, but the shares won’t be listed anywhere.
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