Why Tesla Motors Is Laughing at Toyota's $70,000 Hydrogen Car

Toyota's new hydrogen car costs as much as a Model S. Will anyone buy it?

Jun 29, 2014 at 2:25PM

G

Toyota said this week that the new FCV Sedan, an electric car powered by a hydrogen fuel cell, will go on sale in Japan next spring at a price of almost $70,000. It'll come to the United States and Europe next summer. Source: Toyota

Toyota (NYSE:TM) said this week that its new FCV Sedan will be priced at about seven million yen when it goes on sale in Japan next spring. 

The FCV Sedan is a "fuel cell vehicle". It's an electric car, but unlike the popular Model S from Tesla Motors (NASDAQ:TSLA), it doesn't have batteries. Instead, it's powered by a fuel cell, a device that chemically extracts energy from hydrogen gas and turns it into electricity.

As Motley Fool senior auto analyst John Rosevear points out in this video, the FCV Sedan represents an interesting bet for Toyota. Toyota may be the world leader in hybrids, but it's moving away from battery-electric cars and toward fuel cells instead -- even as Tesla CEO Elon Musk mocks fuel cells as a dead-end idea. Who's right?

A transcript of the video is below.

Warren Buffett's worst automotive nightmare (Hint: It's not Tesla Motors)
A major technological shift is happening in the automotive industry. Most people are skeptical about its impact. Warren Buffett isn't one of them. He recently called it a "real threat" to one of his favorite businesses. An executive at Ford called the technology "fantastic." The beauty for investors is that there is an easy way to invest in this megatrend. Click here to access our exclusive report on this stock.

John Rosevear: Hey Fools, it's John Rosevear, senior auto specialist for Fool.com. Toyota said on Wednesday that its all-new fuel-cell-powered car, which they're calling the FCV Sedan, fuel cell vehicle, will go on sale in Japan "before April 2015" and will come to the U.S. and Europe a few months later, next summer.

Toyota also revealed the new car's final exterior design, which looks a lot like the FCV Concept show car that we saw last fall. And they said that it will be priced at about 7 million yen when it goes on sale in Japan next spring, that's a little under $69,000 dollars.

Not a cheap ride, in other words. But it's still significant.

The FCV Sedan is an electric car, but it's not like the Teslas or the Nissan (NASDAQOTH:NSANY) Leaf or Ford's (NYSE:F) Focus Electric, it doesn't have batteries. Instead, it has a fuel cell, which is a device that chemically extracts the energy from hydrogen gas and turns it into electricity. The only "emissions" this car produces is water vapor. Toyota has been moving more aggressively toward fuel cells, they seem to have decided as a company that battery-powered electric cars are not where they want to place their big bets.

But this car is expensive, at the price Toyota announced on Wednesday this thing is going to be competing head on with the entry-level Tesla Model S, which for most people is a completely different and much more compelling proposition.

Of course the thing with the Tesla is like a lot of luxury cars, that may be the starting price but once you add the features you really want it's considerably more expensive, but still. If you're someone who is considering spending $70,000 on a green car, what are the odds that you'll choose this over a Tesla?

The other issue is of course the lack of infrastructure, there are only a few hydrogen refueling stations in the U.S. at the moment and most of them are in southern California, if you live in Texas or Nebraska or Rhode Island or really anywhere that isn't the Los Angeles metro area, you're going to have some trouble when you run out of gas.

Now, there may turn out to be government subsidies for buyers of these, and that may bring the price down to something a little more competitive with higher-end hybrids and so forth, but I wonder how many people will actually be willing to take a chance on this.

And I think it's also interesting that Tesla's CEO Elon Musk is really really disparaging fuel cells, he calls them "Fool Cells" and he doesn't mean "Fool" in the way we mean it here. Of course it's in his interest for battery-electric cars to catch on more widely, so he has an interest in talking down competiting technologies. More battery-electrics would mean more recharging points and so forth and with the Tesla battery gigafactory I think they're really hoping to sell batteries to other automakers.

But it is very interesting that Toyota, who is the global leader in hybrid cars and knows a thing or two about batteries and electric propulsion, is making this strong move toward fuel cells instead. I'm looking forward to seeing how this develops. Thanks for watching. 

John Rosevear owns shares of Ford. The Motley Fool recommends Ford and Tesla Motors. The Motley Fool owns shares of Ford and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers