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


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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information