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Toyota Bets Against Tesla With New Hydrogen Car

Toyota's new hydrogen fuel cell vehicle is expected to be called the Mirai. It will go on sale around the world next year. Source: Toyota.

It's really happening: Toyota's (NYSE: TM  ) new hydrogen fuel cell car will start arriving at dealers sometime next year.

Bloomberg reported this week that the car is expected to be called the "Mirai," the Japanese word for "the future". It won't be cheap: Toyota says it'll be priced around 7 million yen, about $68,000, when it goes on sale in Japan next spring. Sales in Europe and the U.S. will follow.

Unless governments are willing to offer some hefty incentives to buyers, It doesn't seem likely that Toyota will sell too many Mirais at that price.

But the Mirai is a big deal, because of what it says about Toyota's view on electric cars and its view on a company it has invested in, California's Tesla Motors (NASDAQ: TSLA  ) .

An electric car, minus the big battery pack
So what is this thing? First and foremost, the Toyota Mirai is an electric car, but it doesn't have the big, heavy battery packs used by cars such as Tesla's Model S and Nissan's (NASDAQOTH: NSANY  ) Leaf.

Instead, it has a fuel cell, a device that chemically converts the energy in hydrogen gas into electricity. It's a very clean process: the only "exhaust" from a hydrogen fuel cell is water vapor.

Hydrogen fuel cell cars like the Mirai have most of the advantages of battery-electric cars -- they're clean and quiet -- without the weight of the battery pack, which in a car like the Model S is very substantial. 

But unlike a battery-electric car, which simply needs to be recharged, the Mirai will need "gas" -- hydrogen gas -- in order to operate. Right now, there are only a handful of hydrogen refueling stations in the U.S., but if the cars start to catch on, more will spring up quickly.

But why is Toyota making such an aggressive move toward this technology and away from battery-electric cars?

A big bet that puts Toyota at odds with Tesla
Simply put, Toyota thinks that current battery technology isn't good enough, and there are no promising breakthroughs on the horizon.

Toyota global research and development chief Mitsuhisa Kato recently told trade publication Automotive News that he thinks the short range and long recharging time of current battery-electric cars are huge disadvantages for the technology. As Kato sees it, a "Nobel Prize-winning type battery" would be needed to change his mind.

Under Kato, Toyota's research team has moved aggressively toward fuel cells -- so aggressively, reports have suggested, that the automaker has delayed the next-generation Prius in order to focus on the Mirai's development. 

But Toyota's investment in the Mirai project seems like a big bet against a company like Tesla. And it's all the more striking because Toyota is one of Tesla's investors

Of course, Tesla thinks Toyota's view is nonsense. CEO Elon Musk believes current battery technology is sufficient to make a fine car -- and Tesla's award-winning Model S sedan is a powerful argument in his favor.

Can battery-electric technology lead to great cars? Tesla's Model S is certainly a good one. Source: Tesla Motors.

Musk has derided hydrogen fuel cells as "fool cells" and dismisses the technology as a dead end. Of course, you'd expect that from a CEO of a battery-electric-car maker, who has a big interest in seeing batteries adopted more widely, but it's still telling that Tesla doesn't believe fuel cells hold any real promise.

Who's right?
It's not as if Toyota doesn't know anything about using batteries to propel a car. Toyota is, after all, the world's leading maker of hybrids. In terms of technology, developing a pure battery-electric car wouldn't be a daunting task for Toyota, as its plug-in hybrid Prius shows.

But giant Toyota has chosen another path, despite the success (so far) of upstart Tesla Motors.

Will this turn out to be the right move? Or are hydrogen fuel cells a technological dead end? Scroll down to leave a comment and share your thoughts.

Read/Post Comments (23) | Recommend This Article (20)

Comments from our Foolish Readers

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  • Report this Comment On July 30, 2014, at 8:38 PM, robertf33 wrote:

    The big advantage of hydrogen is being able to fill the tank in under 5 minutes instead of needing to directly charge the battery, taking half an hour or more.

    Toyota may need to follow Tesla's lead by establishing hydrogen stations, which would need a gas hookup as well as electric.

    It's also hard to imagine a home hydrogen station requiring electricity, natural gas, a reformer, refiner, compressor, high-pressure storage tanks, and enough space to displace two motorcycles. How many would be ready to take on this?

  • Report this Comment On July 30, 2014, at 9:40 PM, Alta9966 wrote:

    I have always thought the hydrogen fuel cell held the most promise for generating electricity going forward. I just wish Elon would swallow his pride and work cooperatively with Toyota on this. Everybody wins in that scenario.

  • Report this Comment On July 30, 2014, at 10:17 PM, btc909 wrote:

    Once energy density, recharge times & thermal issues are dealt with; Hydrogen is dead.

    Still no mention of what the non-subsidized cost to fill a Hydrogen car well be.

    If Nuclear was commonplace the electrical costs for the Hydrogen conversion process would be a mute point.

    Hydrogen will be taxed just like any other fuel.

    I can generate my own electricity and if you are willing to fork over the money you can store that electricity as well and the cost is already planned to drop.

  • Report this Comment On July 30, 2014, at 11:11 PM, clubbuiler wrote:

    Toyota and Ford have teemed up and so have Honda and GM to work on Hydrogen fuel cells as partnerships. I am a firm believer in Hydrogen have been for 10+ years, however the big oil companies and the government are holding back the technology. Why? Because it's the most abundant source on our planet and it can be had for much less than oil. Don't believe the crap about the energy conversion required to tranform hydrogen; it can be done efficiently. Of course you wouldn't hear that from the sources (government and oil companies) that make billions per year on oil, and don't want to pay billions for the conversion from oil to hydrogen until they have too.

    The point this article is missing is auto companies are required to have so many alternative energy cars on the road and the US in the next few years.For the USA requirements, hydrogen is equal to battery as far as credits required by auto manufacturers. But in California where most of the hydrogen stations (around 100) are located you get more credits for hydrogen over electric. So auto companies can make less cars that will lose money with hydrogen over batteries. They lose less money if they make less cars with less parts (and without expensive battery packs). Loosely translated according to Popular Mechanics March 214 issue. This is why Toyota is releasing a hydrogen car soon, because it enables them to work on the technology if hydrogen becomes mainstream (which I believe it will be). Tractor trailers are not going to run on batteries you have to fight weight. Hydrogen is as powerful as a combustion engine, is the most abundant resource on earth, clean, safe, and quick to fill up. Plus the government and oil companies can keep making us pay for fill ups like herion adicts (verus all electric cars where they cannot charge you to run). it's the long term answer, watch how quickly it happens once the oil wells run dry.

  • Report this Comment On July 31, 2014, at 12:52 AM, randomnotes wrote:

    In an energy production and use cycle hydrogen is essentially a storage medium. It takes energy to free up the hydrogen and store it. If the source of the energy used to break the chemical bonds and free the hydrogen is clean and sustainable, like solar, and the source of the the hydrogen is water, then we can have a system that fills our immediate need for an energy dense fuel that isn't poisoning the planet. Batteries as direct storage of solar energy can be good and no doubt they will get better. It's not an either/or. We should keep in mind that as the wealthiest country on earth, we have yet to devote any significant resources toward the development of fuels that would give us an alternative to our economic addiction to burning of carbon. We have spent less as a country in our entire 238 year history to research "alternative" energy sources than we spent in a typical 6 month period of the war in Iraq. To all of us who would point to the impossibility of developing these new resources, I would point out that we travel in the direction that we are looking. New technologies create new possibilities. Let's solve our problems with creativity and imagination.

  • Report this Comment On July 31, 2014, at 12:57 AM, trestranpryat wrote:

    More like Tesla is a fool. Battery was never meant to be mainstreamed for the future.

  • Report this Comment On July 31, 2014, at 1:47 AM, Phrontrowalpine wrote:

    Where does the hydrogen come from? Tesla's fuel can come from anywhere. Unless I can own a clean hydrogen maker as easily as I can own solar panels and a windmill, why would I want to pay someone else on the comeback anymore? Own your own power company in your back yard or city people, in a co op and cut out the furl dealer. Next level, boom.

  • Report this Comment On July 31, 2014, at 1:48 AM, Phrontrowalpine wrote:


  • Report this Comment On July 31, 2014, at 3:05 AM, milktea0 wrote:

    It is sad that people don't realized they are trying to divert the public attention. They've made us focus on the duel between Batteries versus Fuel Cells, and avoided the real issue!

    So what is the real truth? What is the rest of the story that Toyota and the Japanese Governments are not telling the public?

    The key point is in the lithium batteries. Rare Earth metals are needed to create the batteries for EV. And a significant part of these Rare Earths comes from China!!

    Japan heavily depends on China Rare Earth imports to sustain the production demands for their EVs.

    Based on CRS Report for Congress - "Rare Earth Elements: The Global Supply Chain" - R41347 (page 19), Japan has the urgency to secure new "non-Chinese" supplies of Rare Earth Elements! Japan now receives over 80% of Rare Earths from China.

    And I believe you are all aware of the conflicts between China and Japan.

    Now, I hope everyone see the whole story of why Japanese Automakers are moving away from pure battery EV into Fuel cell.

    Actually both technologies have their merits. They both have their advantages for the targeted market segment.

  • Report this Comment On July 31, 2014, at 7:02 AM, NinaSerentsia wrote:

    I would rather on the places of one of them made something from marijuana, cause it's oil can used as a gas. Of course, you need the type of engine, but you can juss try.

  • Report this Comment On July 31, 2014, at 9:37 AM, DWW12 wrote:

    Almost all hydrogen is made stripping the H2 off natural gas. Hydrogen as a fuel cost the same per mile as gasoline now, whereas battery electric is 1/3 the cost per mile as gas. Hydrogen is not going to get any cheaper and making it through electrolysis is much more costly. You can power your battery electric with solar panels on your garage (I get about 70 miles worth of electricity from my 16 panels on our two car garage every day). Yes, hydrogen can fill faster but good luck finding a station outside California in the next 10 years or in California in the next 3. You can charge your battery electric anywhere there is a plug. Those are all the facts you need to make a decision which is better. As a consumer or as an oil and gas company or as a gas station company the choice is obvious and opposite.

  • Report this Comment On July 31, 2014, at 9:51 AM, cohenfive wrote:

    They make this seem like a battle, like battery vs fuel cell. It isn't. Toyota is hedging its bets since over the long run we do not know which technology will win the day. Both fuel cells and batteries have distinct advantages and disadvantages over each other and it is far too early (in Toyota's mind) to call a winner. Batteries are heavy, expensive, don't have enough range and take a long time to charge, but they can be plugged in anywhere. Fuel cells are light, clean, have long range but there is no filling infrastructure--yet...and building that infrastructure will be very, very expensive. Toyota is supporting both technologies, not one over the other. Probably a smart call. Sounds like they will be working with BMW on a bimmer fuel cell car. All good for consumers.

  • Report this Comment On July 31, 2014, at 10:15 AM, cove3 wrote:

    <<<<Hydrogen fuel cell cars like the Mirai have most of the advantages of battery-electric cars without the weight of the battery pack, which in a car like the Model S is very substantial. >>>

    I don't find this to be true based on my analysis of the fuel cell drive train of the Hyundai ix35. The ix35 at 4100 lbs is a whopping 807 lbs over the gas vehicle. Based on clues, I estimate the fc drive train: stack, battery, 2 tanks and fuel to be around 1500 lbs. This is more than the 1100-1483 lbs for the 65/85 kwh Tesla batteries. (assume the electric motors,inverters etc are the same weight)

    Weight (as well as cost ) is the key in the struggle between fcevs and long range bevs like Tesla, so an understanding is important. I created a thread on the new Hyundai ix35 if you have some data to contribute.

    My take is that Obama's all of the above will prevail. gas ices, diesel ices, hybrids, plug in hybrids, short range bevs, long range bevs, and fuel cells. The question is in what proportion and over what time span.


  • Report this Comment On July 31, 2014, at 11:42 AM, AmcnFndrs wrote:

    Whatever Toyota does, they have GOT to do something about their design. Consumers should expect performance, design, and innovation and should not have to trade off at todays prices.

  • Report this Comment On July 31, 2014, at 11:51 AM, Zinj wrote:

    My instinct is that it is probably a good thing for multiple technologies to be not only in the lab but in real-world use, competing with one another.

    That said, I'm far more comfortable sitting on top of a lithium pack or in front of a gasoline tank than right next to a hydrogen "bomb".

    I like fuel cells for industrial or residential purposes. however -- wherever the gas is either contained well without oxygen or in the even of a leak is vented so completely that it is overly diluted with air so that it passes right by it's explosive range. Ideally we get our hydrogen by splitting water using renewable energy rather than stripping it off of hydrocarbons, but I expect the hydrocarbon source will predominate for the foreseeable future.

  • Report this Comment On July 31, 2014, at 11:59 AM, Pfoolhart17 wrote:

    There is room for both in a changing world.

  • Report this Comment On July 31, 2014, at 12:06 PM, johnnya2 wrote:

    Here is why hydrogen is not the answer. Lifted directly from Putney Energy Committee

    "The reason that fuel cells are not viable is because unlike batteries fuel cells are not an energy source. Batteries internally store energy in the form of electricity from an external charge. Fuel cells do not store energy, they convert fuel into electricity. Fuel cells solve NONE of the current problems of our fossil based system and introduce additional issues;

    1. Fuel for the fuel cells needs to be created, usually from fossil fuels, or water + electricity = hydrogen. The energy to do this - electricity needs to come from some source. Coal, Nukes, and gas fured plants produce enough spare electricity at night to make hydrogen.

    2. Fuel for the fuel cells needs to be transported usually by tanker or truck - this uses fossil fuel. It is inefficient when compared to the existing electric grid. Electric distribution will only get better as smart grid and low loss super conductors are installed on the grid.

    3. Hydrogen fuel distribution systems need to remain under pressure, and never leak. Remember Hydrogen is explosive. They will need to pump the hydrogen into large underground insulated tanks or above ground insulated storage containers. Those cost big bucks. And then hydrogen is pumped again (never leaking) into personal automobiles and trucks, this pumping needs to be under high pressure, to store enough fuel on board to allow reasonable travel distance.

    4. This on-board storage, needs to be under pressure, and cold, very cold (-160'). This is not available / affordable technology. The only way to achieve high enough pressure is to super cool the fuel and the tank - this again uses energy constantly.

    5. At every step in the manufacture and distribution and storage and consumption of fuel for fuel cell transportation, there are energy losses, brought about by the conversion or transportation of this fuel.

    When you look at the electric grid as a potential fuel source, powered in part by renewable energy - and the inherent efficiencies of battery electric vehicles, it is a completely different game.

    When it comes down to it, once you convert hydrogen to electricity to power your car it costs you 10 to 100 times as much to travel in that car as it would in a simple battery powered electric car.

  • Report this Comment On July 31, 2014, at 1:13 PM, Supersyd wrote:

    There is one humongous problem with fuel cells that no one dares talk about. If you would like to tool around town sitting on top of a highly explosive tank of hydrogen gas, raise your hand. And then pray (hard) that you are never in an accident. Anyone remember the Hindenberg?? I do!

  • Report this Comment On July 31, 2014, at 2:15 PM, CrazyDocAl wrote:

    Hydrogen is the answer. Anyone who knows anything about electricity knows that the biggest problem is transporting it. To do so over long distances you need to increase the voltage up to thousands of volts. Once it's that high special needs have to be put into place. Ever notice that high power transmission lines are always a long way off of the ground and each cable is spaced very far apart? Also neither aluminum or copper work well, power lines are usually galvanized steel, which is not a good conductor.

    Anyone who starts talking about things like hydrogen being a bomb knows very little about the technology. The future of hydrogen is ammonia (NH3). It can easily be split releasing the nitrogen. The ammonia can be made at the source of the natural gas or possibly water if there is a source of cheap electrical power and then transported to the retail location (like gas and diesel are now).

    Ammonia is a common compound used throughout the world. it can be kept as a liquid at relatively low pressure (200psi) at room temperatures. Much easier than hydrogen. Ammonia can even be shipped all across the world, something that electricity will never be able to do.

    Probably the best thing going for hydrogen powered cars is the fact that the US has lots of natural gas, a surplus. Transporting natural gas is expensive unless it's done by pipeline. Yet liquid ammonia is easy to transport. In fact it's done routinely millions of times a year. There's a potential for profit which always helps any new technology become mainstream.

    While Musk may not think hydrogen is the future Tesla is well positioned to make the transition since all they would need to do is replace the batteries with a fuel cell and a storage tank.

  • Report this Comment On July 31, 2014, at 2:37 PM, ffbj wrote:

    It's a niche car for a niche market. Mainly to be sold in Japan and a compliance car in the US. A good deal for islands like Iceland, Hawaii where importation of gasoline is exorbitant.

    My take is that Toyota got behind the eight ball with no pure ev, so they came out the fuel cell to change up the game and the debate.

    The ev is the way of the future though it will not replace gasoline anytime soon, and fuel cells will be in the mix in very small way. I will plug my ev in and have the solar panels on the roof recharge it. Battery technology is getting better all the time.

    5 years from now there will be little debate on this subject.

  • Report this Comment On July 31, 2014, at 6:47 PM, milktea0 wrote:


    Don't know where you got your facts from, but HVAC power transmission does use Aluminum! In fact, it uses steel reinforced aluminum conductor.

    And why would transporting electric utility the biggest problem? According to EIA, national electricity transmission and distribution losses average about 6% in the U.S.

    While I don't have any numbers for transportation and distribution of natural gas, but I would think the efficiency couldn't be better than that of electricity.

  • Report this Comment On August 03, 2014, at 3:19 PM, SkepikI wrote:

    Those of you who believe Hydrogen is the answer need to spend more time around it and be in a position to observe the safety precautions necessary. Hydrogen is one of only a few gases that can DETONATE (technical term) and has a very wide flammable range. Ive spend a good deal of time around it in my lifetime and seen some horrific accidents that would have been a lot worse with large quantities. I do not relish having a bunch of nimrods running about in autos with large tanks of hydrogen. On board reformers with different storage technology, different opinion....

  • Report this Comment On August 05, 2014, at 9:05 PM, Davosil wrote:

    G_d bless BOTH of these companies! Who will ultimately be proven right? Who knows and at this stage, who cares! Humanity is 'staring down the barrel of a gun' vis-a-vis the threats from climate change and the only hope for our kids' future is if governments, the private sector and the public shake off this illogical, irrational denial of science and adopt an "all hands on deck" attitude. We have everything we need right now to start to turn this around, but the ultimate solutions will require continued invention & innovation in BOTH battery and fuel cell technologies. We owe thanks to both Elon Musk and Toyota for their efforts.

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John Rosevear

John Rosevear is the Fool's Senior Auto Specialist. John has been writing about the auto business and investing for over 20 years, and for The Motley Fool since 2007.

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