While it's not a road that many automakers have traveled far down, Toyota Motor (NYSE:TM) is driving ahead in the development of fuel cell vehicles. The company announced today that it has signed an agreement with five other companies to form a joint venture called United Fuel Cell System R&D (FCRD). Collectively, the six companies will leverage their prowess to develop fuel cell solutions for commercial vehicles in China, where the government is targeting 20% of vehicle sales to be new energy vehicles, including fuel cell vehicles, by 2025. 

Toyota will hold a 65% equity stake in the joint venture, which represents a total investment value of approximately 5 billion yen, or $46 million. According to Toyota, the joint venture will "engage in discussions to formulate product plans and create a single streamlined structure to develop a series of technologies from components including FC [fuel cell] stacks that satisfy performance needs in China and FC system controls that support those components, to vehicle installation."

A map of China

Image source: Getty Images.

China has high hopes that an increase in the number of alternative fuel vehicles will help the nation mitigate its environmental problems -- something the joint venture is acutely aware of. In a press release, Toyota states the joint venture "will support the proliferation of FCEVs [fuel cell electric vehicles] for the creation of a hydrogen-based society in China, and by promoting and developing FCEVs, will contribute to solving environmental issues including reducing CO2 emissions and curtailing air pollution."

The other companies participating in the joint venture are:

  • China FAW Corporation Limited
  • Dongfeng Motor Corporation 
  • Guangzhou Automobile Group Co., Ltd. 
  • Beijing Automotive Group Co., Ltd. 
  • Beijing SinoHytec Co., Ltd

Like Toyota, Ballard Power Systems, a leading provider of fuel cell solutions, has recognized the opportunity for commercial fuel cell vehicles in China, forming a joint venture with Weichai Power two years ago. And it appears that momentum is building. Last December, Ballard announced that it had received a $19.2 million purchase order from the joint venture related to a long-term membrane electrode assembly supply agreement.