At this year's Tokyo Auto Show, Toyota Motors (NYSE:TM) unveiled its new fuel-cell vehicle, or FCV, concept that it says will be available for sale in the U.S. in 2016. Not to be outdone, Hyundai Motors (NASDAQOTH:HYMTF) said that its Tucson crossover FCEV will go on sale in the U.S. next year. More importantly with this move, fuel-cell vehicles are that much closer to mass-market sales. So, what does this mean for battery electric vehicles, or BEVs?
The green car of the future?
When it comes to "green" vehicles, Toyota is far from being inexperienced -- in 1997, it unveiled the Prius in Japan. Following that, and a successful 2000 U.S. debut, the Prius became the first mass-produced, mass-accepted hybrid vehicle. Now Toyota is at it again and is hoping its FCV will gain mass-market acceptance. And there are a number of reasons it could.
First, Toyota's FCV concept is roughly the size of its widely popular Camry and is estimated to get 310 miles per tank of hydrogen. Second, it can be refueled in minutes, produces zero emissions during operation, and, according to Toyota's deputy chief engineer, Yoshikazu Tanaka, its purpose is to "trigger the growth of fuel-cell vehicles to the level of the current hybrid, the Prius level." Moreover, thanks to a significant decrease in platinum -- down from 100 grams to about 30 grams -- the price for Toyota's FCV is estimated to be anywhere from $50,000 to $100,000. While that's still expensive, it's a far cry less than previous FCVs -- plus, that's not any more expensive than Tesla Motors' Model S.
That's great news for those wanting a fuel-cell car, but for those who'd prefer a fuel-cell SUV, Hyundai has you covered. As I previously wrote, Hyundai began its research and development into fuel-cell technology in 1998, and the result is the Hyundai Tucson ix35 hydrogen fuel-cell electric vehicle. In addition, the Tucson hydrogen can go 369 miles on one tank of hydrogen, has a top speed of 100 mph, and can go from 0 to 62 mph in 12.5 seconds. More importantly, Hyundai just delivered its first line-produced ix35 fuel-cell vehicles to Copenhagen, Denmark.
Like Toyota, Hyundai hasn't released a price for its FCEV, but it has said it'll be the first mass-market hydrogen vehicle available in the United States. Byung Ki Ahn, the general manager of fuel-cell research at Hyundai, told CNN, "Hyundai's target sale price for the next three to five years for the vehicle is $50,000."
BEVs face an uncertain future
Since 2010, there have been 63,309 BEVs sold in the United States, according to the Electric Drive Transportation Association. And as The New York Times put it, "Despite the popularity of electric cars from Tesla Motors in California, fully electric cars remain a niche market." Conversely, FCVs will also start out as only appealing to a niche market, in part because of the current lack of infrastructure, as well as high price points for FCVs. But the two types of vehicles will go head-to-head when it comes to the title of green car of the future.
However, as hydrogen-fueling stations are built, and the price point for FCVs decreases, the popularity of FCVs is likely to increase -- for example, thanks to the passing of Assembly Bill 8, California just committed to building 100 new hydrogen fueling stations. Further, the Department of Energy launched H2USA, a "public-private partnership with fuel cell electric vehicle original equipment manufacturers focused on advancing hydrogen infrastructure to support more transportation energy options for U.S. consumers."
As if that's not enough, the U.S. government has halted loans for electric-vehicle development and reinstated funding for FCVs. Even more significant is that noted physicist and Nobel Prize winner Steven Chu reversed his critical stance regarding fuel cells and stated that fuel cells are "an important technology, and we want to continue to support the research." He continued:
Fuel cells can be incredibly reliable. There are many fuel cells in buses that have been running in buses for 10 years, rock solid. But our target is a $20,000 personal vehicle that can compete with a 45- or even 50-mile-per-gallon internal combustion car.
Boiled down, what this means is BEVs -- while unlikely to completely disappear -- may forever be doomed to niche market appeal.
Vehicles of the future
There's no question that FCVs have significant barriers to overcome, the most significant being infrastructure. But demand is already fueling supply, and the infrastructure is starting to be built. Further, while FCVs will probably remain a niche market for a while, as technology progresses, their popularity is likely to increase. This is great news for auto manufactures that are planning to release their FCVs in the U.S. soon. Consequently, if you're looking for your next great auto stock for the future, Toyota or Hyundai may make a nice addition to your investing portfolio.