Up close, the 2016 Toyota (NYSE:TM) Mirai doesn't really look like a "game changer." It's a compact-ish, quirky-looking sedan that incorporates some recent love-it-or-hate-it Toyota styling themes.
But it's a very significant product. With the Mirai, which is powered by a hydrogen fuel cell, Toyota is making a huge, multi-billion-dollar bet that the future of autos isn't battery-powered.
That's a bet that goes against the conventional wisdom of most of the industry -- and of many investors, particularly those in Tesla Motors (NASDAQ:TSLA). What is Toyota thinking?
Toyota thinks its fuel cell is "a better battery"
According to the CEO of Toyota's North America unit, Jim Lentz, the answer is simple: "It's a better battery," he told me recently.
The Mirai is an electric car, but instead of a big battery pack, it uses a fuel cell -- a device that converts the energy in hydrogen gas to electricity, cleanly.
The lithium-ion battery packs used in current battery-electric cars like Tesla's Model S are heavy and expensive, though it's likely that both of those problems will be addressed in time.
But Toyota thinks they have another problem that won't be addressed anytime soon: Recharging time. That's what Lentz means when he refers to the fuel cell and its tank of hydrogen as a "better battery."
Right now, the fastest way to charge a Tesla is with one of the company's "Supercharger" stations, which can add 170 miles of range in 30 minutes. Home charging is a lot slower -- even with Tesla's wall-mounted "high power charger" in your garage, you'll only be able to add 58 miles of range for every hour of charging, Tesla says.
In contrast, a Mirai can be refueled with a full tank of hydrogen -- good for about 300 miles of range -- in about five minutes, roughly the same as refueling a gasoline-powered car.
Faster charging systems for battery-electric cars may be coming. But even if so, Toyota argues that they don't make environmental sense. "If you were to charge a car in 12 minutes for a range of 500 km (310 miles), for example, you're probably using up electricity required to power 1,000 houses," the Mirai's chief engineer, Yoshikazu Tanaka, recently told Reuters.
Tanaka said that while Toyota doesn't deny the benefits of battery-electric cars, the company thinks they're best used as short-range commuters, recharging at home at night.
In other words, they're niche products, not the mass-market future -- and hydrogen fuel cells represent a better bet. Is Toyota right?
Toyota's size and track record makes this argument hard to dismiss
If you're a fan of Tesla's Model S or other battery-electric cars, this probably sounds like an argument you'd expect from a crank. But this is no crank -- it's Toyota, the world's largest automaker and the world's leader in hybrid cars.
For the most part, Toyota is a careful, conservative company. It made a bold-seeming bet on battery-electric hybrids with its then-revolutionary Prius in the late 1990s -- but it did so knowing that the Prius would find a ready market in Japan and California, if not beyond, once the technology was refined.
The Prius is one of those innovations that seems obvious in retrospect. But the Mirai is more puzzling, not least because it has its own challenges. For starters: If you think finding a recharging station for your Tesla or Leaf is hard, just try to find a hydrogen refueling station. There are very few right now, in the U.S. or anywhere else.
It's not just a car, it's a bet against Tesla's future
But there's a bigger issue here. The Mirai isn't just a new kind of car, it's a bet against a vision of the future -- the vision that is supporting Tesla's lofty stock price, and driving billions of dollars of investments by Toyota's big rivals.
What's more, the Mirai runs counter to the direction most other automakers seem to be taking. It's not just Tesla, although the Silicon Valley start-up has done a lot to make battery-electric cars seem both cool and practical. But General Motors (NYSE:GM), Nissan (OTC:NSANY), Volkswagen Group (OTC:VWAGY), and others -- most of Toyota's peers and rivals -- are making big bets on battery-powered cars or gearing up to do so soon.
Toyota is making a different bet. Will the Mirai end up being the Betamax to Tesla's (and GM's, and Nissan's, and VW's, and others') VHS -- the maybe-superior technology that loses out to the momentum of the alternative?
Toyota certainly hopes not. At the New York International Auto Show earlier this month, Toyota had a display inviting executives from other automakers to talk about licensing its fuel-cell patents. It certainly wants the technology to catch on.
But will it? This Fool is very skeptical -- but I can't dismiss it. I don't see the Mirai catching on, but it just doesn't seem wise to bet against Toyota on a green-car technology. Not yet, at least.