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2016 Toyota Mirai Fuel Cell Sedan 001. Image source: Toyota.

Have you ever wished you could fuel your car with water instead of gas? Sadly, that's not a possibility today. Still, cars that run on hydrogen -- one of the elements in H2O -- have come a long way, and could be a step toward fueling our cars with something as simple as water. At least, that's what Toyota Motor (NYSE:TM) is betting on.

Of course, when it comes to hydrogen fuel cell electric vehicles, or FCEVs (or FCVs), there are still three main barriers to entry: the cost and production of hydrogen fuel, the lack of a hydrogen infrastructure, and costly platinum catalysts. So, the question is: Will Toyota's hydrogen gamble pay off?

If you build it...
In 1997, Toyota unveiled the Prius, which became the first mass-produced hybrid vehicle. However, it was definitely not an instant success.

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2001-2003 Toyota Prius. Image source: Toyota.

In fact, it took the Prius nine years and nine months for cumulative sales to reach the 1 million mark, in May 2007. But since then, demand has increased precipitously, and as of July 2015, Toyota's hybrid sales topped 8 million. Furthermore, the Prius has been the top-selling hybrid for years, and in 2012 and 2013 it was the best-selling car in California. 

More important, Toyota is hoping its latest FCV, the Mirai, will follow a similar trajectory. Toyota states in its 2014 annual report:

The first-generation Prius opened the door to [the electrified powertrain] future in 1997, and a new era of transportation emerged once major challenges were overcome. Similarly, fuel cell vehicles represent the next stage in the development of a future "mobility society." Toyota has embarked on a long journey toward making hydrogen an everyday fuel and fuel cell vehicles the norm.  

Specifically, while Toyota has already launched the Mirai in Japan, the Mirai will have a limited release in California in October 2015. This limited release is due, in part, to the limited hydrogen-fueling infrastructure.

The good news is that the Mirai (which comes with three years of free hydrogen fuel) has an EPA-rated 312-mile range, it refuels in about five minutes, and its starting MSRP is $57,500 before incentives. Furthermore, Car and Driver test-drove the Mirai and reported that it averaged 57 MPGe, with a cost of roughly $0.25 per mile. This is, obviously, not cheap, but cost is one of the issues currently being addressed when it comes to hydrogen.

Hydrogen production
A major benefit of hydrogen is that it's the most abundant element in the universe. However, it's rare to find pure hydrogen on Earth. Therefore, it must be extracted from something that contains hydrogen, and this extraction process can be inefficient and costly. Today, most of the hydrogen produced in the U.S. is extracted from natural gas because (1) natural gas is cheap, and (2) extracting hydrogen from natural gas is easy. When used in an FCEV, this method reduces greenhouse gas, or GHG, emissions by approximately 50% compared to conventional gasoline vehicles. Unfortunately, this process still uses a natural resource and isn't renewable. Consequently, scientists are exploring ways to make hydrogen from other sources.

According to the National Renewable Energy Laboratory, some promising areas of research include:

  1. Biological water splitting: As part of their metabolic processes, photosynthetic microbes use light energy to produce hydrogen from water.
  2. Conversion of biomass and wastes: Decomposition or gasification of biomass resources (consumer wastes, agricultural residues like peanut shells, etc.) to produce hydrogen.
  3. Photoelectrochemical water splitting: The cleanest way to produce hydrogen; sunlight is used to directly split water into hydrogen and oxygen.

All three of the above methods (and a number of others) successfully produce hydrogen, but as of this writing, are not commercially viable because of cost and energy inefficiency. Fortunately, in regard to water splitting, scientists at Stanford University have made significant advances that may solve both of these stated problems, sooner rather than later.

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The splitting of water using a semiconductor immersed in an aqueous solution has been called the Holy Grail of photoelectrochemistry. Image source: Warren Gretz via NREL.

Specifically, Stanford chemists invented a water splitter that uses nickel and iron for the catalyst -- instead of the traditional platinum -- and runs on an ordinary 1.5-volt battery. Also, this splitter can continuously split water for more than a week, and its water-splitting efficiency is 82% at room temperature. This significantly reduces the cost of creating hydrogen, and is environmentally friendly because it doesn't use precious metals. More important, John Turner, a renowned hydrogen water-splitting expert and a research fellow at NREL, stated about Stanford's discovery, "Producing hydrogen directly from the sun -- and in a way that is commercially viable -- is more a reality, less a pipe dream." Of course, once you've made the hydrogen, you have to get it to the FCEV, which is where infrastructure comes in.

The coming infrastructure
In 2011, the U.S. Department of Energy, in cooperation with other agencies, opened the world's first tri-generation fuel cell and hydrogen energy station in Fountain Valley, California. This station not only co-produces hydrogen from anaerobically digested biogas from a municipal wastewater treatment plant, but also produces electricity and heat that are then used to power and warm the facility, according to the DOE. Additionally, the DOE states, "The station has co-produced electricity and hydrogen with 54% efficiency and provides up to 100 kg of hydrogen a day, enough to fuel 25 to 50 vehicles."  

The idea behind the tri-generation station, according to the DOE, is to address the logistical and other real-world challenges of hydrogen fueling stations. Furthermore, the tri-generation station demonstrates the versatility of fuel cells -- the station runs on methane that can be obtained from biogas (the primary source) or from natural gas if there's a disruption in biogas availability. 

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2016 Toyota Mirai Fuel Cell Sedan. Image source: Toyota.

In addition, in 2013, the DOE co-launched a public-private partnership called H2USA, with the express purpose of overcoming hurdles to establishing a hydrogen-fueling infrastructure. So far this partnership has helped open eight hydrogen-fueling stations in California, with 48 currently funded and under development. Plus, California isn't the only state where H2USA is working to develop a hydrogen infrastructure -- Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont are all part of H2USA's initial push to establish, and expand, a hydrogen infrastructure. Of course, the DOE isn't the only entity working on hydrogen infrastructure.

Companies like HyperSolar are currently working on an on-site, self-contained solar-powered hydrogen production unit. If successful, HyperSolar's hydrogen unit will use a low-cost, submersible hydrogen production particle to split water molecules. Moreover, this technology uses sunlight and any source of water (wastewater and saltwater, too) to make renewable hydrogen. More good news? HyperSolar has a working prototype, and it recently announced that it reached the 1.4 volts milestone, which means it's that much closer to using artificial photosynthesis to split water into hydrogen and oxygen (for commercial application, it needs to reach 1.5 V).  

More important, these are just a few examples of how the DOE and other companies are tackling the hydrogen infrastructure problem. That leaves us with the use of platinum.

The platinum catalyst
One of the main barriers to commercialization of FCEVs is the fuel cell's platinum catalyst. Platinum is extremely expensive, which in turn makes the vehicle expensive. Furthermore, platinum is a precious metal, and the use of it in FCEVs is not environmentally sustainable. As such, scientists are currently researching ways to reduce, and eventually eliminate, the use of platinum.

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2016 Toyota Mirai Fuel Cell Sedan. Image source: Toyota.

So far this push has successfully reduced the amount of platinum needed in fuel cells by 80% since 2005. However, that's not enough for scientists at NREL, so they're working to make "ultra-thin platinum films limited to a few atomic layers." If they're successful, hydrogen fuel cells will contain the same amount of platinum as current catalytic converters. This is significant because catalytic converters are mandatory for pollution control in internal-combustion-engine vehicles, but aren't needed in FCEVs.

Naturally, eliminating platinum altogether would be better. To that end, Argonne National Laboratory, in cooperation with the DOE, is working on replacing the platinum cathode with a cheaper catalyst. So far, it's studied metals like copper and iron and seen positive results. If Argonne is successful, the cost of the cathode electrocatalyst would decrease by 60%. More important, these are just some of the ways in which the use of platinum in fuel cells is being reduced.

The world of tomorrow
There's no guarantee that any of these technologies will come to fruition or that FCEVs will become mainstream. However, the main barriers to entry are becoming smaller by the day, which is especially good news for Toyota. Moreover, while there's been no official statement on how much Toyota's spent on developing the Mirai, there's no doubt that it's been an expensive endeavor. However, if it's anything like the Prius, the Mirai could be a catalyst for greater acceptance of FCEVs, and that would undoubtedly benefit Toyota's bottom line. Consequently, this is something to watch.

Katie Spence has no position in any stocks mentioned, and neither does The Motley Fool. 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.