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Why General Motors is Waiting to Launch a Hydrogen Fuel Cell Car

By John Rosevear – Feb 18, 2016 at 5:20PM

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GM has great fuel-cell technology. But there are two big reasons why it hasn't yet brought a fuel-cell vehicle to market, and why it probably won't for another few years.

GM's fleet of Chevy Equinox SUVs powered by fuel cells has been running since 2007, and has covered more than 3 million miles. But GM says the time isn't yet right to bring the technology to market. Image source: General Motors

What's holding back fuel cell vehicles?

To hear General Motors (GM -5.08%) tell it, it's a combination of two things. One is obvious: There are just a few hydrogen refueling stations in the U.S., nowhere near enough to make ownership feasible outside of southern California.

But the other is less obvious, and a little surprising: GM thinks that fuel-cell technology is advancing too quickly.

GM's research is advancing faster than it can bring a product to market
GM has long been considered a leader in developing fuel-cell technology for cars. Fuel cells are devices that chemically convert the energy in hydrogen to electricity. A vehicle powered by a fuel cell is an electric car, but instead of a big battery pack it makes its own electricity onboard using hydrogen from a tank. The only "exhaust" is water vapor.

GM has been tinkering with fuel cells for decades. It has invested over $1.5 billion in fuel-cell technology over the years, and it says it has had a commercially viable system ready to go since 2010.

But it hasn't brought a fuel-cell car to market yet. According to a new report in trade publication Ward's Auto, GM has held off in part because it doesn't want to bring an out-of-date system to market. It said that the technology is advancing so quickly right now that any system it tried to produce would be outdated by the time GM got fuel-cell cars to its dealers.

A lot of work is being done, but few cars exist now
GM has said repeatedly that it sees a role for fuel cells in its future-product portfolio alongside battery-electric vehicles. GM's view is that fuel cells are likely to be more appropriate than batteries for larger, heavier vehicles, and for vehicles that can't be taken off duty for an extended period to charge (think fire trucks, for instance).

GM is working with Honda (HMC -1.80%) on a mass-market fuel-cell system for vehicles that is expected to come to market around 2020. But GM's concerns about outdated technology haven't held back its Japanese development partner: Honda has been offering fuel-cell-powered vehicles since 2002, albeit only in tiny numbers as a research effort. But it's expected to seek a wider market for the latest version of its FCV sedan, unveiled in Tokyo last fall.

That car will compete directly with Toyota's (TM -1.27%) Mirai, which is already on sale in the U.S. and Japan. The Mirai hasn't exactly been lighting up the sales charts: Through January, Toyota has sold just 26 in the U.S.

But big sales numbers aren't the point. Toyota's engineers are skeptical that battery-electric vehicles will ever be adopted in big numbers by mainstream consumers, in large part because of the long recharging times required. The company's executives describe the Mirai's fuel cell as a "better battery," one that can be "recharged," or refueled with hydrogen gas, in just a few minutes.

The industry is waiting for more "gas" stations
Of course, finding a "gas" station for your fuel-cell car is still a challenge in most of the U.S. Hyundai has been offering a fuel-cell version of its Tucson SUV in tiny numbers in southern California, where it has set up refueling stations at several of its dealerships.

But that won't work for the rest of us. Efforts are under way in several parts of the country to build out hydrogen-refueling stations, but that -- and, probably, GM's first hydrogen car -- is still a few years off.

John Rosevear owns shares of General Motors. The Motley Fool recommends General Motors. 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.

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