Toyota Motor Corp (ADR) (NYSE:TM) (TYO:7203) had originally planned to release the car at a price of up to $100,000 but has backtracked and is expected to begin pricing the vehicle at around $70,000.
While Hyundai Motor Co (KRX:005380) (OTCMKTS:HYMLF) already began selling a hydrogen-powered SUV this year in California and Honda Motor Co Ltd (ADR) (NYSE:HMC) (TYO:7267) intends to introduce its own some time next year, Toyota is largely viewed at the forefront when it comes to the sustainable and (harmful) emission free vehicles powered by hydrogen.
Toyota Motors: “We’re very serious”
The advantage of the technology is the fact that they can be fully fueled in mere minutes. The caveat, however, is the fact that finding a station to fuel them is a chore at the very best. Toyota Motor Corp (ADR) (NYSE:TM) (TYO:7203) is well aware of this and understands that it has a long ways to go in order to catch up with electric car manufacturers especially now that Tesla Motors Inc (NASDAQ:TSLA) has opened its patents for its charging stations.
That “long ways to go” will, however, be mitigated in Japan with the present Prime Minister, Shinzo Abe, believing that the technology represents an opportunity for economic growth for the island nation and has already stated his intention to offer massive subsidies for those willing to purchase a hydrogen-powered automobile.
In the United States, Toyota and others are under pressure to comply with regulatory demands to sell zero-emission cars. By stating their intent to produce hydrogen vehicles it will allow them to continue to sell gas-guzzling SUVs to consumers without the risk of penalties imposed by the state.
“We want to demonstrate how serious we are,” said Mitsuhisa Kato, a Toyota Motor Corp (ADR) (NYSE:TM) (TYO:7203) executive vice president, at a news conference on Wednesday.
The company is calling the vehicle that it displayed the FCV, a simple acronym for the fuel-cell vehicle.
Japan to offer large subsidies
While $70,000 is not a drop in the bucket by any means, Japan is intending to extend subsidies to the FCV just as it subsidizes all-electric vehicles. While the amount of the subsidy is unknown, Japan presently spends around $300 million on electric car subsidies each year. Those subsidies can take as much as $10,000 off the price of a $30,000 vehicle. If the subsidy for hydrogen remains in line with this, the FCV’s price of $70,000 could come down under $50,000.
At that price, “you’re basically moving from an extremely expensive vehicle to one that somewhat resembles a mass-production vehicle,” said Kurt Sanger, an analyst at Deutsche Bank. “But even at that price range, the user of a new engine technology with limited refueling infrastructure is not your next-door neighbor.”
Japan has announced that it intends to provide subsidies of $70 million to install over a hundred refueling stations across the country by the end of 2015.
“It’s not a question of the chicken or the egg first,” said Chihiro Tobe, director of the hydrogen and fuel-cell promotion office of the Ministry of Economy, Trade and Industry. “They both have to move in tandem.”