Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Toyota banks on Olympic halo for the humble bus to keep hydrogen dream alive

Published 18/09/2019, 05:14
Updated 18/09/2019, 05:14
© Reuters. FILE PHOTO: Toyota Motor Corp. displays the company's fuel cell bus Sora during media preview of the 45th Tokyo Motor Show in Tokyo

© Reuters. FILE PHOTO: Toyota Motor Corp. displays the company's fuel cell bus Sora during media preview of the 45th Tokyo Motor Show in Tokyo

By Kevin Buckland

TOKYO (Reuters) - Buses may not be the most glamorous mode of transport but at the 2020 Tokyo Olympic games, they will represent Toyota Motor Corp's (T:7203) best bet for wider acceptance of hydrogen power - technology so far eclipsed by electric vehicles.

Japan's biggest automaker plans to roll out 100 hydrogen fuel cell buses to shuttle visitors between venues, a stepping stone to a big ramp up for the Beijing Winter Olympics in 2022.

There, more than 1,000 buses are planned in partnership with Beiqi Foton Motor Co (SS:600166), according to people familiar with the project, which aims to make the most of a push by China to start adopting the zero-emissions technology.

The plans to promote hydrogen with its exclusive Olympic 'mobility' sponsorship deal - one Toyota holds until 2024 - underscore its determination to keep backing the technology. That's despite an increasing number of electric cars on the road and Toyota's own efforts to speed up EV development.

But its reliance on buses for hydrogen publicity also highlights the lack of traction for its fuel cell cars, and the risk that hydrogen-powered transport may never be more than a niche market despite a quarter century of development and Japanese government backing.

Toyota has sold fewer than 10,000 of the Mirai, a fuel cell sedan it touted as a game changer at its launch five years ago. Costing consumers about 5 million yen (£37,013) in Japan after subsidies, it is one of three fuel cell cars available to consumers. Hyundai Motor Co (KS:005380) sells the Nexo, while Honda Motor Co Ltd (T:7267) leases out the Clarity.

By contrast, Tesla Inc (O:TSLA) sold 25,000 of its all-electric Model S sedans in its first year and a half.

The disappointing Mirai sales reflect insufficient refuelling stations, consumer worries about resale values and concerns over the risk of hydrogen explosions. A hydrogen tank blast in South Korea that killed two in May was followed by another at a Norway hydrogen station in June.

"Hydrogen still has this image of being dangerous - that it might explode - and our aim with the Olympics is to erase this image," Masaaki Ito, Toyota's general manager of its Olympic and Paralympic division, told Reuters.

The company will also provide 500 Mirai sedans to ferry officials between venues at the Tokyo Olympics. "We want to expose the technology to as many people as possible."

GOVT AMBITIONS UNFULFILLED

Toyota, which is also developing fuel cell delivery trucks and big rigs, has not disclosed how much money it has poured into the technology but it has been emboldened by support from the Japanese government, which sees hydrogen as a key way to reduce its reliance on oil.

Both envision a "hydrogen society" where homes, trains, ships, and even lunar rovers can be powered by fuel cells that turn the invisible, odourless gas into electricity.

The city of Tokyo, which will showcase the Olympic village for athletes as a hydrogen society in miniature, is buying most of the buses for its Toei municipal transport service, with 15 already in operation.

Unlike cars, buses have fixed routes, making it easier to plan fuelling stations and give them a shot at being profitable.

Local and national government subsidies cover 80% of the cost, bringing them in line with the 23 million yen ($213,000) price tag for a regular diesel bus, a Toei representative said.

But lofty government goals remain unmet. Three years ago, Japan declared that by 2020 it wanted 40,000 fuel cell vehicles on the road and 160 hydrogen fuelling stations in operation.

Today, just 3,400 fuel cell vehicles have been sold in Japan and it has 109 hydrogen stations.

Though vital for fuel cell cars to catch on, the stations are not easy to build, costing five times as much as a gasoline stand. Due to stringent safety regulations, they also require large plots of land which are in scarce supply.

RELYING ON CHINA

Yet for all the slow progress, some analysts don't fault Toyota's pursuit of hydrogen power, pointing to China's backing of the technology and its vast auto market.

"China is actually moving ahead a lot faster and although they suffer the same issue with lack of refuelling infrastructure, China has shown in the past that they can get infrastructure done pretty quickly," said Janet Lewis, head of Asian auto research at Macquarie.

For the Beijing games, Toyota will supply powertrain components for the Foton buses. They will be emblazoned with "Powered by Toyota" branding during the event, the sources said, declining to be identified as the plans have not been made public.

Toyota said the number of fuel cell buses for the Beijing Olympics has not been decided and that branding would be up to Foton. Foton did not respond to requests for comment.

Toyota has similar deals with Higer Bus Co and China FAW Group Corp.

The project with Higer will likely have a fleet of 20 buses ready for deployment in early 2020 whereas FAW plans to have its first prototype ready by the end of the year, said Audrey Ma, a director at Shanghai ReFire Technology Co, which is doing the system integration.

Outside of China, the only other similar deal Toyota has announced is one to supply fuel cell systems to Portugal's Caetanobus.

© Reuters. FILE PHOTO: Toyota Motor Corp. displays the company's fuel cell bus Sora during media preview of the 45th Tokyo Motor Show in Tokyo

Although the technology remains unprofitable, Toyota says costs will fall with scale. It is building new fuel cell stack and hydrogen tank factories so it can lift production of fuel cell vehicles to 30,000 a year.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.