Toyota To Lose Big Bucks on Fuel Cell Cars, Says Former Top EU Official | Edmunds

Toyota To Lose Big Bucks on Fuel Cell Cars, Says Former Top EU Official

CHENGDU, China Toyota Motor Co., which is betting big on the future success of hydrogen fuel-cell cars and is scheduled to launch retail sales next year of its first model, a sporty sedan, could be preparing to lose as much as $133,000 per vehicle, Pat Cox, the former president of the European Parliament says.

That would represent a huge potential savings for consumers if, as expected, the automaker prices the fuel-cell electric car at $60,000-$70,000 before incentives. A federal tax credit of up to $7,500 would knock down the cost even farther. In California, a state rebate would provide an additional $5,000 of relief.

Toyota declined comment on Cox's estimate of its potential losses, saying only that each of the company's initial fuel-cell vehicle markets (in Japan, California and Europe) would have its own pricing strategy.

Cox, who served as head of the European Union's governing body from 2002-'04, raised the specter of big losses on the cars during a panel discussion this week at the Challenge Bibendum sustainable mobility conference. His remarks originally were reported by Autoblog Green.

Cox didn't claim direct knowledge of Toyota's cost or pricing plans, but said that the high development costs of the technology means, "they are probably taking a hit of 50,000-100,000 Euros ($66,000-$133,000)" in order to get the cars into the retail stream.

That wouldn't be unusual. Many automakers continue to lose money on plug-in electric vehicles and even on some conventional gas-electric hybrids. The marketplace simply won't allow them to charge prices that would provide profits sufficient to immediately earn back the high costs of developing the pricey batteries and other specialized components.

In the case of fuel-cell electric vehicles, there is not yet a commercial supply for some of the main components, meaning that the cars' energy storage and conversion systems are largely hand built. It will take several years of escalating sales to hit the point at which initial costs are earned back and the cars start returning profits — or at least stop losing money — with each sale.

FCEVs also face the hurdle of extremely limited fuel supply. There is lots of hydrogen in the U.S., but most is used in petroleum processing. There are only a handful of hydrogen fuel stations, almost all of them located in Southern California.

In addition to Toyota, Honda Motor Co. also intends to launch a fuel cell electric car for sale in limited areas in 2015, and Hyundai Motor Co. launched limited leasing of its Tucson fuel-cell electric crossover earlier this year in Southern California. Several other major automakers including Mercedes-Benz, Volkswagen and General Motors also are working on FCEVs and are expected to launch sales and leasing in and after 2017.

Fuel-cell electric vehicles (FCEVs) use onboard thermo-chemical systems called fuel cells to pull electrons from pressurized hydrogen gas combined with oxygen and use the resulting electrical current to power the vehicles' electric motors. The hydrogen is pumped from specialized filling stations into the vehicles' tanks, in the same way as conventional cars receive and store gasoline or diesel fuel.

FCEVs operate as electric cars, the hydrogen fuel cell system taking the place of the battery electric vehicle's large and heavy battery pack.

Toyota and other automakers are betting that in many markets, the FCEVs will fare better with consumers than have battery-electric cars because the fuel-cell vehicles can be refilled quickly at hydrogen stations and won't suffer from limited range and long recharging times, as do most battery-electric models.

Cox brought up the expectation of initial losses by Toyota on sales of its FCEVs during a discussion of hydrogen availability at the Michelin-sponsored Challenge Bibendum.

The event, aimed at shining a spotlight on clean, sustainable mobility for consumers around the globe, has been held a dozen times since its inception in 1998. This week's event in the western Chinese city of Chengdu, capital of the Sichuan province, was the third to be held in China. Challenge Bibenbum programs have also been held in California, Germany, Japan, France and Brazil. The name derives from the name of the "Michelin Man," the Michelin Group mascot.

Cox, an Irish politician, used his estimate of initial losses on FCEV sales as an example of the kinds of challenges pioneering automakers can face with new fuels and new technologies.

Edmunds says: Toyota believes fuel cell electric cars are the way to go and can absorb losses while getting them established in the market. Whether fuel providers and consumers will be as enthusiastic remains to be seen.

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