When it comes to EVs and fuel cells, what is Toyota really thinking?

Though there does not necessarily have to be a battle between batteries and fuel cells, it often seems to happen that way. Toyota has been fueling the conflict between the two technologies through its words and actions, but what does the automaker truly think about the future of transportation?

Don’t you sometimes wish you could get inside the heads of other people to find out what they are really thinking? Those following the auto industry, particularly the emerging alternative powertrain segment, no doubt would like to figure out what is going on in the minds of Toyota executives.

The global automotive heavyweight has placed a big bet on hydrogen fuel cell cars while deriding battery electric vehicles and their current shortcomings, but there is almost certainly more to it.

High expectations for fuel cells, harsh words for EVs

Toyota executives have repeatedly offered comments that infuriate electric car advocates as the company trumpets its vision of a hydrogen-powered future. We collected some of the most prominent, occasionally head-scratching statements from recent months:

Bob Carter, senior VP of automotive operations: “Fuel cell electric vehicles will be in our future sooner than many people believe, and in much greater numbers than anyone expected.”

Bob Carter, at the JP Morgan Auto Conference: “The next big thing in automotive technology [is] hydrogen fuel cells.”

Craig Scott, national manager of advanced technologies, to the LA Times: “No one is coming to our door asking us to build a new electric car.”

Mitsuhisa Kato, head of R&D: “The cruising distance is so short for EVs, and the charging time is so long. At the current level of technology, somebody needs to invent a Nobel Prize-winning battery.”

Jim Lentz, CEO of Toyota North America: “For long-range travel primary vehicles, we feel there are better alternatives, such as hybrids and plug-in hybrids, and tomorrow with fuel cells.”

Former Toyota exec Bill Reinert: “While I don’t expect the battery car to get dramatically better, the internal combustion engine is getting phenomenally better...it’s hard to see where the case for the electric car really comes in. Is it for carbon reduction? No, you’d have to decarbonize the whole grid to make that case, and that’s not likely to happen...There’s going to continue to be a market for them, but it’s going to be a very small market.”

The reasoning of Toyota

Toyota clearly believes that EVs, or hydrogen fuel cell cars, must duplicate the range and refueling characteristics of gasoline cars to succeed. This may be wrong, and we would argue that electric vehicles in particular do not have to be capable of 400 miles on a charge with 5-minute refueling times to reach the mass market.

However, human nature sides with Toyota. Consumers are very reluctant to change their habits, and do not often make car-buying decisions based on logic alone. The TEPCO paradox is an excellent demonstration of the psychological considerations of humans when it comes to electric cars.

Toyota certainly has some very valid reasons for its skepticism toward the battery electric car. Today’s electric cars certainly can’t meet everyone’s needs – in addition to drivers who have long commutes or make frequent road trips in regions with low charging station density, 15% of Americans live in apartment homes largely without access to a charging point at night, and this trend is increasing. This is especially a problem in some global markets (i.e. China).

And even with significant reductions in battery costs across the industry, an electric vehicle capable of 200-300 miles on a charge will command a price premium over a legacy gasoline competitor for many years to come – and barring great energy density improvements, such a battery will be large and heavy and difficult to package without redesigning the traditional vehicle architecture as Tesla and BMW have done.

It is also worth pointing out that CARB awards more credits to hydrogen fuel cell vehicles than electric vehicles.

Bullish on fuel cells

One of the reasons Toyota is so bullish on fuel cells is the remarkable progress they have made over the last decade-plus of intense research and development. The automaker has reduced the cost of the fuel cell powertrain by 95% in 12 years and is confident it can reduce it further.

However, it still is a very expensive system in the limited volumes of Toyota’s initial production run of a planned 1,000 units. The car will retail for about $70,000 in Japan, though U.S. pricing is still unconfirmed. Costs will have to come down a whole lot more to bring the mass market even within shouting distance.

Arguably the biggest obstacle to fuel cell vehicle adoption, however, is the lack of hydrogen fueling infrastructure, which Toyota is no doubt aware of. There are currently 11 public refueling stations in California, but allegedly only 68 stations could feasibly serve 10,000 fuel cell cars that would all be within a 6-minute drive of a station.

As for the East Coast, though, don’t hold your breath.

Another disadvantage is the cost of refueling the vehicle. Toyota estimates that a full tank of compressed hydrogen to provide 300 miles of range will cost $50 initially with the potential to reduce to $30. This is approximately equivalent to the cost of gasoline in an average family sedan today, and more expensive than a current Prius even under the optimistic future scenario. Electric cars, on the other hand, require a fraction of the cost to refuel compared to gasoline vehicles – 1/5 to 1/3 the cost per mile in most cases.

Has Toyota’s vision become clouded?

Some are quick to view Toyota’s dogged persistence of fuel cells at the expense of battery electric vehicles as proof that the automaker is off its rocker. We think there is more to it, however.

Granted, there are a couple of clear flaws in Toyota’s apparent reasoning. The company seems to fail to recognize the importance of owner satisfaction of electric vehicles, which by all accounts is unprecedented. The convenience of recharging at home most of the time similarly ought not be overlooked in the value proposition of electric cars, yet Toyota seems to willfully forget this detail.

It also appears on the surface that Toyota assumes lithium-ion batteries will not improve much in the coming years, as many of their arguments are based on the current range limitations of electric cars. However, the second generation of EVs – arriving a mere 5-7 years after the dawn of the current electric car era – will demonstrate significantly increased range across the board, from the Chevrolet Volt to the Nissan LEAF to yet-to-be-revealed long-range EVs from Tesla, GM, and others.

Is Toyota that shortsighted, to presume that the current state-of-the-art in EV batteries will remain so for the foreseeable future?

Obviously not. Contrary to what some EV advocates are quick to suggest, there are plenty of brilliant people at Toyota. We also would be remiss to forget that it was Toyota that pioneered the hybrid electric vehicle back when no other automaker was thinking about fuel efficiency.

What else might they be thinking?

We have a feeling that Toyota and its Lexus division are biding their time until battery technology improves significantly. The automaker is known to be researching solid-state and lithium-air batteries, both potentially revolutionary advancements. Toyota also has a joint venture in China called GAC Toyota Motor Co. that will produce electric vehicles under the Leahead brand, and is expanding an EV charging station trial project in Japan.

It is evident that Toyota has not totally written off the idea of battery electric vehicles, despite what company executives may say publicly. If a better battery comes along, Toyota would likely jump back on board the EV bandwagon for fear of being left behind.

There is also more to fuel cell development than a single Toyota car. Great potential for hydrogen fuel cells exists in grid applications, as well as heavy-duty transport where battery power is impractical. Toyota’s home market of Japan also demonstrates intriguing potential for a legitimate hydrogen economy based on a multitude of factors, and the government is clearly supportive of hydrogen fuel cells – it will be giving out $20,000 in incentives for Toyota’s hydrogen fuel cell car to make it more affordable.

And if there is a future for range-extended electric vehicles that use hydrogen fuel cells as the backup energy supply, Toyota will have an immense head start.

It is undeniable that hydrogen fuel cells present some very interesting possibilities for the future. However, that future may be a long way off if it even arrives at all. Toyota has placed a big bet on the potential of fuel cells while appearing to write off electric vehicles, but their true intentions – as well as a backup plan, assuming there is one – remain unknown to us.