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Hydrogen-fueled cars face uncertain market in California

Hyundai Motor America Tucson Arrives in California

Hyundai's first mass-produced Tucson fuel-cell vehicles arrive in Southern California. PRNewsFoto, Hyundai Motor America/Courtesy photo

By
From page A12 | June 06, 2014 |

By David R. Baker

Cars that drive hundreds of miles on a tank of hydrogen and spew nothing from the tailpipe but water will hit the market this month in California.

But it wasn’t customer demand that drove automakers to build fuel-cell cars – it was basic economics, with a nudge from regulation.

California and other states are pushing automakers to offer cars that don’t contribute to global warming. Many companies turned to electric cars and plug-in hybrids in response.

However, executives at Hyundai, Toyota and several other automakers are convinced that fuel-cell cars, which can fill up in five minutes, are better suited to Americans’ driving habits than electric cars will ever be.

And if the cars prove popular enough to make money someday, automakers that develop and build their own fuel cells may be able to keep a bigger slice of the profits than they can from electric cars.

The most expensive component of any plug-in vehicle is its battery, and while some electric car makers such as Tesla Motors and Nissan build their own battery packs, many don’t.

“When you develop all the technology for yourself, and you don’t have to pay any patents, you can reap the benefits down the road,” said Derek Joyce, manager for product public relations for Hyundai.

Slow sales
His company spent more than 14 years developing and testing its own fuel cell. Next week, Southern California drivers will become the first in the nation to lease Hyundai’s fuel-cell version of its Tucson sports utility vehicle. It will go for $499 per month – about double the price of leasing a gas-burning Tucson.

The company won’t say how many people have signed up. But Hyundai plans to make about 600 of the cars by the end of 2015. For comparison, Nissan sold 954 electric Leaf hatchbacks and GM sold 1,529 Chevy Volts, an advanced plug-in hybrid, in their first year on the market.

Eco-minded drivers who spent years badgering the auto industry into building electric cars haven’t done the same for fuel cells. Many of them even call the new technology a waste of time, requiring a whole new network of expensive fueling stations. Fuel-cell cars, as a result, will jump into the market without a safety net.

“Nobody wants them,” said Felix Kramer, founder of CalCars, a plug-in vehicle advocacy group. “Nobody’s asking for them. People who wanted a zero-emission car can now get any number of electric vehicles. I’m kind of bewildered about why Toyota and Honda and the others are hanging so much on it.”

The car companies know they need to convince people – electric-vehicle fans and ordinary drivers alike – to give fuel cells a chance.

“I certainly won’t argue with you that the awareness for fuel cells is very low compared to the awareness of EVs,” said Craig Scott, manager of advanced vehicle technologies for Toyota Motor Sales, USA. “We have to do our job to make people aware that this is here, now, and it’s not some kind of science project.”

Fuel-cell cars operate much like electric cars, relying on an electric motor rather than an internal combustion engine to turn the wheels. But instead of drawing their electricity from a big, rechargeable battery pack, they produce it onboard. A fuel cell uses an electrochemical reaction between hydrogen and oxygen to generate current.

California requirements

That reaction yields no carbon dioxide or smog-forming chemicals, only water. As a result, automakers can use fuel-cell cars to meet California’s requirements that a small percentage of the vehicles they sell in the state produce no greenhouse gas emissions. The California Energy Commission last month agreed to spend $46.6 million building 28 hydrogen fueling stations in the Bay Area, the Los Angeles region and along the Interstate 5 corridor.

“Our goal is really zero-emission vehicles,” said commission Chairman Robert Weisenmiller. “So if it’s electric, if it’s hydrogen, if it’s biofuels — we’re agnostic.”

The same zero-emission rule helped make California the center of electric-car culture in America, with more than 32,000 battery-powered vehicles sold in the state so far. But while sales of electrics are slowly rising, some automakers still doubt the average driver will ever embrace them.

Most electric cars can’t travel 100 miles without recharging their batteries, a process that often takes more than an hour at public charging stations. Tesla’s Model S sedan can go 208 to 265 miles on a charge, depending on the size of its battery pack, but most drivers can’t afford its starting price of $71,070.

Fuel-cell cars, in contrast, run for more than 250 miles on a tank of hydrogen. Filling up takes five to seven minutes and uses equipment similar to traditional gas pumps. Unlike electric cars, fuel-cell vehicles can’t fill up at home.

“It’s the only option we think that doesn’t ask customers to sacrifice how they live,” Scott said. Toyota plans to introduce a fuel-cell sedan in California next year. “We think that’s a fool’s game, to try to get people to change their lifestyle.”

Toyota has long been considered an electric-vehicle skeptic, focusing on hybrids instead. Although the company collaborated with Tesla to create an electric version of its Rav4, Toyota didn’t throw much effort into promoting the car, and production is expected to end this year.

Technological lead

Roland Hwang, director of the transportation program at the Natural Resources Defense Council, said Toyota may see in fuel cells a way to retake the technological lead in green cars. Other companies that didn’t jump on the electric bandwagon may feel the same.

“They’re concerned about the leapfrogging of their technology,” Hwang said. “They clearly know they no longer have the pole position in this space.”

Critics question the safety of driving on a big tank of hydrogen, which could ignite in a crash. They also note the difficulty and expense of building hydrogen fueling stations, which cost $1 million to $2 million apiece.

Ten years ago, California’s then-governor, Arnold Schwarzenegger, committed to building 200 hydrogen stations by 2010. Today, the state has nine, with another 17 under development. The new funding from the Energy Commission will bring the total to 54. Prices at those stations remain unclear, as they aren’t yet open to private vehicles.

“To the extent that there’s an infrastructure problem with EVs, there’s an infrastructure problem on steroids with hydrogen,” Kramer said.

Fuel-cell believers consider the safety question overblown, noting that drivers don’t think twice about the tanks of flammable gasoline in their cars. As for fueling stations, most of the early ones will be located near oil refineries, which use hydrogen in their daily operations.

“The automakers have never truly gauged the interest of consumers in fuel cells in the past,” said Alec Gutierrez, senior analyst at the Kelley Blue Book auto information service. While he thinks the cars have potential, he said, “It’s going to be a slow start, for sure.”

— Reach David R. Baker at dbaker@sfchronicle.com

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