Editor's Note: This is a guest post from Will Sierzchula, a researcher who analyzes factors which influence the development and adoption of alternative fuel vehicles.
Automobiles powered by hydrogen fuel cells are often lampooned as the cars of the future—and they always will be. But by one important measure that moment appears to finally have arrived. At the 2014 Los Angeles Auto Show, Toyota officially introduced its new hydrogen fuel cell vehicle the Mirai (Japanese for “future”). While the Mirai’s commercial introduction marks a technological achievement and bold statement by Toyota, it is unlikely that automobiles powered by hydrogen will take over the roads any time soon. Competition among alternative-fuel vehicles is heating up, however.
To get a hold of a Mirai, consumers can either pay the $57,000 sticker price, or lease the vehicle for $499 a month and a down payment of $3,649. Retail sales in the U.S. are scheduled to start in mid to late 2015 and initially the vehicle will only be available in California. Toyota projects that the Mirai will see limited production in the coming years as the car maker gauges market demand with a total of 3,000 units expected to be sold in the U.S. through 2017.
The Mirai runs on electricity from a process in which its fuel cell strips out electrons when combining hydrogen and oxygen to form H2O (water vapor). With refueling times between 3-5 minutes and driving ranges of approximately 300 miles, fuel cell vehicles address two major consumer concerns regarding battery electric vehicles, namely that they take 30 minutes to several hours to recharge and can only go 70-100 miles on a full battery (excluding Tesla’s Model S and Roadster).
Since hydrogen gas naturally occurs only very rarely on Earth, it must be manufactured in order to power the automobiles. If it is produced using renewable energy such as through solar-powered electrolysis, then fuel cell vehicles give off zero tailpipe pollutants. But if the hydrogen comes from steam methane reforming of natural gas, then the automobiles still emit greenhouse gases. Because of the high cost entailed in using renewable energy to produce hydrogen, Joseph Romm, a former Department of Energy official, claims that the process is not nor will it be economically feasible. Consequently, most hydrogen fuel will likely come from methane reforming.
The Mirai will join Hyundai’s Tucson Fuel Cell as the only mass-produced automobiles that run on hydrogen, bringing the number of fuels that power commercially-available cars up to an astonishing seven: hydrogen, compressed natural gas, liquefied petroleum gas, ethanol, electricity, gasoline, and diesel. Which technology, if any, will ultimately win out remains to be seen.
Vehicles using alternative fuels (i.e., not gasoline or diesel) face formidable barriers to adoption in the form of several ‘chicken-and-egg’ dilemmas including high prices, consumer uncertainty, and lack of infrastructure. In the case of the Mirai, the car costs about $30,000 more than a comparable gas-powered vehicle, suffers from safety concerns (the Hindenburg effect), and can be fueled at only 13 stations in the U.S. But in order to address those types of issues, there needs to be a critical mass of alternative fuel vehicles (AFVs). For example, economies of scale will not help to make AFVs affordable until there is sufficient demand to justify such high production figures. These issues help to explain why AFVs have had such difficulty competing against conventional cars.
In addition, AFVs contend in an auto market that is notoriously slow to change because of a rigid socio-economic system that has developed between consumers, car makers, fuel suppliers, and related service providers. Sales figures suggest it will require a very long time to transition away from cars powered by gasoline or diesel. Hybrid-electric vehicles, though they have been available to consumers for 15 years (and do not require special fuel infrastructure), still account for less than 4 percent of new car sales. Furthermore, plug-in electric vehicles such as the Chevy Volt and Nissan Leaf have less than a 1 percent market share. And although sales of plug-in vehicles have been going up the past three years, hybrid-electric vehicles appear to have hit a market-share plateau.
The IEA projects that over the next 30 years, sales of automobiles using alternative fuels will increase at the expense of vehicles that run on gasoline or diesel. For this to occur, cars powered by different alternative fuels will need to find distinct market niches. Possible scenarios include small electric cars in urban areas due to their limited driving range and zippy pickup, and natural gas-powered vehicles for organizational fleets such as UPS or a university, because of their centralized refueling and low fueling costs.
Regulations provide a guiding hand
Due to pollution and climate change concerns, government policies are attempting to reduce the environmental impact of automobiles. Greenhouse gas regulations and fuel economy standards in the world’s largest auto markets (China, the U.S., the European Union and Japan) drive the development and adoption of eco-friendly vehicles. These policies have helped to improve average U.S. fuel efficiency in passenger vehicles by 26 percent, from 20.1 miles per gallon in 2007 to 25.3 in 2014. However, these policies may only result in incremental improvements to conventional cars, and thus may not actually result in higher AFV adoption rates.
Policies that specifically target specific types of AFVs are more likely to have a big impact on fuel cell and fully electric automobiles. California along with a handful of other U.S. states employ Zero Emission Vehicle (ZEV) regulations that force large auto manufacturers to sell cars that have zero tailpipe pollutants or pay a hefty fine. Fully electric and hydrogen fuel cell vehicles are currently the only automobiles that meet this requirement.
ZEV policies have led to the emergence of several compliance electric vehicles such as the Fiat 500e and Honda Fit EV that are only available in states with these regulations. Initial reports indicate that the Mirai’s commercial introduction may in-part be based on its ability to help Toyota fulfill ZEV requirements and that it is not meant for broad consumer adoption in the short term. Though ZEV sales requirements will ramp up in the coming years, they represent only a small fraction of the new car market and by themselves will not result in broad adoption of fuel cell or electric vehicles. They might, however, help address some of the chicken-or-egg issues that plague AFV adoption identified earlier.
Car makers are attempting to meet these regulatory requirements through a variety of different approaches. Nissan is focusing on fully electric vehicles, GM has put most of its effort behind plug-in hybrid vehicles, and Toyota is betting on hybrid-electric and hydrogen cars. But the auto industry’s long research and development cycle and strong competition between commercial AFV options indicate that the powertrain of the future is unlikely to be decided anytime soon.
The car of the future
In order for any one type of AFV to pull market share away from gasoline and diesel-powered automobiles, a host of issues will need to be addressed, especially in the case of the Mirai. History is littered with examples of one technology disrupting another (e.g., steam powered ships displacing sailing ships), but there is no guarantee that any of the current alternative fuel powertrains will emerge triumphant, much less that hydrogen fuel cell vehicles will be the ones to do so. Due to supportive policies and their rapidly increasing market share, electric vehicles should be considered to have the momentum among contending powertrains. But with hydrogen fuel cell vehicles now having formally entered the fray, the race to power the car of the future is in full swing.