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INSIGHT-In green car race, Toyota adds muscle with fuel-cell launch

Source: Reuters - Thu, 17 Apr 2014 09:00 GMT
Author: Reuters
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(Drops "Tokyo" from paragraph 25)

By Norihiko Shirouzu, Paul Lienert and Yoko Kubota

TOYOTA CITY, Japan/IRVINE, Calif., April 17 (Reuters) - In 1997, Toyota caught its competitors by surprise with the revolutionary Prius, the first commercially successful gasoline-electric hybrid car. Now, the Japanese firm is trying to do the same with a technology that seems straight out of science fiction.

Toyota Motor Corp will next year launch a hydrogen-powered car in the United States, Japan and Europe. For now, people at Toyota are calling it the 2015 FC car, for fuel-cell.

Fuel-cell cars use a "stack" of cells that electro-chemically combine hydrogen with oxygen to generate electricity that helps propel the car. Their only emission, bar heat, is water vapor, they can run five times longer than battery electric cars, and it takes just minutes to fill the tank with hydrogen - far quicker than even the most rapid charger can recharge a battery electric car.

The 2015 launch culminates a 20-year zig-zag quest during which Toyota first struggled to get the technology to work and then strained to lower manufacturing costs enough to permit realistic pricing. It has also been playing catch-up to rival Honda Motor Co, which has set the early pace with its FCX Clarity, a sleek, purpose-built hydrogen car.

The cost-cutting continues, though Toyota thinks it has cracked the code with incremental design improvements, such as using wider, flatter "fettuccine-style" copper in coils that make the motor more powerful, and thus smaller and cheaper.

"With the 2015 FC car we think we've achieved a degree of dominance over our rivals," Satoshi Ogiso, a Toyota managing director, said in a recent interview at the group's global headquarters. "With the car, we make a first giant step" toward making fuel-cell vehicles practical for everyday use.

What's more, executives and engineers say Toyota is willing to sell the car at a loss for a long while to popularize the new technology - just as it did with the Prius, which, with other hybrids, now accounts for 14 percent of Toyota's annual sales, excluding group companies, of around 9 million vehicles.

As a result, drivers in key "green" markets such as California may be able to buy the car for a little more than $30,000-$40,000, after government subsidies - if management approves a pricing strategy put forward by a group of managers and engineers. General Motors Co's Chevrolet Volt, a near-all-electric plug-in hybrid, for comparison, starts at around $35,000 in the United States.

The stakes are high - for global automakers, oil producers, economies, and the environment.

INFRASTRUCTURE ROADBLOCKS

As with battery electric cars, a major challenge for fuel-cell automakers is a lack of infrastructure, with few hydrogen fuel stations in the world. Estimates vary, but it costs about $2 million to build a single hydrogen fuel station in the United States, according to Toyota executives.

Safety is also a concern. Hydrogen is a highly flammable element when not handled properly.

The Toyota launch pits fuel-cell technology against battery electric in a race to capture the hearts and wallets of drivers looking for engines that are easier on the environment. Automakers are under pressure to invest in so-called "zero-emission" cars as tougher rules globally demand lower harmful emissions and better fuel economy.

It's a polarizing debate.

Takeshi Uchiyamada, the 67-year-old "father of the Prius" whose success catapulted him from mid-level engineer to Toyota board chairman, says technology inefficiencies will make the battery electric car little more than an "errands car" - a small run-around for shopping, dropping the kids at school and other short-haul chores.

Other global automakers in the fuel-cell camp include Daimler AG, Hyundai Motor Co and Honda, which plans to introduce an upgraded FCX Clarity next year with seating for five, a smaller fuel-cell stack, greater power and a longer driving range.

Those betting on battery electric cars include Nissan Motor Co, Tesla Motors Inc, Bayerische Motoren Werke AG, GM, Ford Motor Co and Chinese automakers backed by the country's industrial policymakers. China offers generous purchase incentives for those buying battery electric cars and aims to have 5 million "new energy" vehicles - mostly all-electric and near all-electric plug-in hybrids - on the road by 2020. Several of these will be exhibited at the Beijing auto show from April 20.

Tesla chief Elon Musk has said hydrogen is an unsuitable fuel for cars. In a videotaped speech last year to employees and others at a new Tesla service center in Germany, Musk said: "Fuel-cell is so bullshit. Hydrogen is a quite dangerous gas. It's suitable for the upper-stage rocket, but not for cars."

Even Toyota only expects tens of thousands of fuel-cell cars to be sold each year a decade from now as the new technology will need time to gain traction.

GETTING YELLED AT

It's been a long road for Toyota to get this far.

Ogiso, who was part of the team that came up with the Prius and now leads the development of hydrogen cars, likens the two-decade effort to "racing cars in dark tunnels."

"You don't know whether you're ahead or behind," said the 53-year-old engineer-turned executive.

Just a decade ago, it cost more than $1 million to manufacture a fuel-cell vehicle propulsion system. Toyota has whittled down those costs and overcome technological hurdles, such as how to start the car in very cold weather.

In October 2003, a materials researcher at Toyota's tech center in Ann Arbor, Michigan gave a presentation in which he highlighted the difficulty his team faced in solving this issue. Shortly afterwards, rival Honda said it developed a fuel-cell car that could run in temperatures as low as minus 20 Celsius (minus 4 Fahrenheit). "It was embarrassing, and we were yelled at by the big bosses," recalled a person familiar with the incident.

Five years later, there was more embarrassment at the hands of Honda - what Toyota fuel-cell engineers call the "Clarity shock" - referring to Honda's launch of the FCX Clarity. "Honda built every part of that from the ground up, and it had cool styling," said a Toyota engineer who has been on the fuel-cell team for more than a decade. "It sent shockwaves through our team."

On a single floor of Toyota's research tower, across the street from the headquarters, some 200 material scientists, chemists, computer programmers and mechanical engineers worked to nail down the hydrogen electric fuel-cell technology they needed.

LESS PLATINUM

A sizeable chunk of the cost savings has come from using less platinum as a catalyst in the electrochemical reaction between hydrogen and oxygen, resulting in fuel economies. Toyota says its 2015 hydrogen car should drive 700 km (435 miles) on a single tank, more than many conventional gasoline-engine cars, and a strong selling point to those worried about driving range.

Ogiso and his engineers are reluctant to talk specifically about how they made their breakthrough, but noted Toyota's expertise in nanotechnology, allowing them to shrink platinum particles to better combine oxygen and hydrogen and generate more electricity. That allowed them to reduce the size of the cell stack and use less fuel to make the car go farther.

Ogiso says Toyota has cut the platinum use per car by more than two-thirds through nanotechnology and stack-design improvements, and he expects to trim that further. Engineer Hitoshi Nomasa said a hydrogen-powered Toyota SUV now uses around 30 grams of platinum in the fuel-cell, down from 100 grams previously. Platinum currently costs $1,437 an ounce (28 grams) on world markets.

Toyota has also borrowed spare parts from the Prius and other gasoline-electric hybrids it sells around the world. While the fuel-cell car uses hydrogen as fuel, it otherwise resembles the hybrid models as both use electricity to power their motors.

"Very roughly ... under the hood of the 2015 FC car lie more or less the exact same components used for the Prius and other hybrids," said another Toyota fuel-cell engineer, referring to the electric motor, "transaxle" gear and hybrid battery pack, among the parts lifted from the hybrid spares bin.

Even the incremental advance with the "fettuccine coils" - the wide, flat-shaped copper wire can bind the coil more tightly and needs less space - took the Toyota team a decade to hone.

While costs have come down significantly, Toyota says a hydrogen car's fuel-cell propulsion system alone still costs it close to $50,000 to produce. That's partly why some Toyota money managers want a more conservative pricing strategy - of $50,000-$100,000 - said one individual on the 2015 FC car launch team.

"It might be tough to price it below $50,000," Ogiso said. "But anything is possible at this point." (Editing by Ian Geoghegan)

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