Toyota’s fuel cell vehicle, the Mirai, comes to Calif.

Dana Hull, Bloomberg News 12:12 a.m. EST November 22, 2015

The Toyota Mirai fuel cell vehicle(Photo: Jordan Strauss / Invision for Toyota)

Toyota Motor Corp. is making a huge bet with its Mirai fuel-cell sedan that hydrogen-powered vehicles — not battery-electric cars — will be the real future of clean transportation. It's starting with very small numbers.

Toyota sold 34 of them last month in California, the only state in the U.S. where it is currently available for sale or lease, and plans to deliver 100 this year at a price of $58,335. The car qualifies for a $5,000 rebate from the state of California and the coveted, white carpool-lane sticker.

Toyota argues that hydrogen-powered vehicles have a big advantage over battery-electric cars and are a better long-term solution to clean-air regulations. The trapezoid-shaped Mirai can go 312 miles on a full tank of hydrogen and takes three to five minutes to refuel, which is closer to what consumers experience with gasoline-powered cars. No plug-in electric car on the market can go that far on a single charge.

The world's largest automaker is making about three Mirais each day at a plant in Toyota City, the company's headquarters city in Japan. It plans to produce 2,000 of the cars next year and 3,000 in 2017 before accelerating production even faster.

"Our goal is to produce 30,000 units annually by 2020," said Yoshikazu Tanaka, the Mirai's chief engineer. "Further cost reduction is necessary to make the technology affordable and accessible."

Toyota isn't alone. Honda Motor Co. is working on a reboot of its fuel-cell model, and Seoul-based Hyundai Motor Co. started selling a hydrogen-powered Tucson SUV last year. Neither sells battery-EV in the U.S.

California is helping Toyota's hydrogen play in a big way. Former Governor Arnold Schwarzenegger started talking about a "hydrogen highway" back in 2004. The state's ambitious zero- emission vehicle goal calls for at least 1.5 million hydrogen, electric and plug-in vehicles to be on the roads by 2025. To jump-start the infrastructure needed to support consumer adoption, the state is spending $200 million to build 100 hydrogen refueling stations, many of them clustered in Los Angeles and around the Bay Area.

Toyota is introducing the Mirai very slowly. Only eight Toyota dealerships — four in northern California and four in southern California — are designated "launch dealers." Owners must live near one of those dealerships and in proximity to a hydrogen fueling station. Consumers don't have a lot of options and can choose between four colors: blue, white, silver and black.

The perks Toyota is throwing in for initial owners are plentiful, including three years of complimentary fuel and roadside assistance, and seven days with a free rental car annually.

"We're just now starting to deliver the first Mirais in California," said Toyota spokesman John Hanson. "But we believe that hydrogen fuel cell electric vehicles, more than battery electric vehicles, will become mainstream vehicles more quickly."

Toyota sees battery-electric vehicles filling a niche for short commutes, but thinks that fuel cell vehicles, or FCVs, have the greatest potential for long distance driving and for use in buses and trucks.

Like electricity, hydrogen can be produced in several ways; most is made from natural gas. Hydrogen fuel cells generate electricity from the chemical reaction between hydrogen and oxygen, with water vapor as the only exhaust product. A fuel cell vehicle is refueled instead of recharged.

Fuel cells like the Mirai, which means "future" in Japanese, have been questioned by competitors. Tesla Motors Inc. Chief Executive Officer Elon Musk has been among the loudest, calling them "fool cells" and telling analysts last year that the technology is inefficient and that "success is not one of the possible outcomes."

"I'm bewildered that Elon Musk is denying fuel cells," said Tanaka, who spoke through an interpreter during an interview in San Francisco. "But if Elon Musk says fuel cell technology is stupid, in a sense this is true: We are just at the beginning. It was just born and has huge potential."

Toyota was an early partner with Tesla, investing $50 million in the Palo Alto, California-based company and cooperating on the RAV4EV, which produced roughly 2,500 vehicles. But Toyota is now firmly focused on fuel cells, and has invested in FirstElement Fuel Inc., a startup that is creating a hydrogen fueling network. The Japanese automaker has stopped making the RAV4 EV.

"The question isn't Do we need fuel cells or plug-in vehicles?"' said David Reichmuth, a senior engineer in the Clean Vehicles Program at the Union of Concerned Scientists. "We need both. Fuel cells are not competing with plug-in EVs; they are teammates. The main difference between them is how they store the energy."

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Source: Toyota's fuel cell vehicle, the Mirai, comes to Calif.