Monday, August 24, 2009

TOKYO | Honda Motor Co. Ltd. is backing hydrogen power for the cars of the future, waving aside a decision by the Obama administration to drop the fuel-cell technology in favor of battery-run vehicles.

“Fuel-cell cars will become necessary,” said Takashi Moriya, head of Honda’s group developing the technology. “We’re positioning it as the ultimate zero-emission car.”

Honda, the only carmaker to lease hydrogen-powered autos to individual motorists, opened a production line last year in Tochigi prefecture to make 200 fuel-cell FCX Clarity sedans, the model being leased in a trial in Los Angeles.

The Obama administration sought to eliminate hydrogen-station funding and instead lend $1.6 billion to Nissan Motor Co. and $465 million to Tesla Motors Inc. to make electric cars and give $2.4 billion in grants to makers of lithium-ion batteries.

“Honda has a propensity to think very long term,” said Ed Kim, an analyst at AutoPacific Inc. in Tustin, Calif. “It’s also part of the company culture that if they’ve made a decision they think is correct, they’ll really stick with it.”

Honda is not alone. Toyota Motor Corp., Daimler AG, General Motors Corp. and Hyundai Motor Co. say hydrogen, the universe’s most abundant element, is among the few options to replace oil as a low-carbon transportation fuel.

U.S. Energy Secretary Steven Chu said in May his department would “be moving away” from hydrogen, as it is unlikely the United States can convert to the fuel even after 20 years. Nissan chief executive Carlos Ghosn predicts electric vehicles may grab 10 percent of global auto sales by 2020.

Hydrogen, made mainly for industrial use from natural gas, costs about $5 to $10 per kilogram for vehicles in California, more than double an equivalent amount of gasoline. The Energy Department estimates future prices for hydrogen will fall to $2 to $3 a kilogram.

Toyota President Akio Toyoda said earlier this month his company plans consumer sales of fuel-cell cars within six years. Toyota, like Honda, is making “exponential progress” with fuel-cell technology, said Justin Ward, manager of Toyota’s U.S. advanced powertrain program.

A fuel cell is an electrochemical device that combines hydrogen and oxygen to produce electricity, with water and heat as its byproduct. Since the conversion of the fuel to energy takes place via an electrochemical process, not combustion, the process is clean, quiet and highly efficient — two to three times more efficient than burning fuel, scientists say.

Battery-powered electric cars are further along in the market than fuel-cell vehicles, however. Mitsubishi Motors Corp. started selling the i-MiEV last month. Tesla sells a $109,000 Roadster, and Nissan unveiled its first electric car, the Leaf, this month. It plans limited sales of the model in Japan and the United States next year.

Honda hasn’t announced plans for a battery-powered car. The Tokyo company says hydrogen vehicles match the refueling style drivers are used to: filling up in minutes at a service station. Nissan’s Leaf recharges fully in 30 minutes with a fast-charger, or up to 16 hours on a household outlet, said Tetsuro Sasaki, senior manager of Nissan’s battery test group.

A budget crisis slowed plans for more hydrogen stations in California, home to the biggest fleet of cars using the fuel. At the federal level, Mr. Chu sought $333.3 million in May for battery and advanced gasoline autos in the 2010 budget, up 22 percent. Hydrogen funds were cut 60 percent to $68 million, slashing money that would have gone to transportation projects.

The Clarity is available in the United States only in Los Angeles, where drivers have access to 16 hydrogen stations. The five-passenger car has a top speed of 100 mph and can go 240 miles on a single fill-up, more than double the 100-mile range of Nissan’s compact electric car. Through July, Honda leased cars to 10 drivers for $600 a month.

One problem for Honda is the need for a network of hydrogen filling stations.

“We cannot do infrastructure alone,” said Mr. Moriya. “We’ve been developing the cars on our own without government support.”

The Senate and House voted in July to restore the funds to expand access to hydrogen, but President Obama must approve the final budget.

Honda and Toyota will have to reduce production costs to win over consumers. Fuel cells require more platinum — a precious metal that costs more than $1,200 per ounce — and current durability is half that of gasoline engines, according to Mr. Moriya.

Honda plans to offer hydrogen-powered cars at costs comparable to midsize gasoline autos by 2020. Honda said its 2005 hand-built predecessor to the Clarity cost about $1 million. Mr. Moriya wouldn’t discuss the Clarity’s price.

Honda engineers in Tochigi are trying to trim costs. For 13 months, technicians have worked in a semiconductor-style clean room, coating rolls of plastic film for fuel-cell membranes. Nearby, a press stamps stainless-steel plates that will grip the material. Hundreds of the cells are then sealed in a metal case, forming the fuel-cell stack.

Honda’s hydrogen push has been undermined by plunging auto sales in the United States, its main market. Last quarter, profit at Japan’s second-largest carmaker fell 96 percent to $79 million. Honda cut funds for fuel cells and shifted some spending to other “priorities,” Mr. Moriya said, without elaborating.

“Maybe, just maybe, fuel cells will be the future,” said Edwin Merner, who helps manage about $3 billion at Atlantis Investment Research Corp. in Tokyo. “And if you’re not in there, then you have a big disadvantage.”

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