Fill ‘Er Up With Hydrogen

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from Fortune Magazine,

With a wave of new models in the pipeline, automakers like Toyota, GM, and Honda are betting that the fuel-cell car’s time has finally come.

Hydrogen is the fuel of the future — and always will be. So goes a long-running joke in engineering circles. The quest to build a car powered by one of the most abundant elements on earth dates back to 1966.

In the decades since, the major automakers have spent billions in a quest to perfect the hydrogen car — with little to show for their R&D dollars. Though hydrogen fuel cells have become much smaller, cheaper, and infinitely more efficient over the years, the technology has remained stuck on a road to nowhere. Fewer than 500 fuel-cell cars were sold globally last year, according to Navigant Research.

But at long last we might — just maybe — be on the verge of a hydrogen moment. Virtually every major carmaker is preparing to launch hydrogen-powered models in the next few years.

What’s behind all the activity? The cynical view is that the auto industry is simply scrambling to meet California’s strict air regulations: By 2025 more than 22% of new sales for the major automakers must be zero-emission or plug-in hybrids. “With electric car sales not living up to expectations, the carmakers are looking for a hedge to meet the standards in California, and hydrogen provides that,” says Kevin See, a senior analyst at Lux research.

That may be true. But fuel-cell proponents are feeling optimistic for a good reason: Hydrogen appears to be close to making economic as well as environmental sense. The price of hydrogen fuel cells has dropped dramatically, and the range and reliability have increased.

But the biggest challenge facing fuel-cell cars today is the same as it’s always been — a lack of infrastructure. Only a handful of hydrogen filling stations exist in the U.S. “What we have is a chicken and egg problem,” says Chris Hostetter, the group VP for strategic planning at Toyota Motor Sales USA. “The entrepreneurs don’t want to invest in hydrogen stations until there are enough cars on the road, and the carmakers can’t sell large numbers of the car unless there’s a place to fuel them.”

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