Toyota is pushing hydrogen cars but will they ever be as cheap to run as EVs?




Toyota is pushing hydrogen cars but will they ever be as cheap to run as EVs?


When security guard Grant Burton patrols Melbourne’s streets in a green and white decaled Toyota sedan, pedestrians likely can’t pick that he is driving a very rare type of vehicle. 


From the back, his company car looks like a battery electric vehicle, with no rear exhaust for fumes. Yet it still has a tailpipe hidden underneath the carriage.


As Mr Burton jokes, what drips out there is so pure you can “cook noodles in it”.


His car only emits water, and it is fuelled by hydrogen.


Mr Burton jokes, said:


These have been a big win for us across the business.


“They’re a niche customer base right now being pioneered by a few brands in the market. But hopefully we see a take-off in the next few years.”


Toyota is also betting on a take-off in coming years, and is pouring money into hydrogen development at a time when other established automotive companies are pledging to go all EV. 


Yet some analysts say hydrogen will never win this race. 


Why bother with a hydrogen car in the new world of EVs?


For Mr Burton’s security company, every minute off the road is lost money.


That’s what YPG Risk discovered a year ago, when they first trialled several EVs that needed to be plugged in for hours at a time to fully recharge their batteries. 


Mr Burton, says:


If [a company car] is plugged in at 10 per cent battery, we can’t leave the area at a moment’s notice, let alone respond to alarm responses, lock-up requests, those sorts of things.


“We need to refuel at a moment’s notice, and have a car on the road in minutes.”


For his security company, the traditional EV shortcomings are solved by its three new hydrogen fuel cell cars.


Through a leasing agreement with Toyota, the cars can be taken down to the Japanese company’s hydrogen refuelling station in Melbourne’s west, just a 20-minute drive from the company’s headquarters.


The hydrogen is made there onsite through electrolysation, which involves taking solar generated onsite and energy from the grid, and using this power to split lots of water into hydrogen and oxygen.


The hydrogen is stored at sub-zero temperatures as a gas, and comes out of a nozzle into the car in the same way as refuelling an old-school petrol or diesel internal combustion engine (ICE).


Filling up takes less than five minutes, and a full tank can run a Toyota Mirai for up to 650km. At this stage, workers from YPG Risk are taking their hydrogen cars to this facility every morning to refuel. 


Mr Burton, says:


“Within days, we knew this was the vehicle for us to move our fleet beyond [petrol],”


Under the hood, the car’s fuel cell converts the hydrogen gas back into power, which runs the engine.


As Toyota’s local manager of carbon policy explains, this makes these cars more similar to EVs than the internal combustion engines that the world’s largest car company was founded on 86 years ago.


Andrew Willis, says:


It’s an electric vehicle, but it’s powered by hydrogen.


Mr Willis says the only emission is water vapour, after the hydrogen reforms with oxygen.


“You can collect the water,” he says.


“It’s nice and pure and green, and you could water the garden [with it].


“Dr Karl Kruszelnicki and others in the past have actually drunk the water itself. It’s probably not recommended but you can do it.”


What’s keeping hydrogen cars in the slow lane?


Despite the advantages of hydrogen fuel cell cars, the technology hasn’t yet taken off in Australia.


Just six hydrogen fuel cell vehicles were brought here in 2023 — all of them Toyota Mirais accessed through leasing arrangements — compared to more than 87,000 new EVs and even more hybrids.


Toyota’s Andrew Willis says a lack of refuelling infrastructure is holding up wider adoption.


There are only about a dozen hydrogen refuelling stations nationally, including the one owned by Toyota in Melbourne, which can only produce enough hydrogen daily for about a dozen cars.


Mr Willis, says:


“The refuelling infrastructure is limited,”


“It’s growing, but it’s still limited. We can’t introduce a car to market that you can’t refuel.


“Refuelling is one of the key barriers to the growth in the volumes.”


Mr Burton is also agitating for more refuelling infrastructure.


While his company is making do with the current Toyota refuelling facility, it would like more options so that their hydrogen cars aren’t stuck driving within a roughly 250km range of this facility.


“I believe the government needs to get on board and install more refuelling stations,” Mr Burton says.


“Right now their attention is focused on EV chargers.”


Hydrogen refuelling stations opened recently include a $2.5 million facility jointly funded by Swinburne University and the federal science body CSIRO. The federal body ARENA is also opening another one.


The federal government has committed half a billion dollars towards EV charging infrastructure, compared to $80 million matched by the states towards hydrogen refuelling, mostly for bigger vehicles like trucks.


Are more refuelling sites the solution?


While hydrogen enthusiasts want more refuelling infrastructure, Grattan Institute energy economist Alison Reeve says global evidence shows it won’t lead to widespread uptake of these cars.


“If you look at California, for example, they’ve spent a billion US dollars since 2008, subsidising refuelling stations,” she says.


“They’ve got 55 refilling stations across the state. And they have a total fleet size in the US of around 18,000 hydrogen vehicles.”


She believes this is because most typical drivers contemplating a switch to low-emissions cars are finding that hydrogen ones don’t stack up economically compared to EVs.


She says the cost of hydrogen gas is currently averaging anywhere between $7/kg and $16/kg, which works out to roughly the same cost per 100km of driving a petrol car.


“That’s a big contrast to battery electric cars, which even though they cost more up-front, are a lot cheaper per 100km to drive and actually end up saving you money over the life of the car,” Ms Reeve says.


“Hydrogen cars don’t really do that at the moment.”


Ms Reeve thinks the price of hydrogen will need to plummet down to $2/kg to become comparable to EVs.


“To get hydrogen at $2/kg, you need to be able to make electricity to make the hydrogen really, really, really cheap,” she explains.


“And the thing is, that when electricity gets really cheap, it becomes even cheaper to run your electric car.”


On this assessment, Ms Reeve believes the vast majority of Australian drivers will choose EVs over hydrogen cars, especially because they don’t drive a lot and can recharge their cars at home overnight.


“If you’re talking about government subsidising hydrogen refuelling stations, they really need to think about where the hydrogen going to get used,” she says.


“A lot of that general infrastructure may well end up as a stranded asset.”


The energy analyst does concede that hydrogen cars will make sense for “niche” sectors, such as taxi fleets or security patrols — and is exactly what Mr Burton’s security company YPG Risk is experiencing under its current deal with Toyota.


Its Toyota Mirai can only be leased from the automotive company at a cost of around $25,000 a year, which includes registration, licensing, tyre changes and servicing, and all the hydrogen refilling they want.


This works out well for the company, which has cars that can drive hundreds of kilometres a night.


“It’s even cheaper for us. We would have been spending $25,000 on the fuel alone,” Mr Burton says.


Toyota’s Andrew Willis says the current leasing deal is not a money-maker for the company, and acknowledged that the price of hydrogen needs to drop down to around $2/kg.


Will more money be put into refuelling for ‘niche’ sectors?


In response to this story, the federal government acknowledged that hydrogen passenger vehicles being developed by companies like Toyota, Hyundai, and Honda have some upsides.


“They offer some weight, range, and refuelling advantages,” a spokesperson for the Minister for Climate Change, Chris Bowen, said in a statement.


“This may result in them fulfilling particular roles in the future and complementing other low emission vehicles technologies.”


Yet the minister’s spokesperson also noted that the federal government’s $80 million for hydrogen was primarily going towards refuelling infrastructure for bigger vehicles, such as trucks. 


Some proponents of hydrogen have been arguing that this is where the focus should be because bigger vehicles like trains or buses will always struggle to be powered purely by heavy batteries.


Over in the UK, a large farming machinery company believes hydrogen is the future, and has developed forklifts with old school-internal combustion engines that run on this element.


This has also been something Toyota is working on. It’s got a trial of vans here with ICE engines that run on hydrogen and have “ultra-low CO2 tailpipe emissions”. 


At a global car conference, its chairman Akio Toyoda also mentioned a racing car that the company unveiled recently, that runs on liquid hydrogen and has an internal combustion engine.


“Many of our 5.5 million colleagues make engine parts,” Akio told the crowd.


“These people support Japan and have the skills to make the Japan of tomorrow strong. We must never lose these people.


“To all those who have made engines up until now, let’s continue to make engines,” he said, adding that their “sounds and smells are irresistible”.


“There is always one truth. The only enemy is carbon!”


In Alison Reeve’s opinion, Toyota is fighting a losing game.


While the company does sell a lot of hybrid cars, which combine old-school engines with battery technology, it has been slower than other big car makers to introduce pure EVs. Its first only comes out here next month.


“The companies that made a big bet on hydrogen vehicles and have found that’s not working out for them, I think are a little bit reluctant to let go of the sunk cost,” Ms Reeve says.


“The uptake of fuel cell vehicles in Japan has not been as high as the uptake of battery electric vehicles.


“There are only 420 hydrogen fuel cell cars sold in Japan last year, and that’s in a market of more than 7 million vehicles.”


Back in Australia, Toyota’s Mr Willis reiterated the company’s “multifaceted” strategy to ABC News, and said more hydrogen cars will start appearing on Australian roads between “now and 2030”.


“We have plenty of customers that are very interested in hydrogen, from the mining sector to local businesses,” he says.


“So there is a lot of excitement out there but there are still some ways to go.”



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