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TheStreet Open House

Want a Hydrogen-Fueled Car? It'll Cost You Double

Stock quotes in this article: TM

NEW YORK (TheStreet) -- In a presentation to the JPMorgan conference in New York Tuesday, Toyota's (TM) U.S. boss, Bob Carter, made an important disclosure regarding the price of fuel for its upcoming hydrogen fuel cell car.

The purpose of this article is to compare this cost to a gasoline car today.

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The range of Toyota’s first hydrogen fuel cell car, to be made available in Southern California starting in the middle of 2015, is 300 miles. Toyota says that it will initially cost $50 to fully fuel the car for its 300 mile capacity. Then, longer-term, it would cost $30.

By "longer-term" I understand from Toyota that it means at least five to 10 years into the future, perhaps longer. How does this compare to Toyota’s own gasoline cars today?

In my view, the most relevant comparable gasoline car is the Prius. Why?  First of all, it fits five people instead of the four that Toyota’s initial hydrogen fuel cell car will fit. Secondly, it has a large and very flexible luggage space, where the rear seat can be folded for superb usability. At this point we do not know if the hydrogen car’s back seat can be folded.

Some have argued that the more relevant object of comparison is the Camry hybrid. I disagree. The Camry is not really any bigger on the inside, and besides we are comparing it with a car that fits only four people -- not five.  In terms of luggage space, the Camry hybrid is also compromised by the battery placement and is in any case not as well-shaped as the Prius, which is a practical hatchback.

The Prius yields approximately 50 miles per gallon, which millions of Prius drivers have confirmed in real-world driving.  Older versions of the Prius yielded more like 45 mpg.

To travel 300 miles, it therefore takes six gallons in the Prius.  The gasoline price today is approximately $4 per gallon. This means $24 in total.

In other words, Toyota’s hydrogen car is approximately half as cost-efficient as today’s Prius today -- $50 for 300 miles, vs. $24. A decade or so into the future, it would be only 20% less cost-efficient, costing "only" $30.

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Phrased differently, Toyota’s hydrogen car has the cost efficiency of a 25-mpg car today, but with a falling hydrogen fuel price will be the equivalent of a 42-mpg car at some point in the distant future.

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