Firms tie up to drive demand for hydrogen vehicles

Japan H2 Mobility President Hideki Sugawara (fifth from left) and representatives of its joint establishment companies hold hands during a photo session after their joint press conference in Tokyo on March 5, 2018.
Japan H2 Mobility President Hideki Sugawara (fifth from left) and representatives of its joint establishment companies hold hands during a photo session after their joint press conference in Tokyo on March 5, 2018.PHOTO: AFP

Japan's top carmakers have teamed up with major energy companies and other key players to set up a consortium to reduce the costs and inconvenience of using hydrogen fuel-cell vehicles (FCVs), in a bid to boost demand.

The consortium of 11 companies - known as Japan H2 Mobility - aims, among other things, to reduce the costs of installing and maintaining hydrogen refuelling stations.

It targets to have 80 new hydrogen stations by fiscal year 2021. These are in addition to the 101 stations that have been built, planned or are undergoing construction by individual companies, said the consortium's president, Mr Hideki Sugawara.

This is in line with national targets set last year for 160 stations by 2020 and 900 by 2030.

Tokyo also wants to increase the number of FCVs on the road to 40,000 units by 2020 and to 800,000 units by 2030.

The hope is that more advanced technology and better cost efficiencies can help to drive consumer interest, with refuelling costs expected to be slashed by a third by 2030, Mr Sugawara said at a news conference on Monday.

The joint venture will work to reduce the burden on infrastructure companies to build and maintain hydrogen stations through private and public funds.

Each station now has a price tag of 500 million yen (S$6 million), about five times the cost of a petrol station. Talks are ongoing to secure other investors.

FCVs have been dubbed by Prime Minister Shinzo Abe as the "ultimate eco-car", but are seen as expensive and inconvenient.

The domestic take-up rate has been slow. Only 2,400 such vehicles ply the roads - four years since Toyota became the world's first carmaker to mass produce such cars and two years after Honda entered the market.

Industry leaders spelt out a chicken-and-egg problem: Demand for FCVs cannot grow without an adequate network of hydrogen refuelling stations which, by themselves, are white elephants if demand is lacking.

This led the 11 companies to band together to rev up national efforts to drive down the costs in installing and maintaining hydrogen stations.

The companies include three of Japan's motoring giants - Toyota, Honda and Nissan. There are also six major energy companies, including JXTG Nippon Oil & Energy, Idemitsu Kosan and Air Liquide Japan. Also represented are trading firm Toyota Tsusho, and the government-backed Development Bank of Japan.

Mr Yutaka Kuwahara, senior vice-president of JXTG, which runs about 40 per cent of Japan's hydrogen stations, said construction has been slowing due to high building costs and a lack of users.

When asked how the new alliance will improve the situation, he said: "We need to lower the costs to remove the bottlenecks of high construction and operational costs, and in this sense, the joint venture marks a new 'all-Japan' business model."

A version of this article appeared in the print edition of The Straits Times on March 07, 2018, with the headline 'Firms tie up to drive demand for hydrogen vehicles'. Print Edition | Subscribe