Toyota Bets on China Fuel Cell Future With FAW, Other Automakers
(Bloomberg) -- Toyota Motor Corp. is teaming up with five Chinese companies including Beijing Automobile Group Co. and China FAW Corp. to develop fuel cells for commercial vehicles, seeking to push deeper into China and the market for the alternate energy source.
The other joint venture partners are Beijing SinoHytec Co., Dongfeng Motor Corp. and Guangzhou Automobile Group Co., the companies said Friday. The new Beijing-based entity, which will be 65% owned by Toyota, will be called United Fuel Cell System R&D and start with an initial investment of 5 billion yen ($46 million).
Toyota has been one of the biggest backers of fuel cells among global automakers, betting that they can become a source of energy for electric vehicles on par or even better than batteries. The new partnership underscores Toyota’s continued interest in fuel cells, especially for commercial applications such as buses and trucks. Annual sales of fuel cells are on track to reach 1 million vehicles by 2035, according to BloomberNEF, driven by growth of buses and commercial vehicles mainly in China, Korea, Japan and Europe.
“China is really trying to commit to fuel cells,” said Seiji Sugiura, an analyst at Tokyo Tokai.
The six companies will try to develop low-cost fuel cell systems while improving drive performance, fuel efficiency and durability, they said in a statement. FAW and Dongfeng are two of three central government-owned automaking groups in China, and Toyota has already partnered with Guangzhou Auto and China FAW to develop fuel cell vehicles. Beijing Auto and GAC are partners with foreign carmakers including Daimler AG and Honda Motor Co.
Despite the backing of Toyota and other industry giants touting the benefits of fuel-cell vehicles — they refuel faster and are more suitable for driving long distances than all-electric vehicles — the technology hasn’t caught on due its expensive price tag. Price of hydrogen remains higher than other transport fuels, and there hasn’t been enough hydrogen refueling infrastructure, according to BNEF. Toyota has also recently put more resources into battery development.
China has the muscle to change the landscape should it make hydrogen-powered vehicles a national priority. The world’s biggest car market is set to embrace hydrogen fuel-cell vehicles in the same way that it did EVs, Wan Gang, who’s been called the father of China’s electric-car movement, said last year.
The government wants 1 million fuel-cell vehicles on the roads in a decade and is seeding that plan with hundreds of millions of yuan to spur research and development, and to subsidize purchases. And, as seen with EVs, a slew of startups and established companies are trying to capitalize.
“The fuel-cell electric vehicle market, primarily for commercial vehicles, is growing at a pace not seen anywhere else in the world,” Toyota said in the statement.
BNEF tracked more than $17 billion worth of announced investments in the industry through 2023. One of the largest is China National Heavy Duty Truck Group’s plan to spend $7.6 billion to manufacture fuel-cell vehicles in Shandong province on the east coast.
Even so, China still has a long way to go. The number of fuel-cell vehicles on the road — both passenger and commercial — will only reach 5,000 units next year, according to government projections.
©2020 Bloomberg L.P.