Oct. 9 (Bloomberg) -- General Motors Co., Toyota Motor Corp. and other automakers want to sell consumers electric cars powered by hydrogen within six years. Their plans clash with the U.S. government’s infrastructure priorities.

GM, Toyota, Honda Motor Co. and Daimler AG say durability improvements and cost reductions may enable them to sell the zero-emission vehicles by 2015. Costs to make the fuel-cell cars have fallen from $1 million each a few years ago, and automakers are working to meet a proposed goal of slashing the premium for the cars to $3,600 more than a midsized gasoline model.

As the federal government, utilities, cities and states plan charging infrastructure for battery cars, hydrogen fueling stations are also needed, automakers say. While Germany and Japan are moving to build large-scale fueling networks, the U.S. lacks a national infrastructure program and the Energy Department has sought to cut hydrogen-related project funding.

“The advances that have been made by the automobile manufacturers are remarkable,” said Scott Samuelsen, director of the National Fuel Cell Research Center at the University of California, Irvine. “Infrastructure is the Achilles’ heel.”

The fuel cell center opened in 1998 and is funded mainly by the U.S. government and California Energy Commission. It has also received grants from Toyota and Royal Dutch Shell Plc’s hydrogen unit, said Kathy Haq, a spokeswoman for the center.

Toyota rose 0.6 percent to close at 3,520 yen in Tokyo trading. The shares have gained 21 percent this year.

Funding Cut

The U.S. has provided more than $10 billion in low-cost loans and grants this year for production of electric cars, batteries and charging infrastructure, as the Obama administration pushes automakers to improve fuel economy and cut oil imports. By contrast, hydrogen funding was initially gutted.

Energy Secretary Steven Chu in May recommended a 60 percent budget cut for hydrogen projects to $68.2 million, saying batteries and bio-fuels are a better near-term option. Congress restored funding to $190 million.

“Secretary Chu will continue to work with Congress to shape a budget that will help us achieve the most efficient vehicles and will help save money for consumers,” said Stephanie Mueller, an Energy Department spokeswoman.

Hydrogen “is taking longer because fuel cells themselves are still very expensive and getting ‘green’ hydrogen -- made from wind or solar, rather than natural gas -- is still not so easy,” said Daniel Kammen, director of the Renewable and Appropriate Energy Laboratory at the University of California, Berkeley.

“It might look right now that EVs and plug-ins are winning the race, certainly in terms of federal funding, but that’s because they’re a bit more near term,” Kammen said.

‘Million-Dollar Car’

Hydrogen cars, touted for a decade as an eventual replacement for gasoline models, offer better range and faster fueling than battery models. Fuel cells, made up of layers of plastic film coated with platinum sandwiched between metal plates, make electricity in a chemical process combining hydrogen and oxygen, with water vapor as the only exhaust.

“The fuel-cell vehicle has been called the ‘million-dollar car,’ and when they first came out, they were a million bucks,” Irv Miller, a group vice president for Toyota’s U.S. sales unit, said Oct. 2 in Los Angeles.

Toyota, Honda, Daimler and Hyundai Motor Co. said at a Sept. 21 briefing in Sacramento, California, they were working to meet a proposed target of a $3,600 cost premium for the cars. To do that will require mass-production and continued cuts in fuel- cell stack and hydrogen tank costs, the companies said.

Platinum Costs

GM has spent $1.5 billion on fuel-cell research, Charles Freese, executive director of GM’s fuel-cell program, said in an interview. The company is discussing partnerships to commercialize the technology, he said, without providing details.

Detroit-based GM showed a fuel-cell system on Sept. 24 that is 220 pounds lighter than one it replaces, uses less than half as much platinum and may be durable enough for a decade of use.

“We’ve gone from 80 grams of platinum per stack to less than 30 grams,” Freese said. The reduction, smaller size and other refinements mean “substantial” cost reductions, he said, without elaborating. Platinum cost $1,334 an ounce as of Oct. 8.

GM, Toyota, Honda, Daimler, Hyundai, Kia Motors Corp., Renault SA and Nissan Motor Co. released a statement Sept. 9 saying they shared a goal to create a fuel-cell vehicle market within six years.

Government support for the goal is stronger in Germany and Japan than in the U.S., according to GM’s Freese and Samuelsen of the fuel cell center. Germany plans 1,000 hydrogen stations by 2015, and Japan has a similar goal.

Germany, California

The German government is working with utilities and Linde AG, the world’s second-biggest maker of industrial gases, to set up a station network, Bharat Balasubramanian, Daimler’s vice president for product innovations, said in Los Angeles.

“We have a road map to address these challenges of infrastructure by 2015,” Balasubramanian said.

In California, where most fuel-cell vehicles in the U.S. are tested and even owned by some customers, compressed hydrogen gas is dispensed at pumps similar to those for gasoline. The fuel comes either from a process that breaks down natural gas using steam, or from solar power and water.

While the state requires large automakers to sell “zero- emission” vehicles, it’s added hydrogen stations at a slower pace than planned, said Catherine Dunwoody, executive director of the California Fuel Cell Partnership. California currently lists 23 stations in operation.

“Germany has come out with a very strong program to develop infrastructure; we don’t have anything like that on the federal level,” Dunwoody said.

Hydrogen Pumps

Just 32 public hydrogen pumps, installed mainly at existing gasoline stations in Southern California, would be sufficient to support an initial consumer market and cost as little as $32 million, Samuelsen said.

Shell, among the few oil companies adding U.S. hydrogen stations, will open two more in Southern California by next year, Phil Baxley, president of Shell Hydrogen, said in Los Angeles. Shell is also participating in Germany’s program.

The cost of installing a hydrogen pump at a Shell station ranges from $1 million to $5 million, depending on how much capacity is required, Baxley said.

“Daimler, Toyota, Honda, they have the advantage of partnerships with national governments that are forcing the creation of a fueling infrastructure,” GM’s Freese said. “If we don’t do the same thing in the U.S., we’re going to fall behind.”

To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

Last Updated: October 9, 2009 03:53 EDT