Toyota Joins California Hydrogen Push in Station Funding

Toyota Motor Corp. is funding a startup led by General Motors Co.’s former marketing chief to speed up the opening of hydrogen-fuel stations in California needed for zero-emission cars.

Toyota is backing FirstElement Fuel, led by Joel Ewanick, with at least $7.2 million, according to letters filed with the California Energy Commission and obtained by Bloomberg News. FirstElement, based in Newport Beach, California, plans to operate pumps and sell hydrogen for passenger cars from at least 19 new stations in California.

The Japanese automaker’s support for the closely held company comes as California provides grants worth $46.6 million for hydrogen-fuel stations that will help companies including Toyota, Hyundai Motor Co. and Honda Motor Co. build a market for hydrogen fuel-cell vehicles arriving this year and next.

“This is really the first step in creating a fueling network that for the first time allows people to use their cars with no limitations,” Ewanick, FirstElement’s chief executive officer, said in an interview. The company was the biggest grant recipient, landing awards totaling $27.6 million.

The California Energy Commission grants will open 28 new hydrogen stations and one mobile refueler in the state, Rachel Grant Kiley, a commission officer, said in a phone interview. California, with just nine public hydrogen stations open and 17 in development, announced a program last year worth as much as $200 million to create a 100-station network over a decade.

Toyota Plans

The figure California announced, the largest such award in the U.S., is more than double the $20 million that carmakers had expected from the state, the biggest U.S. auto market. Vehicles running on hydrogen fuel cells, used in spacecraft since the 1960s, make power in an electrochemical reaction of hydrogen and oxygen, and water vapor is the only exhaust.

Toyota plans to sell a Camry-size fuel-cell sedan, as yet unnamed, to California customers in 2015. Honda promises a replacement next year for its FCX Clarity sedan, now leased to a few dozen Los Angeles-area drivers. Hyundai is about to start leases for a fuel-cell version of its Tucson, a crossover vehicle already available in South Korea.

Bob Carter, Toyota’s senior vice president, said in January that the carmaker was prepared to help create a hydrogen station network in California, without elaborating.

“The first few years here in California will be a critical period for hydrogen fuel cell technology,” Carter said in a statement yesterday. “Through this financial arrangement with FirstElement, Toyota is showing its full commitment to deploy zero-emission fuel-cell vehicles here.”

Automaker Funding

The carmaker’s total financing commitment to FirstElement hasn’t been determined, said John Hanson, a spokesman for Toyota.

“The actual amount of financial assistance will be based on an analysis of the grant of the award to FirstElement by the CEC,” with final approval anticipated in June, Hanson said.

The state energy commission isn’t aware of any other automakers financially supporting hydrogen fuel station operators, said Lori Sinsley, a deputy executive director of the Sacramento-based agency.

Automakers are under pressure in California, as well as across the U.S., Europe, Japan and South Korea, to offer vehicles that emit little or no carbon pollution and reduce petroleum use. While fuel-cell vehicles, like battery-electric cars, produce no tailpipe pollution, a lack of fueling infrastructure has been a hurdle to bringing them to market.

Toyota, Honda, Hyundai, Daimler AG and GM, along with developing hybrid-electric and rechargeable models, say hydrogen is a long-term replacement fuel for petroleum.

Federal Program

“For larger vehicles, we believe hydrogen will be the fuel of the next century,” Chris Hostetter, Toyota’s U.S. group vice president for strategic planning, said at the Milken Global Conference this week in Beverly Hills, California.

Separately, the U.S. Energy Department said it also wants to accelerate the design and construction of fueling stations for cars that run on hydrogen.

Under the H2FIRST project announced April 30, the agency will collaborate with Sandia National Laboratories and the National Renewable Energy Laboratory on designs and materials for hydrogen fueling stations. Researchers will also share data with state agencies, automakers and hydrogen suppliers to reduce the cost and time needed to develop the infrastructure.

Fuel Cells

Automakers collectively have poured billions of dollars into fuel cells since the 1990s, spurred by hydrogen’s allure. For mass-market appeal, carmakers are competing to cut the cost of the cell stacks, which use expensive precious metals, and the high-pressure carbon-fiber fuel tanks.

Toyota’s fuel-cell program started in 1992, said Hostetter, who estimates that more than half of new vehicles sold from 2030 onward will be fuel-cell or battery-electric.

“We believe that fuel cell -- due to its convenience to the customer, no range anxiety, no temperature issue -- will really become the standard of the future,” he said.

Toyota’s American depositary receipts rose 0.2 percent to $109.97 at 9:47 a.m. in New York and had dropped 10 percent this year through yesterday.

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