Did Toyota Misjudge?
Toyota recently made a management change, with the previous CEO, Akio Toyoda, moving to become board chair, and Koji Sato taking over the top job. Toyoda, grandson of the founder of Toyota, feels the company needs a change in leadership and direction, and believes that someone else needs to take over.
Part of the motivation appears to be the company’s failed bet, guided by Toyoda, on the next phase of automotive powertrains. The company was puttingt their efforts behind hydrogen fuel cell (HFC) cars, rather than battery electric (BEV). The thinking was that it was closer to gasoline and diesel when it comes to the owner experience for refuelling, since refilling with hydrogen is (hypothetically) faster than recharging a battery.
But what surprises me is that they typically resorted to the “there aren’t enough charging stations” as a defence of using HFC. Where this argument falls down, though, is that there are even fewer places to get liquid hydrogen (LH2) in North America or western Europe, two of the three largest new car markets.
There are a handful of stations across North America. In Canada, there are 4 around Vancouver, 1 in Toronto, and 1 in Quebec City. That’s it. In the US, there’s one in Hawaii, and a bunch in California. If charging stations are hard to find, LH2 stations are vanishingly rare, and there doesn’t seem to be much push to expand those networks. But to say “not enough chargers” when your preferred fuel is almost impossible to find seems nonsensical.
I get that Japan is working on expanding their LH2 fuelling network. But it’s easy for a geographically small country with high population density to build out that kind of infrastructure. Western Europe is far larger, and North America is truly massive compared to Japan. There’s already electricity supplied to filling stations, so you can at least put in some kind of a charger, even if it isn’t a higher-voltage rapid charger. Adding LH2 requires a lot more equipment, training for staff, and it requires a supplier to deliver the product.
Yes, there are issues when it comes to transmission of electricity in North America, but at least there’s something. There’s literally nothing when it comes to LH2. And the money that needs to be spent on building up LH2 generating and refuelling facilities is money that could also be spent on upgrading transmission and generating capacity for electricity. That doesn’t mean we can’t do both, and in some ways I find the idea of LH2 a bit more appealing philosophically. But I also recognize the limitations when it comes to the pressure tank to store it, and the challenges we face in creating LH2 in the first place.
The expectation at Toyota is that the new CEO will shift the company’s direction, and put more effort into BEV design and production. This is the direction that the industry and consumers are taking right now. Governments are spending to support BEVs at the moment. It doesn’t mean LH2 and HFC cars are dead. It just means that what people seem to want, and governments are willing to subsidize, are BEV’s, and Toyota will need to adapt to remain competitive.