Hyundai preps fuel cell vehicle for '14 U.S. debut

Editor's note: An earlier version of this story, which also appeared on Page 28 of the Nov. 11 issue, mischaracterized California’s plans to develop a network of hydrogen refueling stations. The state has a goal of opening 68 more stations by 2016.

NAMYANG, South Korea -- Hyundai is readying a fuel cell electric crossover for a U.S. debut next year, joining a cadre of automakers that see renewed promise in the economic viability of hydrogen-powered vehicles.

Kwon Moon-sik, Hyundai Motor Group's president of r&d, discussed the plans during a recent media event here, saying that cost factors are pointing the company toward electric vehicles powered by hydrogen rather than batteries, where several automakers say the potential for economies of scale are drying up.

"There is no problem with the technology -- only with the cost and profitability," Kwon said of battery EVs. "We cannot make a profit with them."

Kwon says that the advanced lithium ion batteries used in modern electric cars remain expensive, and few opportunities for cost reductions are on the horizon.

On the other hand, he said, hydrogen fuel cells offer more hope for volume savings.

Kwon's comments highlight the global auto industry's increased attention to hydrogen fuel cell-powered vehicles, whose only waste product is water.

Along with Hyundai, automakers such as Toyota, Honda, Daimler, General Motors, Ford and Nissan plan to begin putting more hydrogen vehicles on the road between 2015 and 2020, and some have echoed Hyundai's statements about the potential for falling costs.

In July, GM and Honda joined forces to develop a common fuel cell system in time for 2020, to reduce development costs for the technology and to consolidate their component supply base to help make the pricey powertrains more affordable.

Toyota says its fuel cell vehicle debuting in 2015 will cost the company about $50,000 to produce -- down from $1 million per unit as recently as 2007 -- largely due to manufacturing efficiencies gained by building 5,000 to 10,000 units annually.

By 2020, Toyota predicts, fuel cell production costs will fall by half again.

In addition to the Honda-GM partnership, Nissan, Daimler and Ford Motor Co. in January announced a joint venture to bring fuel cell vehicles to market as early as 2017.

For now, Hyundai is working alone and starting small. The automaker began producing a version of its Tucson compact crossover powered by a hydrogen fuel cell on a line at its sprawling factory in Ulsan, South Korea, last year, with plans to produce 1,000 units for sale globally by 2015.

The big challenge facing the adoption of hydrogen-powered cars is the lack of refueling stations. California, which has had some of the nation's strictest mandates for zero-emission vehicles, is trying to address that with a goal of opening 68 more stations by 2016.

Just nine hydrogen refueling stations in the state are open to the public, 19 are in development and another 12 private or demonstration stations are operational, according to the California Fuel Cell Partnership.

The federal government is getting involved, too.

After shunning fuel cells in 2008 in favor of policies to support battery EV technologies, the U.S. Department of Energy in May launched H2USA, a public-private partnership with Hyundai, Mercedes-Benz, Nissan and Toyota to promote hydrogen refueling infrastructure.

Kwon, who says sales of battery EVs depend too heavily on government subsidies to consumers, nonetheless argues that more government involvement is needed to establish a hydrogen fueling infrastructure.

"The investment is huge, so one or two companies cannot do this," Kwon said. "Only government decisions can do that."