Japan set to miss hydrogen stations target for fuel-cell cars this year

Japan set to miss hydrogen stations target for fuel-cell cars this year
Employees of Toyota Motors check the FCV "Mirai" on its final assembly line during the vehicle's line off ceremony at the Motomachi factory in Toyota city, Aichi prefecture on February 24, 2015.

TOKYO - Japan looks set to miss its ambitious target of having around 100 hydrogen fuelling stations for fuel-cell cars in operation by March 2016, with just 76 approved after the deadline to apply for subsidies passed last month.

The government had earmarked 21.38 billion yen (S$245.16 million) over the past three years to subsidise the construction and operation of fuelling stations by March 2016 as it aims to lead the world in setting up a hydrogen-based society featuring fuel-cell cars such as Toyota Motor Corp's Mirai.

But applications for the final portion - a supplementary budget of 9.59 billion yen for fiscal 2015 - resulted in just 32 stations getting the nod, government data showed this week, highlighting the difficulty of encouraging energy companies to bet on the still-unproven business.

A total of 44 had been approved previously.

So far, the only commercial fuel-cell car on the road is the Mirai, launched in December. Toyota has said it would limit production to three a day for the first year, ramping that up to about 3,000 in 2017. Honda Motor Co is also due to begin selling a fuel-cell car by next March but has not disclosed a sales target.

Hydrogen stations cost about $5 million to build, and the government's subsidy for one location is capped at around half that. Even with the generous handouts, the stations are seen making a loss for at least the first decade, industry officials say.

When contacted by Reuters, an official of Japan's Ministry of Economy, Trade and Industry said the government will consider whether to increase the subsidy to prod companies to set up the stations.

To take the plunge, energy companies want proof that fuel-cell cars will take off, while a dearth of fuelling stations is a put-off for consumers, resulting in a classic chicken-and-egg conundrum. Fuel-cell cars, which run on hydrogen and emit only water, are also expensive, requiring big subsidies themselves. The Mirai's suggested retail price is 7.24 million yen ($60,404).

The hurdles of setting up the necessary infrastructure are often cited by fuel-cell sceptics such as Nissan Motor Co Chief Executive Carlos Ghosn as a big reason that battery-run electric cars are a better zero-emission option.

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