Fuel Cells vs. Electric Vehicles. Which Side of the Alt-Energy Battle Are You On?

Toyota’s new commitment to hydrogen fuel-cell vehicles and its abandonment of fully electric ones highlights two huge divides facing CEOs and other leaders, not just in the automotive industry, but across a broad spectrum of organizations in the car-dependent economy, including politicians, other types of manufacturers, the travel industry and agriculture, among others.

Hydrogen is inherently touchy to store and transport. In fact, because of such challenges, Tesla CEO Elon Musk has called the technology “fool cells.”

“Toyota executives coldly concluded a few years ago that mainstream EVs simply aren’t a good bet for the future.”

But Toyota has its own message for Musk. The company essentially swore off EVs a couple of years ago, citing consumers’ indifference to them; and that was when gasoline prices were around $4 a gallon, instead of the current $3. Then a few weeks ago, Toyota announced it had sold some of its $50-million initial stake in Tesla, just after Daimler announced the same thing.

Reducing its investment in EV-king Tesla followed Toyota’s move last spring to phase out its 2010 agreement with Tesla for Musk’s company to deliver battery packs for the co-developed Toyota RAV4 EV. Production of the SUV is ending soon after the RAV4 sold just a couple thousand units, even though Musk portrayed the vehicle as the basis for a broader Toyota-Tesla partnership.

Toyota’s sticker on the vehicles was almost $50,000, double the price of the gasoline-powered RAV4, and it was only sold in emissions-strict California. Because of that, some critics said that Toyota essentially sabotaged its own EV efforts. But the truth is, Toyota executives coldly concluded a few years ago that mainstream EVs simply aren’t a good bet for the future, even though their Prius franchise has defined and still dominates conventional electric-gas hybrids.


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