Corporate Social Responsibility / International Business / Organizational Strategy / Product Development / Technology

What is the Honda FCV?

honda fcv

At this week’s annual car show in Detroit, Honda Motor Company, Ltd. unveiled its plans to introduce to the market a new car called the Honda FCV by March 2016 in Japan, although it may also decide to offer them in California as well. The FCV is a sleek, sporty four-door sedan with an extraordinary amount of leg room in the back seats. If that sounds like every car Honda has ever made, keep reading. This is a bold new step for the company.

The Honda FCV will be fueled not by gasoline like most cars, or by electricity like some innovators such as Tesla have produced, but rather by hydrogen. The cars will come equipped with hydrogen fuel cells, which can be charged at a hydrogen fueling station in a matter of minutes for a 300-mile range. The car will produce zero emissions; you only need to have access to a charging station.

These charging stations do not exist in the United States outside of southern California. There, only a dozen or so are operable but the state strives to have fifty ready for use by 2016 thanks to its initiatives to encourage alternative energy infrastructure. Steve Ellis, Honda’s manager of fuel cell vehicle sales, said that California is on pace to justify production of the car for that market. “We’re seeing the ramping up now of these facilities, and it’s only going to accelerate from here.”

Toyota also has a hydrogen car, the Toyota Mirai, which is already on the market in Japan. Unsurprisingly, the Mirai is priced at $60,000. The technology is currently very expensive and there are not many competitors in this segment of the car market. Further, owning a zero-emission car saves consumers a fortune in gasoline expenses over the life of the car. The average US consumer in 2012 spent about $2,000 on gasoline. Under today’s low interest rates, saving $2,000 every year for ten years is worth a present value of approximately $19,000.

Tesla Motors has been renowned in recent years for championing electric cars, and it comes as no surprise that CEO Elon Musk is critical of Honda’s plans to use hydrogen. He argues that hydrogen is difficult to store and use. “It’s just very difficult to make hydrogen and store it, and use it in a car,” he said in Detroit on Tuesday. “If you’re going to pick an energy storage mechanism, hydrogen is a dumb one to pick.”

The science of cars like these ones is in its infancy, and it will be a very high-risk space for quite some time. In the short term, some of these cars will fail. Perhaps, as Musk surmises, hydrogen is not viable. Perhaps it is, rendering most other cars moot by differentiation. Companies like Honda will risk giant losses in the short term for a chance to be the company that changes the way cars are made and fundamentally alters the global economy. That day seems to be approaching quickly.

Chris Barker


Sources:

Kessler, Aaron M. “Honda Introduces Vehicle Powered by Hydrogen”. The New York Times. 14 January 2015. B4. Print.

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