Toyota’s hydrogen car may come with ¥3 million rebate

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Japan is raising the bar for subsidizing zero-emission cars as incentives may exceed ¥3 million a vehicle for Toyota Motor Corp.’s first hydrogen-powered sedan.

Rebates from the central and prefectural governments may top a combined ¥3 million per car.

Prime Minister Shinzo Abe said last week he plans to extend subsidies of at least ¥2 million, while Aichi Prefecture, Toyota’s home turf, may provide about ¥1 million for local purchases, according to Takashi Horibe, the area’s auto and environmental conservation specialist.

The support in Japan, which has the world’s biggest debt burden, is poised to exceed the level of inducements that China offers for buyers of electric vehicles.

Toyota will join Hyundai Motor Co. and Honda Motor Co. in confronting challenges with hydrogen cars’ high costs and lack of refueling infrastructure.

“Fuel cells are one of the few frontiers where Japan can lead the market,” Thanh Ha Pham, a Tokyo-based analyst with Jefferies Group LLC, said Thursday. “For any new technology you need government support for popularizing.”

Abe said during a visit to Fukuoka Prefecture on July 18 that the government plans to have more than 100 stations for fuel-cell cars, without giving a time frame.

His comments followed a government plan unveiled in June for supporting the spread of fuel-cell vehicles and cultivating an industry forecast to generate ¥1 trillion in revenue by 2030. The government is seeking to bring prices of fuel-cell cars down to about ¥2 million by 2025, after subsidies.

The subsidies from the Abe administration and prefectures including Aichi haven’t been finalized. Toyota said last month that its as-yet unnamed fuel-cell car will go on sale in Japan by April for about ¥7 million.

The combined ¥3 million in incentives would cut the sticker price by about 40 percent and bring its cost in line with the Lexus CT Hybrid, which sells for ¥3.6 million to ¥4.6 million, according to the company’s website.

The subsidies would also be more than triple the rebate currently offered to buyers of Mitsubishi Motors Corp.’s all-electric i-MiEV, which qualifies for a ¥950,000 subsidy in most prefectures.

For China, home to the world’s largest auto market, the central government is stepping up support for electric vehicles as part of a broader plan to gain leadership in the technology, cut pollution and reduce energy dependence.

In the past month, China has mandated that EVs make up at least 30 percent of state purchases and will waive a 10 percent purchase tax from Sept. 1 through 2017 to spur demand.

In Beijing, buyers of an EV can get as much as 114,000 yuan ($18,400) off the sticker price after central and local government rebates, while owners in Shanghai are issued free license plates that cost about 70,000 yuan for conventional vehicles.

Even with the government’s support, EV sales are on pace to fall short of the official target for 5 million on roads by 2020, with consumer concerns over price, convenience and reliability outweighing the lure of subsidies.

Toyota, the world’s largest automaker, is prioritizing fuel-cell technology in its plans for introducing zero-emission vehicles over the electric vehicles championed by China and carmakers including Tesla Motors Inc. and Nissan Motor Co.

Toyota has said hydrogen-powered autos will be a more attractive zero-emissions option for consumers than battery-electric vehicles because their range, performance and refueling time are competitive with gasoline cars.

While fuel-cell cars are propelled entirely by electric motors like those in Tesla’s $71,000 Model S, they don’t need to be plugged into power outlets to store energy. Instead, hydrogen gas passes through a stack of plastic membranes and platinum-dusted plates to produce electricity. The stacks remain expensive because of the precious metals needed, as do the high-pressure tanks.

The global fuel-cell vehicle market may reach ¥3.3 trillion by 2025 from an estimated ¥34 billion next year, with major growth happening after 2020, according to estimates by Jefferies.

The U.S. offers a $7,500 per vehicle federal tax credit to electric vehicle buyers. States also provide additional incentives. Buyers in California, for example, are eligible for $2,500 in rebates, local utilities offer discounted electricity and drivers are permitted to use high-occupancy vehicle lanes.

California plans to provide about $47 million for 28 new stations selling hydrogen for fuel-cell cars. Those stations combined with 16 in development and 10 already in operation will be enough to support at least 10,000 vehicles, Jim Lentz, Toyota’s North American chief, said in May.

In Europe, Norway has the most generous incentives for electric cars, including reduced taxes as well as an exemption from all public parking fees, toll charges and use of bus lanes. Within the European Union, 18 of the 27 member states provide schemes that include tax perks and lower fees for electric cars, according to the European Automobile Manufacturer’s Association.