Develop Plug-In Autos as Obama Alters U.S. Policy

April 27 (Bloomberg) -- Honda Motor Co., the only company selling hydrogen-powered cars to U.S. drivers, may also develop plug-in models as U.S. policy shifts to favor battery-powered autos.

Honda, which began leasing hydrogen fuel cell FCX Clarity sedans in Los Angeles last year, still sees hydrogen as the best long-term alternative to gasoline as a fuel that can cut carbon exhaust tied to global warming, President Takeo Fukui said in an interview. Still, the company will respond to a push by the Obama administration for carmakers to sell plug-ins, he said.
“We understand the situation, in terms of government and incentives,” Fukui said April 23 in Detroit. “Naturally, we’re going to have to accommodate that too.”

General Motors Corp., Toyota Motor Corp. and Nissan Motor Co., and startups Tesla Motors Inc. and Fisker Automotive Inc., are rushing out cars that can be recharged at electrical outlets as the U.S. moves to tighten fuel-economy and greenhouse gas rules. Honda has yet to announce plans to sell one, citing high costs for the lithium-ion batteries needed to power them and poor range.
“We are thinking about plug-in hybrids, but we aren’t thinking about commercializing one right away,” Fukui said.

Honda, Japan’s second-largest carmaker, last week began building a lithium-ion battery factory with joint-venture partner GS Yuasa Corp. in Japan’s Kyoto prefecture to make packs for gasoline-electric hybrid cars made by Tokyo-based Honda starting in late 2010.

“We started working with GS Yuasa with just the hybrid application in mind,” Fukui said. “We are thinking about extending that application to plug-in hybrids.”

Fukui, 65, said in February he’ll step down as Honda’s president in June, and will be succeeded by Takanobu Ito.

Policy Shift
Former President George W. Bush in 2003 committed $1.2 billion in federal funds to a 5-year program aimed at speeding development of hydrogen as a vehicle fuel as part of efforts to wean the U.S. from its reliance on imported oil.

So far, President Barack Obama has announced no new federal effort to promote the fuel, and federal funding for hydrogen for transportation use in the 2009 budget dropped to $177.7 million this year from $211.9 million, according to the Department of Energy Web site.

Tax Credits
Instead, Obama backed tax credits of as much as $7,500 in the stimulus package approved in February for buyers of plug-in cars. The Energy Department is also preparing to award as much as $25 billion in low-cost federal loans for production of advanced technology vehicles, with many of the applications coming from companies planning to build plug-ins or the batteries and components needed to power them.

“I haven’t heard any discussion of hydrogen since the Bush administration was getting ready to leave,” said Dan Becker, director of the Safe Climate Campaign, a group in Washington that works for environmentally “clean” cars. “It looks like hydrogen has lost at this stage.”

Tom Welch, a spokesman for the Energy Department, wasn’t immediately able to comment on whether the agency’s view of hydrogen as an automotive fuel has changed.

Honda, the world’s largest engine maker, set a goal of leading the industry in hydrogen fuel cell autos. In July, it opened an assembly line in Japan to build its FCX Clarity. The hydrogen-powered car has a top speed of 105 miles per hour and travels as far as 280 miles on electricity produced by its fuel cell stack.

The vehicle costs U.S. customers $600 a month to lease. Honda hasn’t revealed its production price.

Fuel Cells
Fuel cells create electricity in a chemical process that combines hydrogen and oxygen, emitting only water vapor. California, which requires big automakers to sell some non- polluting vehicles, rates Clarity a “zero-emission vehicle.”

While hydrogen provides driving performance similar to that of gasoline vehicles, fuel cell models will remain costly to build for the foreseeable future and aren’t as durable as conventional cars. A lack of hydrogen fueling stations also limits the areas in the U.S. where such vehicles can be used.
While GM, Toyota and Hyundai Motor Co. are also developing fuel-cell cars, those companies, as well as Honda, don’t expect hydrogen to be competitive with gasoline autos until about 2020.

“Hydrogen may have a future, but the view seems to be that batteries are what we can do reasonably soon,” Becker said.

Automakers have to plan for an eventual tightening of global oil supplies and pressure to cut greenhouse gases, Fukui said.

“Oil prices are going to go up. When that time comes, fuel cells, solar panels, hydrogen, those will be the key words,” Fukui said. “We will have packages that will be very competitive at that time.”

To contact the reporter on this story: Alan Ohnsman in Los Angeles aohnsman@bloomberg.net

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