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Toyota’s plans to build a hydrogen-based society

Toyota Motor Corp. President Akio Toyoda Attends Line Off Event For The Mirai Fuel Cell VehicleToyota Motor Corp. President Akio Toyoda Attends Line Off Event For The Mirai Fuel Cell Vehicle
A Toyota Motor Corp. worker checks a Mirai fuel cell vehicle on the production line of the company's Motomachi plant in Toyota.Photograph by Tomohiro Ohsumi – Getty Images

Over the next several decades, Toyota says it will slash emissions generated from new vehicles and its production processes. To get there, the company is betting on hydrogen and renewable energy.

Toyota outlined Wednesday a series of ambitious environmental targets—the earliest of which kick in by the end of the decade. The Japanese automaker says it will cut emissions generated by production to roughly half of 2001 levels by 2020, and roughly one-third by 2030. Emissions generated by new vehicles will be slashed 22% by the end of the decade, compared to Toyota’s 2010 global average. By 2050, Toyota says it will cut emissions from new vehicles 90% and eliminate them altogether at its factories (at new plants and new production lines).

While other automakers are investing more into electric vehicles as a means to reduce tailpipe emissions, Toyota is betting on hydrogen and hybrid cars. The company says it will sell more than 30,000 fuel cell (hydrogen) vehicles and 1.5 million hybrids a year by 2020. It also says it will begin sales of fuel cell buses by 2017, focusing first on Tokyo.

Toyota (TOYOF) is well on its way to reaching the hybrid sales goal. The automaker sold more than 1.2 million hybrid vehicles in 2014 and expects to reach 8 million in worldwide cumulative hybrid vehicle sales by 2015.

Hydrogen cars are another matter. Toyota launched its first fuel cell vehicle, the Mirai, in late 2014. To reach its 30,000 annual sales goal by 2020 it will have to increase production volume tenfold from 2017. The car, which the EPA says has a 312-mile range, will debut in the U.S. market (just California) this fall. Even if customer demand for the fuel cell vehicle tops expectations, sales will likely remain sluggish until infrastructure problems are solved. There are only 12 public hydrogen fuel stations in the United States, according to the Department of Energy. Ten of those are in California, making it the only feasible market in the U.S. for hydrogen cars.

Toyota has taken a lot of flack for its hydrogen car ambitions. Hydrogen cars face logistical, economic, and even environmental challenges that make this a huge risk for the automaker.

However, Toyota has elicited this kind of skepticism before, only to win over consumers and create new categories within the automotive sector. The gas-electric hybrid Prius, which debuted in 1997, was considered a joke by many in the industry. The critics were were proven wrong when the car became a hit. Cumulative worldwide sales of the Prius surpassed 3.3 million last year (the company sold more than 207,000 in 2014).

In Japan, hydrogen cars have at least a fighting chance, thanks largely to a push by Toyota, Nissan, and Honda. Japan’s three biggest automakers announced earlier this year they will cover up to one-third of the operating costs for hydrogen stations run by infrastructure companies. Support will be capped at about 11 million yen (about $90,000) per station.

Toyota isn’t stopping with vehicles. The company wants to “foster a hydrogen-based society,” which means using hydrogen in cars, buses, and manufacturing. To do that, Toyota says it is making 5,680 fuel cell patents freely available and collaborating with other automakers to support the development of hydrogen infrastructure.

Toyota plans to use hydrogen and renewable energy such as wind power to cut emissions generated when manufacturing its cars. Toyota is developing manufacturing technologies that use hydrogen as a power source, and will begin testing on fuel cell vehicle production lines by around 2020.

A couple more of its renewable energy goals:

  • Use wind power produced on-site at its Tahara plant by around 2020.
  • Reduce production process-related carbon dioxide emissions per vehicle manufactured at its new plant in Mexico by at least 40% from global 2001 levels; the plant goes online in 2019.