Toyota says its Mirai will 'lead the hydrogen-based society from now on,' but at present, sales are slow. Photo: Wikipedia

The official website of Toyota’s Mirai sedan is certainly not short on ambitious language. The model, whose name means “future” in Japanese, is hailed as a new standard for an “ecological car” that will “lead the hydrogen-based society from now on.”

The Mirai is just one example of Japanese carmakers commercializing hydrogen fuel cell vehicles (FCVs). Generating only water vapor and warm air as exhaust, their makers tout FCVs as a clean-energy alternative to traditional vehicles burning fossil fuels.

The move by Japanese carmakers to commercialize FCVs is part of a larger effort by the Japanese government to promote hydrogen as a fuel source of the future.

A comprehensive action plan released by the Ministry of Economy, Trade and Industry in March 2019 puts forth goals of 800,000 FCVs on the road, a nationwide hydrogen fueling network of 900 stations, and full commercialization of hydrogen power plants, all by 2030.

The plan also details efforts by private Japanese firms, including carmakers, utilities, investors, and industrial gas producers, to form consortiums that set up hydrogen production plants both in and outside Japan. 

While Japan is not alone in putting together a government-led effort to develop hydrogen as a fuel source, none has put in as much effort in FCVs. For instance, China’s 2021-25 Five Year Plan includes details for government subsidies to develop hydrogen production and fueling networks. The US Department of Energy’s 2020 Hydrogen Program Plan seeks to identify and leverage existing domestic resources for the production of hydrogen.

However, in both countries, electric vehicles (EVs) are moving far ahead of FCVs, with China creating the world’s largest EV fueling network, consisting of 1.2 million stations in 2019, and the US hosting the most valuable EV manufacturer, Tesla.

Indeed, despite Japanese government efforts, FCVs remain far less popular than EVs both in and outside Japan. While 2.1 million EVs were sold worldwide in 2019, Toyota has only managed to sell 11,000 units of the Mirai from its launch in November 2014 to February 2021, hampered by its inability to sell it outside Japan and California, the only places where Toyota deemed a dense enough concentration of hydrogen fueling stations to be available. 

The global nature of EV adoption raises the question of whether Japan is heading into another technological idiosyncrasy with its focus on FCVs.

The “video format war” of the 1970s and 1980s pitted Sony’s Betamax against the more globally used VHS, with Betamax losing the war despite being of arguably higher quality. Other examples of the “Galapagos effect,” or Japanese technology not accepted elsewhere, emerged with Internet-ready feature cell phones, contactless IC cards, digital broadcasting, and anti-earthquake construction methods. 

Given the shrinking size of the Japanese domestic market and the expensive upfront investments in hydrogen production and fueling stations, it will be costly for Japan to end up in a technological Galapagos with FCVs.

Given that the most eco-friendly method of producing hydrogen at a commercial scale remains the use of electricity, it also seems rather redundant and expensive to take the extra step of converting electricity into hydrogen, known for being highly flammable, when the electricity can be directly used to power EVs. 

As such, rather than risking a costly loss for FCVs on the global market, the Japanese government should concentrate on leveraging the country’s already advanced EV technology.

The latest rankings show that, in terms of the number of EV-related patents, 21 of the top 50 firms in the world are Japanese. But in terms of EVs sold, Japanese carmakers remain far behind their global peers, partly because Japan has fallen behind in the number of EV charging stations, with only 18,000 nationwide as of March 2020.

If the Japanese government de-prioritizes its focus on FCVs and shifts financial and policy support to promote EVs instead, it is conceivable that not only will the country be able to boost the number of EV charging stations, but its firms will be able to leverage existing technologies to become dominant in the global EV industry.

Xiaochen Su PhD is a business risk and education consultant in Tokyo, as well as the founder and managing director of the Study Abroad Research Institute, a Tokyo-based non-profit organization promoting international education. He previously worked in East Africa, Taiwan, South Korea and Southeast Asia.