Japan's New Green Car Push

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Honda Burnishes Its Green Street Cred

First up will be Honda's push to build a car that's got Prius-like credentials. Sold only as a hybrid and practical enough to seat five in comfort, it will have a sleek exterior based on Honda's FCX Clarity fuel-cell car and a price tag that's "affordable," CEO Takei Fukui told reporters in Tokyo on May 21. And it's destined for Japan, North America, and Europe starting in early 2009.

That will be followed by a sporty hybrid based on the CR-Z concept car (BusinessWeek.com, 10/10/07), which Honda unveiled at the Tokyo Motor Show last fall. A new version of the Civic hybrid is next, when the compact car gets a design makeover around 2010, and then a hybrid version of the subcompact Fit hatchback. Honda's larger cars, however, will sport clean-diesel engines, with a diesel added to the Acura luxury lineup set for next year.

Where Honda has an advantage is in fuel-cell vehicles, which run on liquid hydrogen and emit only water. On June 16, Honda began limited production of its new fuel-cell model, the FCX Clarity. The car can go 280 miles on a single tank of liquid hydrogen and boasts higher fuel efficiency than comparable gasoline or hybrid models.

Unlike other fuel-cell cars, whose bulky tank and powertrain make for cramped quarters for passengers, the FCX Clarity seats four adults comfortably and still has ample space for luggage. Honda will build and lease just 200 in the U.S. and Japan in the next three years, but CEO Fukui thinks the technology will be ready for the mass market "at the price of a luxury car within 8 to 10 years." One big challenge, of course, is cost: Honda spends an estimated $1 million on every FCX Clarity it makes today. Getting production costs below the $100,000-per-car level will be key.

Nissan's Electric-Car Initiative

Nissan (NSANY), Japan's third-largest automaker, is no Toyota or Honda. Today, it sells just one hybrid model, a gas-electric version of the Altima sedan that relies on technology supplied by Toyota. But Nissan is trying to rectify that as it pushes ahead under a new business plan through 2012. Later this year, Nissan will begin selling its first clean diesels in Japan and will launch a diesel version of the Maxima sedan in the U.S. by 2010. Belatedly, the company is also working on its own hybrids. But perhaps more important, in 2010, Nissan will also introduce a lithium-ion-battery-powered electric vehicle in the U.S. and Japan and then sell the vehicles to consumers globally in 2012.

Nissan CEO Carlos Ghosn says electric cars, which don't emit any harmful greenhouse gases, are superior to hybrids and plug-in hybrids, which partially rely on gasoline engines. "We really want to be the first [to offer electric vehicles] in the mass market," Ghosn said following Nissan's annual shareholder meeting June 25. "Zero-emission [cars are] part of what the global market is looking for and ready to pay for." (Debate rages over whether electric cars are really "zero emission," given the electricity used to charge their batteries, depending on the location, could have been generated at polluting coal-fired power stations).

Even minnow Mitsubishi Motors is rushing to commercialize an electric car called the i-MiEV in 2009. Basing it on the "i" minicar, Mitsubishi is currently conducting fleet tests with several Japanese electric power companies. Reports in Japan say Mitsubishi will produce 2,000 lithium-ion-battery-powered i-MiEVs in 2009, rising to 10,000 a year by 2011. The price is likely to be initially between $23,000 and $28,000. Exports are to start in 2010.

Subaru maker Fuji Heavy Industries will also introduce an all-electric car in 2009. "Japanese makers launched hybrid and developed fuel-cell cars far in advance of the global competitors," says Tatsuo Yoshida, an analyst at UBS (UBS) in Tokyo. "Their accumulated real-world knowledge is enormous and that makes a big difference."

Rowley is a correspondent in BusinessWeek's Tokyo bureau.