Online Extra: Honda's CEO on Fuel Cells' Future

Earlier this month, Japanese auto makers Honda and Toyota delivered the first fuel-cell cars designed for regular, everyday use. Honda President and CEO Hiroyuki Yoshino turned over the keys of one to Japanese Prime Minister Junichiro Koizumi in Tokyo in the morning, caught a plane to California, and presented another car to Los Angeles Mayor James Hahn in the afternoon. BusinessWeek Senior Correspondent Larry Armstrong caught up with Yoshino later in Los Angeles and talked to him about Honda's fuel-cell effort. Following are edited excerpts of their conversation:

Q: You're delivering fuel-cell vehicles to governments in Japan and the U.S. When will customers be able to buy them in Honda dealerships?

A: It's the most promising technology for future cars' power trains. Performance-wise, even today, they're better than conventional cars. The starting torque is very high and smoother. But we don't know when it will be practical to sell them in dealerships. That's still a decade or two away. We'll have to solve several technical challenges before then.

Q: Such as?

A: Such as reducing the amount of catalysts -- mainly platinum -- needed to generate electricity from hydrogen and oxygen. We need a lighter and more compact electric-generation unit. It's now composed of a stack of 400 separate plates. That part is also a challenge for quality control because the worst single plate of the 400 determines the performance of the whole system.

Another interesting problem: Because the byproduct is pure water, and it's everywhere around the 400 plates, the stack will freeze in cold weather. We could have a heater, but that requires a battery and some expenditure of energy.

Q: What about refueling the cars?

A: That's kind of a chicken-and-egg problem. There are no hydrogen refueling stations -- and won't be until there are fuel-cell cars. But manufacturers won't make fuel-cell cars until there are enough hydrogen stations. We have a test refueling station in our R&D facility in Los Angeles, in Torrance, where electricity from solar panels generates hydrogen from water.

Q: How many fuel-cell vehicles are you making?

A: Here in the U.S., we'll deliver five cars to the City of Los Angeles over the next year. In Japan, four will go to the Japanese government. There may be others, once people see how well they run. The technology is changing so much that each car is handmade, but my goal is to build one a month over the next two or three years.

Q: What has your experience been in selling other alternative-fuel vehicles, such as the gasoline-electric hybrid cars?

A: We still sell a few of the original [two-seat] Insights, and we sell about 20,000 Civic hybrids a year (see BW Online, 2/7/02, "Honda's New Hybrid Laps the Field"). It's a pretty good car, but we can't make as much money with the hybrid as with the standard Civic. We essentially break even. Customers who drive long distances every day can benefit from the improved fuel economy. And the pollutants are less. But there will be a mass market only if gas is above $2 or $3 a gallon.

Q: What about in Japan, where gas is well above $2 or $3 a gallon?

A: But the driving distances are so short in Japan. Our sales volume for the hybrid Civic and Insight in Japan is only about a quarter that of the U.S.

Q: How about other fuels?

A: Well, another approach is natural gas with a conventional engine. It's much cleaner: Emissions are near zero, and in some cities the exhaust coming out of the tailpipe is cleaner than the air going in. You might call it an ambient-air-cleaning car. But again, you have to have refueling stations, and there aren't very many. [Honda will relaunch the natural-gas version of its Civic in the U.S. next year with home-use gas compressors so that buyers can refuel the car at home.]

Diesels are very popular in Europe. One reason is the much lower fuel price, because the taxes are so low. The advantage of the diesel engine is that it produces 20% to 30% less greenhouse gas -- carbon dioxide -- than standard gasoline engines. The disadvantage is higher levels of NOX [nitrous oxides] and particulates. As far as I know, not even the most advanced diesel engine can comply with the California regulation of NOX.

Q: Honda no longer makes an EV [electric vehicle.] Why not?

A: One disadvantage of battery-driven electric cars is that battery technology hasn't progressed very much. It's a traditional technology, and we don't see any future for it. The other problem is that batteries need several hours to recharge. Fuel-cell cars and conventional cars can be refueled in a minute or two or three. With an electric car, the quickest is more than three hours. And they don't work in cold weather.

But the electric motor-drive portion of our fuel-cell vehicles comes from our electric cars. And the fuel tank for our fuel-cell vehicles comes from our natural-gas cars. The electricity-management technology comes from our hybrid cars. So you can't say we've done many things in vain, even our pure EV.

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