Toyota leases fuel-cell autos to 2 U.S. universities

Torrance, CA November 19, 2002;Bloomberg News is reporting that Toyota Motor Corp. said two California universities are its first U.S. customers for hydrogen fuel-cell autos as the company seeks to establish its low-pollution technology as an industry standard.

The world's No. 3 automaker will lease a modified version of the Highlander sport-utility vehicle to the University of California, Irvine, and another to the University of California, Davis. The universities will each pay $10,000 a month on a 30-month lease.

Toyota and rival automakers are racing to offer fuel-cell technology in anticipation of tighter environmental rules. Fuel cells, used in spacecraft for decades, create electricity by combining hydrogen and oxygen, and under ideal conditions produce only steam as a byproduct. High costs and a lack of hydrogen-fueling stations limit current prospects for the technology.

"I'm not sure selling a few $300,000 vehicles means that much," said Fitch Ratings analyst Chris Struve. "The winner is going to be whoever can get the price of their vehicles down to a reasonable level."

Toyota's U.S. sales unit is based in Torrance, California. The company's American depositary receipts, which each represent two ordinary shares, fell $1.65 cents to $51.59 in New York Stock Exchange composite trading at 4:00 p.m. and have gained 1.2 percent this year.

Bragging Rights

"Bringing practical fuel-cell powered vehicles to the mass market will require a considerable investment of time, resources, cooperation and patience," Jim Press, executive vice president and chief operating officer of Toyota's U.S. sales unit, said in a statement. "This program marks a significant first step."

Last month Honda Motor Co. announced plans to lease five fuel-cell cars to Los Angeles, with one to be delivered this year and four in 2003. The company hasn't disclosed when the first model is to be delivered to the city or lease terms.

General Motors Corp., the world's largest automaker, is also investing in the technology and has said it expects to be first to sell 100,000 annually as early as 2010.

"Toyota and Honda are definitely going for bragging rights; they want to be seen as environmental leaders," said Chicago-based Struve, who studies the effect of new technology and environmental rules on automakers. "If things were to go south for GM in particular, the other guys could win the fuel-cell race."

Toyota is providing the universities with a FCHV model, or fuel-cell hybrid vehicle, that uses an electric motor as a backup. The FCHV has a Toyota-developed fuel cell stack, seats five and has a top speed more than 90 miles an hour. Earlier today in Tokyo, the company said it would also lease four FCHV models to Japanese government agencies starting Dec. 2.

The Japanese carmaker, which ranks fourth in U.S. sales, plans to provide details next month of a hydrogen fueling infrastructure that includes government, education and industry participation.