Honda Spending $500 Million to Develop Fuel-Cell Car (Update2)
(Adds closing share price at bottom.)
Tokyo, June 2 (Bloomberg) -- Honda Motor Co. said it will
spend between 50 billion yen and 60 billion yen ($419 million and
$500 million) to introduce a fuel-cell powered vehicle by 2003,
joining DaimlerChrysler AG and other automakers in the race to
make a viable pollution-free car.
Japan's third-largest automaker plans to build 300 fuel-cell
powered vehicles a year starting in 2003 for sale in Japan and
the U.S., said Takeo Fukui, managing director in charge of
research and development. The car -- to be based on the EV Plus
compact electric sedan -- will run on fuel cells that will be
lighter and more compact than those currently offered by Ballard
Power Systems Inc., a leader in the field, he added.
Automakers from General Motors Corp. to Bayerische Motoren
Werke AG (BMW), are rushing to develop cars and trucks that
pollute less as governments around the world enact stricter
emissions laws. DaimlerChrysler -- using Ballard fuel cells --
debuted the first practical prototype of a zero-emissions fuel-
cell car in March and said it hopes to sell 40,000 such vehicles
by 2004.
''Fuel-cell vehicles will probably overtake gasoline-powered
cars in the next 20 to 30 years,'' Fukui said.
British Columbia, Canada-based Ballard is working with Ford
Motor Co. and DaimlerChrysler to develop fuel cells that combine
hydrogen and oxygen in a chemical reaction to produce electricity
to power a vehicle. Honda's system will use methanol, Fukui said.
''The question is how small they can make (the fuel cells)
and when gasoline supplies will run out,'' said Shinji Kitayama,
an auto analyst at New Japan Securities Co. who is ''neutral'' on
Honda stock.
While supplies of gasoline last, he said fuel cells must
compete with other technologies such as Toyota Motor Corp.'s
compact Prius sedan, a hybrid vehicle that runs on a combination
of gasoline and electricity. There's also Mitsubishi Motors
Corp.'s gasoline direct-injection engine, which gets 30 percent
better gas mileage than conventional engines through more precise
control of fuel combustion.
Tokyo-based Honda is working with three companies to develop
the fuel cells, Fukui said. While methanol is regarded as safe
and readily available, its high water content may cause existing
gasoline storage tanks to rust, letting the fuel leak out and
pollute ground water.
California -- which consumes more methanol than any other
U.S. state -- decided earlier this year to phase out methanol by
2002. The ban may spread to other states.
That doesn't faze Honda, however.
''If gas stations aren't allowed to store methanol, we'll be
able to switch to pure hydrogen,'' Fukui said.
General Motors and Toyota Motor Corp., the world's biggest
and third-biggest automakers, said last month they will co-
develop electric and fuel-cell powered vehicles, though they
declined to say when they will put their own fuel-cell cars on
sale.
Honda rose 170 yen, or 3.3 percent, to 5,280. It was the
second most active issue by value, with 13.6 billion yen worth of
shares changing hands.
--Eijiro Ueno and Scott Stoddard in the Tokyo newsroom (813) 3201-
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