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Honda to launch hydrogen powered vehicle

Posted On : June 16th, 2008

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On the front page of its Marketplace section, the Wall Street Journal (6/16, B1, Murphy)

Honda Motor Co. Chief Executive Takeo Fukui hates to lose. But that's just what the former racing-team manager has had to accept as Toyota Motor Corp.'s popular Prius hybrid has outsold Honda's hybrid vehicles nearly four to one this decade, establishing Toyota as the industry leader in eco-friendly vehicles.

Now 63-year-old Mr. Fukui, who has led the company for five years, is charting Honda Motor's efforts to be the greenest of the world's auto makers.

As soaring gasoline prices boost demand for more fuel-efficient vehicles, the global auto giants are battling to define the next generation of automobiles with a blitz of eco-friendly vehicle launches, new technologies and campaigns to show off their green credentials.

Monday at a ceremony in Japan, Mr. Fukui is scheduled to roll out a new hydrogen-powered fuel-cell vehicle, the FCX Clarity, one of the world's most-advanced green vehicles, which Honda hopes will bring fuel-cell technology into the mainstream.

The vehicle, powered with electricity produced by combining hydrogen and oxygen in batterylike fuel cells, will be available for lease in California this summer. By 2010, Honda aims to deliver about 200 of these vehicles, making it the largest effort to market fuel-cell vehicles to date.

In his bid to unseat the Prius as the top-selling hybrid vehicle, Mr. Fukui also plans to launch a new gas-electric hybrid car in the U.S., Japan and Europe early next year, one of four hybrid models Honda will unveil by 2015. The company hasn't announced the price of the new car, except to say it will be "affordable," so it isn't clear how it will stack up against Toyota's hybrid.

Japan's No. 2 auto maker, after Toyota, has set a goal of selling 500,000 hybrid vehicles a year. Toyota, however, aims to sell one million hybrid vehicles early in the next decade. It is also at work making improvements to its own fuel-cell vehicle.

The Honda CEO, who still gets thrills riding motorcycles on Honda's test tracks, says he isn't deterred by Toyota's success.

Excerpts from an interview with Mr. Fukui:

WSJ: Why is Honda introducing fuel-cell vehicles when there is no infrastructure yet to support them?

Mr. Fukui: About 100 years ago, when Ford's Model T came out, that kicked off the development of the auto industry. If you ask, 'Were there any gas stations back then?' there weren't. In the car industry, cars should come first and then infrastructure will follow.

WSJ: So how many years away are we from having hydrogen refueling stations for fuel-cell vehicles?

Mr. Fukui: That's not going to happen really quickly. It's happening in California, and may eventually happen in several other states, and also Japan and Europe. We are working on the technology where we can charge hydrogen into fuel-cell vehicles at homes. So probably in the next 10 years we will get some level of infrastructure in place.

WSJ: Hydrogen requires less of a spark to ignite than gas. How is Honda addressing the safety concerns surrounding a hydrogen-powered vehicle?

Mr. Fukui: We can resolve the safety issue. It's not necessarily that hydrogen is more dangerous than gasoline. So it comes down to expertise in handling hydrogen. So we can address this.

WSJ: Honda promotes itself as an eco-friendly auto maker but it appears that Toyota has beaten Honda in the green-image war. What is Honda doing to reclaim its green image?

Mr. Fukui: Honda's image was better but has evened out with [Toyota] because of the strong image of one single model, the Prius, which Honda feels is a problem. Next year, we will come up with a dedicated hybrid vehicle. We feel this model will have to overwhelm and overtake Prius. That is key for us. The thing is, we'll take on the challenge and compete against Toyota with our products and our technology backed by our racing spirit.

WSJ: Honda was the first auto maker to offer a hybrid car, the Insight, in the U.S., and Toyota came along with the Prius and was a best-seller. What went wrong with the Insight?

Mr. Fukui: Well, I don't think anything was wrong. Our intention was not to try to make Insight a mass seller. The significance of the Insight was that at the time, we wanted to establish the best record for fuel efficiency, and we did.

WSJ: Other auto makers, including Nissan Motor Co. and General Motors Corp., are planning to launch electric vehicles, but Honda isn't offering this alternative. Why not?

Mr. Fukui: We feel the practical feasibility of the electric vehicle is very limited. The biggest issue is driving distance. The other issue is the recharging time. The FCX Clarity can be recharged in one minute. With the electric vehicle, it can take several hours. However, this is not to deny the possibility of battery electric vehicles. It's very useful for vehicles with restricted applications, like golf carts.

WSJ: What management lessons did you learn as a longtime chief engineer and head of Honda's racing teams?

Mr. Fukui: When I was fully engaged in the motorcycle-racing team, the pressure was very high, and it was taken for granted that we would win. If you didn't get good results, you got bashed by managers and media. The results were disappointing. We kept on losing....The series of difficulties and challenges is something that I feel everyone should experience because, in a way, I acquired wisdom and creativity to get through that.

WSJ: Do you have any unique management practices?

Mr. Fukui: There are a few things I always keep in mind. Take time to keep up good communication with associates at work. And test our own products with my own hands.

WSJ: In May, Honda beat out Chrysler LLC as the fourth-largest seller of cars in the U.S. [behind GM, Toyota and Ford]. Do you expect Honda to continue to gain in the U.S. market?

Mr. Fukui: If the demand gets stronger, we will increase supply. It doesn't really matter if you come in fourth or fifth or first. What's important for us is that our production is going at full capacity and production is balanced with sales. That's what's important for us. Our system is flexible, so production can be adjusted if needed, depending on vehicle demand. If there is a decline in demand for larger cars, we can shift production to smaller cars.

WSJ: How is Honda's environmental strategy different from its rivals'?

Mr. Fukui: If you compare us with Toyota and GM, we are smaller, so we can't try to cover everything. We have to make strategic choices. The hybrid will be the core product, and after that comes fuel cell and clean diesel. Those are the core products that we are going to be using to address fuel efficiency and CO2 issues.

WSJ: Is 2008 a critical year for the global auto industry?

Mr. Fukui: It's very possible that this will be a turning point. It has become clear that you have to have technology to deal with carbon dioxide and fuel-efficiency issues. We now know that big companies aren't necessarily advantageous. We also know that smaller vehicles are more attractive than larger vehicles [because of rising gas prices]. There's even a possibility that we may go from automobiles back to motorcycles.

WSJ: What kind of car do you drive?

Mr. Fukui: A Honda CR-V.

WSJ: After more than a decade working with Honda's racing teams, do you still try to stay involved in the racing?

Mr. Fukui: I don't race. I do enjoy driving -- just for fun, not for racing -- under the speed limit and just going up and down in the mountains. When it comes to motorcycles, once or twice a year I enjoy riding on Honda's own test track, where there is no speed limit.

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