MarketLine Blog

Toyota follows Tesla down the royalty-free rabbit hole

Toyota has revealed that it intends to allow royalty free access to 5,680 of its hydrogen fuel cell technology patents. This is the same technique that Tesla employed last year to release its battery patents to its competitors. The point of such a move is that in order to kick start new technology on such a massive scale as would be required to replace traditional automobiles; a number of the biggest automotive manufacturers need to heavily invest. This is for a number of reasons but principally consumers need confidence to shift onto a completely new technology and only when there are a number of competitors trying to improve their product will consumers be convinced to switch on a large scale.

Allowing your competitors access to your technology could be very risky, for instance Tesla’s battery technology and Toyota’s fuel cells are unique technologies that have taken a great deal of R+D time to produce. These technologies were developed well in advance of the competition and theoretically leave the companies at a great advantage. The problem is if the infrastructure is not in place to make your technology useable and practical for consumers then it is unlikely to make progress on a large scale, which is what is needed to clean up the carbon emission of the motor industry.

Fuel cell technology was announced by Toyota a number of years ago but has been in a development stage whilst the product became more usable and directly competitive to that of petrol and diesel powered vehicles. The problem for Toyota and ultimately for any of the firms pursuing different fuel technologies, is that without the infrastructure in place to maintain and fuel any vehicles sold consumers are very unlikely to buy them in significant numbers because they are impractical and an inconvenience when compared with standard technology.

The technology is now largely ready for Toyota, it announced that in 2016 a vehicle called the Mirai will be coming to the US market. Toyota claims that the vehicle will act very much like a normal petrol driven car, but refuelling with hydrogen produces zero emissions apart from water. Estimates vary but 300 miles on a tank is possible and refuelling takes under five minutes. This puts the vehicle in direct competition with Tesla for finding the Green fuel replacement that the industry needs. With around 17 refuelling stations put in place in California, Toyota is focussing on smaller areas at first but needs to generate rival products in order to convince service station businesses that providing hydrogen fuel stations is profitable and worthwhile.

In recent months Toyota has become more forceful in its language about the technology as it becomes more convinced that the hydrogen fuel cell is the future of car travel. It is hard to predict whether this technique will work to encourage the likes of GM, Fiat, Volkswagen Group and Renault to use the technology as many firms are focussing on new electric and hybrid products. But it is certainly an opportunity for the world’s car manufacturers to develop their range and acquire a new technology which may eventually become very significant.

To learn more please see our recent case studies: 

Tesla: The Californian start-up that made head way on the automotive giants

Hybrid and Electric Cars in the US: Two differing strategies


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