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Time to Buy Fuel Cell Stocks

Toyota Doubles Down on Hydrogen

Written by Brian Hicks
Posted August 6, 2018 at 8:00PM

Two weeks ago, automobile maker Toyota made a major decision that will not just impact the future of the Japanese car giant, but could alter the global transportation and possibly the global energy market for years to come.

It will also positively impact investors in a small but quickly developing tech industry.

Toyota announced it is “doubling down on its investment in hydrogen fuel cell vehicles (FCV) designing lower-cost, mass-market passenger cars, and SUVs and pushing the technology into buses and trucks to build economies of scale.”

Why is this so significant?

Easy.

With a market capitalization of nearly $200 billion and $266 billion in annual sales, Toyota is by far the largest automaker in the world.

In fact, no other automobile company comes close.

To put this in perspective, here are the market caps of some of the other top global automakers:

Company
Market Cap
(billions)
General Motors
$53
Ford
$40
BMW
$54
Fiat-Chrysler
$26
Honda
$55
Nissan
$37

In terms of market valuation, Toyota is twice the size of the entire U.S. auto industry.

So when the king of the hill declares it’s going all in on hydrogen fuel cells as its future power source for its automobiles, you have to take notice. Period.

According to Toyota:

We’re going to shift from limited production to mass production, reduce the amount of expensive materials like platinum used in FCV components, and make the system more compact and powerful.

The company is planning a phased introduction of other FCV models, including a range of SUVs, pick-up trucks, and commercial trucks beginning around 2025.

Toyota sees hydrogen as the future fuel for the next 100 years.

What are the benefits of hydrogen fuel cells?

Several:

  • Impressive driving range
  • Clean energy (zero emissions)
  • Nearly limitless fuel source
  • Efficient (there are no moving parts in a fuel cell)
  • Renewable

Let me talk about the first benefit, driving range. Toyota intends to push the driving range of its fuel cell vehicle, the Mirai, to hit 1,000 kilometers by 2025. That’s a range of over 600 miles on a single tank.

One of the obstacles to mass adoption of electric vehicles like the Tesla and Chevy Volt is something known as “range anxiety.” In other words, Americans are concerned they’ll run out of a charge before making it to a charging station.

In my more youthful years, it was nothing for me to pack up my car and head to the Eastern Shore for the day. A one-way trip to Ocean City, Maryland, is 150 miles. If I came back that night, the round trip is 300 miles.

And, of course, there was no shortage of gas stations on the route. Filling my tank took less than five minutes.

For comparison, the Tesla Model S has a range of 270 miles on a single full charge. And charging it takes no less than 20 minutes.

The differences don’t end there.

Hydrogen is the most abundant element in the universe and stores more energy than a battery of equivalent weight.

This is one of the reasons the U.S. military is testing hydrogen fuel cells as its primary fuel source. It’s limitless, can power just about everything (not just vehicles), and is silent and gives off no heat signature, a major plus for the military, which relies on stealth.

As Toyota and the U.S. military continue to explore, develop, and adopt hydrogen fuel cells as their power source, you can expect hydrogen fuel cell stocks to come into focus by investors.

Hydrogen fuel cell stocks have a long history of boom and bust cycles. But just a casual glance at some of the more popular names in this space shows this industry is ripe for a breakout.

Toyota will be the spark that ignites the next rally.

In the coming weeks, we will show you exactly how to play the coming boom.

Until then,

Brian Hicks Signature

Brian Hicks

Brian is a founding member and President of Angel Publishing and investment director for the income and dividend newsletter The Wealth Advisory. He writes about general investment strategies for Wealth Daily and Energy and Capital. Known as the "original bull on America," Brian is also the author of Profit from the Peak: The End of Oil and the Greatest Investment Event of the Century, published in 2008. In addition to writing about the economy, investments and politics, Brian is also a frequent guest on CNBC, Bloomberg, Fox, and countless radio shows. For more on Brian, take a look at his editor's page.

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