Taking Toyota's hydrogen car on the road

September 26, 2013: 2:00 PM ET

A hydrogen-powered Toyota Highlander travels 300 miles on a tank and takes less than four minutes to fill.

By Brian Dumaine, senior editor-at-large

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FORTUNE -- When I last wrote about the hydrogen highway, I noted that just about every major car company, from Toyota (TM) to GM (GM) to BMW, was planning to launch a hydrogen-powered car within a few years. Think of an electric car that's powered not by a battery but by a platinum fuel cell. Pump hydrogen, the most abundant element in the universe, into the cell and electrons get stripped from the fuel providing a current that drives electric motors attached to your car's wheels.

Now, that prospect seems even brighter as the California Assembly last week passed a bill that provides $200 million over the next 10 years to fund at least 100 hydrogen stations. Governor Jerry Brown indicated that he will sign it. The idea is that 100 hydrogen stations will create enough critical mass for the big automakers to sell their cars in the region.

A few weeks after my article posted, I got the opportunity to drive a prototype of Toyota's hydrogen car, a modified Highlander SUV, in Wallingford, Conn. and to fill up at one of only two hydrogen stations in the northeast. (The other is at JFK airport in New York City.)

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What strikes you first when driving a hydrogen vehicle is the quiet and the acceleration -- it puts out lots of torque. These cars also have far fewer moving parts than other cars -- no engine, fancy transmission, or drivetrain -- so it will be much simpler and cheaper to maintain. The retrofitted Highlander I drove can travel 300 miles on a tank of hydrogen and takes less than four minutes to fill. The production version of Toyota's new hydrogen car will be unveiled at the Tokyo auto show in November.

As I pulled up to the hydrogen filling station in an office park off Interstate 91, I met Larry Moulthrop, a vice president of hydrogen systems at Proton Onsite, the company that operates the SunHydro station. His company has been running 13 hydrogen Highlanders over the past year, and he says, "The cars have been working almost flawlessly." He explained how, at his company's SunHydro station, it costs about $4 a gallon equivalent to fill his car up, but at scale, he sees the price coming down to about $3 a gallon.

The SunHydro station makes its hydrogen on site with solar power through a process called water electrolysis. It takes the electricity from the rooftop solar panels at its facility and uses it to strip out the hydrogen from the water. The 19 hydrogen stations that already exist in California use hydrogen made from natural gas, and that process is cheaper -- about $3 a gallon equivalent.

The advantage of using solar, wind, or any renewable source of energy is that, compared to natural gas, almost no carbon is emitted in the making of the hydrogen. So you can truly call these Highlanders zero-emission cars. All that comes out of the tail pipe is water vapor.

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SunHydro is building its first commercial station outside of Boston. The company is owned by Tom Sulllivan, the entrepreneur who made his fortune starting Lumber Liquidators. Why is he doing it? He hopes to help break America's dependence on oil by introducing hydrogen as a viable alternative, and because, he says, it's the right thing to do.

His challenge to beat the age-old chicken and egg problem: How can you have filling stations without hydrogen cars, and why would automakers sell a hydrogen car without a place to fill them up? Someone's got to blink first.

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