Toyota, Hydrogen & the Network

Metcalfe’s Law is a phenomenon of the networking world.  Essentially, it says that the value of a network is proportional to the square of the number of connected users.

Simply put: If I have a phone and no one else does, that’s not a particularly valuable thing. But as the number of people with phones grows, the value of my phone (value in this case being based on the ability to call x number of people) grows, as well.

This sort of thinking may be behind Toyota’s announcement at the 2015 Consumer Electronics Show (CES). Bob Carter, Senior Vice President – Automotive Operations, Toyota Motor Sales, U.S.A., Inc., stated in a speech, “As of today, Toyota solely owns approximately 5,680 hydrogen-fuel-cell-related global patents, some still pending.”

This is a consequence of Toyota working on fuel-cell technology for more than 20 years.  Evidence of that work takes the form of the Mirai, which will be launched in the U.S. later this year.  The Mirai is powered by hydrogen.

Carter continued, “But for all we have accomplished over more than two decades of R&D we are really only at the starting gate with consumers.”

And the company will be for some time, as the total production of the Mirai this year will be about 700 units.  To put that number in perspective, realize that Toyota delivered 428,455 Camrys in 2014.  Figure that there are 260 working days in a year.  Based on that, there could be 1,648 Camrys produced in a day—more than double the number of Mirais projected for the year.

Back to Carter:
 
“That’s why I am happy and proud to announce that Toyota will grant royalty-free use of all 5,680 of its solely owned fuel cell patents including pending applications.  Toyota will allow the use of these patents by companies manufacturing and selling fuel cell vehicles through the initial market introduction period which is anticipated to continue through 2020.

“This initiative will include patents that are critical to the development and production of fuel cell vehicles.
 
“Approximately 1,970 licenses are related to the fuel cell stack about 290 to the high-pressure hydrogen tank and about 3,350 to fuel cell system control technology.  
 
“Here’s the best part because it focuses on the rapid expansion of hydrogen fueling station networks.  Toyota will provide for the first time ever royalty-free use of approximately 70 hydrogen-station-related patents indefinitely for those installing and operating hydrogen refueling stations.”

Realize that these patents represent a tremendous amount of investment that Toyota made. It is quite valuable intellectual property.

But Toyota realizes that by opening its patents and allowing other vehicle manufacturers and providers of hydrogen fueling stations to take advantage of what they’ve accomplished, there is a greater likelihood that the limited number of fuel cell vehicles that Toyota builds (and it should be noted that Carter said they’re planning on producing “tens of thousands in the 2020s,” but that’s still dwarfed by that Camry number) will be supplemented by fuel cell vehicles made by other manufacturers.  And a consequence of that will be a faster build out of the required infrastructure.

They’re hoping to create—and leverage—a network.