Toyota Mirai Lawsuit Alleges Automaker, First Element Behind Anticompetitive Pricing Scheme for Hydrogen Fuel

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Dozens of Toyota Mirai drivers allege in a proposed class action lawsuit that the automaker has violated antitrust laws by using deceptive, predatory and exclusionary tactics to maintain a monopoly on the hydrogen fuel retail market in California.

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The 23-page Toyota Mirai lawsuit accuses the automaker and First Element, a hydrogen fuel station operator, of exploiting their dominant position in the hydrogen fuel retail market to stifle competition and artificially inflate the “true cost” of hydrogen cars and fuel, including by blocking rival refueling stations from entering the market. Further, the case claims Toyota has deceived consumers into believing the hydrogen-powered Mirai is environmentally friendly and misused California taxpayer money to cement its control over the hydrogen retail market in the state.

“Toyota’s destruction of competition caused antitrust injury to Plaintiffs and Class members by lobbying for taxpayer funds, misusing taxpayer funds, eliminating meaningful competition, pollution [sic] the environment in the name of helping the environment and continuing to maintain its dominance to sell and profit off California consumers,” the complaint summarizes, claiming both Toyota Mirai owners and California taxpayers alike have been economically harmed by the defendants’ conduct.

Related Reading: Toyota Mirai Class Action Lawsuit

Central to the Mirai lawsuit is Toyota’s alleged treatment of a state-approved hydrogen fuel station at California State University, Los Angeles. According to the complaint, the school obtained a government grant around 2010 to develop a clean-energy hydrogen fuel station, which, upon its completion, was given “a literal seal of approval from the state of California to sell hydrogen to the public.” Over more than seven years, however, Toyota targeted the $5 million Cal State Los Angeles station and essentially prevented it from operating, wasting millions in taxpayer money, the suit says.

Per the case, the University hydrogen fuel station was initially listed on the website H2FCP.org, which provides real-time data about hydrogen stations for drivers looking to fill up their vehicles. The filing says the H2FCP.org site is operated by the Hydrogen Fuel Cell Partnership, formerly the California Fuel Cell Partnership, a “weird creature” that the filing calls a “quasi-governmental entity” run by Toyota.

The lawsuit relays that Michael Dray, the Cal State Los Angeles employee hired to be the hydrogen fuel station manager, around 2011 began to face “intense pressure” from the state’s Air Resources Board to agree to remove the hydrogen fuel station from H2FCP.org. In a conference call with a Toyota engineering consultant about the removal, Dray was allegedly told, “well it takes a lot of guts to say you’re … open to the public,” to which Dray responded, “but we are.” According to the case, the consultant told Dray, “no you’re not, because Toyota vetoes that,” and the conversation was followed by the individual allegedly pressuring the California Air Resources Board and “other governmental actors” to remove the university hydrogen fuel station from H2FCP.org.

Per the suit, it became increasingly clear that if Toyota would not approve the Cal State Los Angeles hydrogen fuel station, the school “would have no customer base anyway,” leaving Dray to acquiesce to Toyota’s removal request with an agreement that the automaker would visit the station and eventually approve it.

“Over the next five years Honda and Hyundai approved the use of the University fuel station for its drivers, but Toyota refused to approve the station or ever visit,” the case alleges.

Instead, Toyota “attacked” the University station by imposing retroactive standards on hydrogen fuel stations in California, which the automaker essentially weaponized, the lawsuit relays. While Toyota threatened to have the California government shut down the Cal State University station if it failed to meet the “impossible” standards, True Zero stations, owned by First Element, for whom Toyota is allegedly a creditor, were automatically approved, the lawsuit relays. Per the case, First Element’s True Zero controls the most hydrogen stations in California.

Overall, Toyota has been able to control and block customers from using hydrogen refueling stations it did not approve of through its alleged anticompetitive conduct, including by providing Mirai buyers free hydrogen fuel cards controlled by the automaker and threatening to void their warranties if they refuel at an unapproved station, the case alleges.

According to the Mirai lawsuit, Toyota and First Element’s “artificial suppression” of hydrogen fueling stations and pricing manipulation is most evident in the lack of resale value for the hydrogen vehicle, which consistently sits at “less than 90% of the original purchase price.” Though Toyota has reportedly sold thousands of Mirais with myriad incentives to dealers, the automaker merely “points fingers at the hydrogen stations or other actors” when drivers complain or sue the company over the cars, the lawsuit claims.

“Ultimately, consumers suffered, and continue to suffer, as a result of Toyota’s wantonly anticompetitive harmful conduct,” the proposed class action alleges, accusing Toyota of “[having] their boot on the necks of every hydrogen station operator” in California.

The case posits that Toyota targeted its alleged harassment at Cal State Los Angeles because its hydrogen fuel station was the only station making green hydrogen, producing it from water.

“Toyota decided from the git-go [sic] that this green process was too costly,” the suit alleges. “Toyota decided they were going to produce hydrogen fuel from carbon/fossil base methods. This is a major betrayal to the California taxpayers.”

The complaint accuses Toyota of engaging in similarly anticompetitive conduct in Denmark, Scandinavia and Germany, “where you will find hundreds of abandoned Toyota Mirais and inoperable hydrogen stations collecting mothballs.”

As the case tells it, Toyota’s playbook for hydrogen fuel amounts to selling a government a “fraudulent bill of good[s]” premised on environmental responsibility, providing hydrogen-fueled cars to key politicians for free, lobbying aggressively for taxpayer money, reaping revenue and customer data, and then abandoning the hydrogen fuel infrastructure.

“Toyota is currently doing this to California, and it was a ripe target,” the lawsuit alleges.

The Toyota Mirai lawsuit looks to cover all California taxpayers from 2011 “or as soon as Toyota began to receive benefits from the State of California for hydrogen” while not producing clean hydrogen and “blocking clean hydrogen paid for by taxpayers from entering the market.”

The case also proposes to cover a subclass that includes any consumer who has ever owned a Toyota Mirai.

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