The purposes of this paper are (1) to examine the realities of fuel cell development to determine the economic potential of fuel cell applications to transportation and (2) to identify the major challenges as well as the public policies that could lead to the automobile becoming a mobile electric power source that is used to power homes and industry. Several technical and cost issues were identified to have the potential to pose development challenges; however, none are likely to be show-stoppers. If the fuel cell powered vehicle can offer the consumer additional uses for the automobile, e.g., a source of electric power for businesses or it can permit a rapid style change in the automobile by easily replacing the passenger compartment at costs the consumer finds acceptable, the consumer will be willing to spend more on the fuel cell powered vehicle than it spends on combustion engine powered vehicles. If the fuel cell stimulates design changes that makes major contributions to the safety of automobiles and results in substantial reductions in the cost of insurance, that will also promote consumer interest. Of equal importance to these technical issues are public policies that could promote fuel cell power use in automobiles. For example, a desire to reduce our dependence on foreign sources of oil or rapid growth in oil prices could lead to pubic policies that would accelerate the adoption of fuel cells in automobiles.

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