Honda Motor Co., Japan's third biggest vehicle maker, plans to begin leasing a pricy new hydrogen-powered fuel-cell car in Japan and the United States in 2008.

"By evolving a next model based on this, I think the level of technology will become very close to that of mass-produced ordinary vehicles within 10 years or so," Honda president Takeo Fukui said in an interview with Kyodo News.

"In 2018, I believe the development (of a fuel-cell car) will have been very advanced," he said. "It will become a real possibility to a large degree."

The world's leading carmakers are developing fuel-cell cars which drastically cut emissions. But the high price of such cars, currently estimated at more than 100 million yen (840,000 dollars) each, has been a major barrier to the commercialisation of hydrogen-powered cars.

Fuel cells produce electricity through a chemical reaction between hydrogen and oxygen, leaving water as the only by-product.

Fukui told Kyodo that there will be many customers who want to buy a Honda fuel-cell car if it goes on sale for 10 million yen in the general market.

Honda has already unveiled a so-called FCX concept model, a fully functional futuristic sedan concept car powered by a hydrogen fuel.

But before the next-generation car becomes more common, Fukui said there are still some technological challenges the automaker needs to overcome.

He said the challenges include how to reduce the amount of noble metals used for fuel cells, how to improve hydrogen storage and how to make hydrogen at lower costs.

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