zoes-kitchenSome investment stories are simple, and some are complicated.

On the simple side are companies like Zoe’s Kitchen (ZOES), a restaurant chain that serves healthy Mediterranean fare at reasonable prices. With 130 locations in 15 states, Zoe’s has the potential to expand substantially, using the cookie-cutter principle employed by all successful chain restaurants.

On the complex side is a company like Tesla Motors (TSLA), which sells electric cars. Not only is a car a far more complex creation than a spinach rollup—barriers to entry are high, competitors are well entrenched, and even the dealer infrastructure is a captive of the status quo.

Yet Tesla has managed to surmount all those difficulties, and done it so well that in the latest Consumer Reports customer satisfaction survey, the Tesla Model S came out on top for the second year in a row, with a rating of 98. (The Corvette Stingray earned a 95, while the Mercedes-Benz E-Class sedan earned an 88.)

tesla-redWhat the typical Tesla owner loves about his car is its drivability, its elegant styling, its low repair and maintenance costs and its low fueling costs. To most of us, that driving experience (sheer silent acceleration) is the best thing about the car, and that’s a direct result of its single-gear electric motor, which supplies instant torque with none of the noise, vibration and harshness (NVH) of an internal combustion vehicle.

Going forward, Tesla promises to come out with a $35,000 car in 2017, as it drives down the cost of batteries with its huge gigafactory near Reno, Nevada.

But the battle to replace the internal combustion engine is far from over.

In fact, Toyota, which is 100 times larger than Tesla as measured by revenues, is betting that hydrogen-fueled cars (not battery electrics) are the solution. Its Mirai, which will use fuel cell technology to convert hydrogen into electricity, will be available for sale in 2015 (in Japan and California) for about $57,000, which though not cheap, is $14,000 less than the least expensive Tesla.

But Toyota will only make 700 vehicles that first year, and the biggest problem their owners will face is fueling. While I plug my Tesla in in my garage every night, just as you plug in your phone (and I can also plug in anywhere else there’s electricity—including Tesla’s excellent network of Superchargers), Mirai owners will need to find a hydrogen station. At the start, that won’t be easy.

Once fueled, the Mirai will accelerate from 0 to 60 mph in 9.0 seconds, slightly quicker than a Prius. It will seat four, and the hydrogen probably won’t pose any more safety hazard than gasoline does in gasoline-powered cars. They seldom explode, but roughly 9,000 catch fire in typical year.

Oh, and as far as looks go, I think the Mirai resembles a futuristic bottom-feeding fish—and I’m sure some people will like that.

toyota miraiSo, who will win?

This is not necessarily an either/or equation. It’s possible that battery electrics and fuel cell electrics will both have their place in the future, along with a dwindling percentage of internal combustion vehicles.

But one of Toyota’s challenges is the risk of cannibalizing its current well-established business. While Tesla was able to start with a clean slate, Toyota has legacy systems everywhere, some of which will help it produce a competitive desirable vehicle, and some of which won’t.

The future will be interesting.

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