China's Chen Jianxin (L) sprints to the finish line next to Japan's Keisuke Nozawa during the men's 4x400m relay final at the 6th East Asian Games in Tianjin municipality October 9, 2013. REUTERS TOKYO/DETROIT (Reuters) - Asia's two autos powerhouses, Japan and China, are jostling for supremacy in how future electric cars should generate their power – from batteries or hydrogen-powered fuel-cells.

In a potentially high-stakes clash reminiscent of Sony versus Panasonic in the Beta-VHS video war in the 1980s, the winner could enjoy years of domination if their technology is adopted as a global standard by other manufacturers.

This time, though, there should be a place in the autos market for both electric battery and hydrogen fuel-cell cars. The key question is which will power more mainstream cars – the market dominated today by the likes of Toyota, General Motors and Volkswagen .

"We're reaching a crossroads," says James Chao, Shanghai-based Asia-Pacific managing director for industry consultant IHS Automotive. "It's difficult to exaggerate the significance of the choice between batteries and hydrogen.

"Billions of dollars will be invested in one or the other and may determine which companies will lead the industry through the end of this century."

RIVAL VISIONS

China, a major oil importer and blighted by air pollution, is pushing for all-electric (EV) cars, offering incentives to buyers, forcing global automakers to share their technology, and opening its market to tech firms and others to produce electric vehicles.

For a decade, Beijing has pushed for the EV to become a mass-market car, hoping a low entry barrier will allow its relative late comers to close a competitive gap with global rivals who have a century's head-start in traditional combustion engines.

"(China President) Xi Jinping explained it very well, saying that developing new energy vehicles is the Chinese auto industry's only road to grow from being big to being strong," Xu Heyi, chairman of Beijing Automotive Group and a high-ranking Communist Party official, told reporters recently.

A man charges the batteries of BAIC Motors electric cars, which will be serve as official vehicles for the APEC Summit, at a new charging station at the Beijing Capital International Airport in Beijing, October 30, 2014. REUTERS

Japan, though, sees the future differently and is investing heavily in fuel-cell technology and infrastructure as part of a national policy to foster what it calls a 'hydrogen society', where the zero-emission fuel would power homes and vehicles.

Toyota Motor especially is keen to maintain the alternative propulsion lead it established a decade and a half ago with the full hybrid electric Prius.

"It's not that we're not doing anything about the EV. Technically speaking, EV is a relatively easier technology," said Koei Saga, Toyota's senior managing officer in charge of vehicle powertrain technology. "But it needs to evolve. If you're looking for the ultimate solution, the EV probably isn't it."

To be sure, China and Japan are not alone. GM has joint research with Honda on hydrogen cars, while BMW is Toyota's fuel-cell partner. Daimler in Europe and Hyundai Motor in South Korea are also carrying out their own research and development on a hydrogen car.

MORE AFFORDABLE

Honda Motor unveiled a 'mass market' hydrogen fuel-cell car at the Tokyo Motor Show on Wednesday that will go on sale in Japan in March, to be followed by launches in the United States and Europe, key potential markets for the technology.

Honda believes the car, dubbed the Clarity Fuel Cell, has reached the affordability range where a "fairly typical mainstream consumer could stretch to buy one," Toshihiro Mibe, a Honda operating officer, told Reuters. "We want this car to be the trigger for the 'hydrogen society'."

Honda Motor Co President and CEO Takahiro Hachigo speaks next to its FCV Clarity Fuel Cell car during a presentation at the 44th Tokyo Motor Show in Tokyo, Japan, October 28, 2015. REUTERS/Yuya Shino

The Clarity, which will retail for 7.66 million yen ($63,970) before government subsidies, follows this year's launch of Toyota's hydrogen-powered Mirai - meaning 'future' in Japanese. Mirai buyers benefit from subsidies totaling around 3 million yen ($24,915) per vehicle.

Honda's main advance on Toyota's technology is to have shrunk the fuel-cell stack - the ensemble of fuel-cell, motor and transmission – by a third from a 2008 model it leased to a few private buyers in California in a subsidized trial deal.

That allows Honda to store the whole stack under the hood, and package the car as "roomy enough to comfortably sit five adults," said Kiyoshi Shimizu, chief engineer for the new car, though it still sacrifices trunk space to accommodate a bulky hydrogen fuel tank. The battery pack sits under the front seat.

"With this, we now hope to make a hydrogen powertrain an option across our product line," Shimizu added.

ON TESLA'S TAIL

China, meanwhile, is running full tilt at electric vehicles, and has opened its automotive industry to deep-pocketed technology firms to invest.

The move has bred more than half a dozen Chinese-funded EV start-ups, backed by the likes of Baidu, Alibaba, Xiaomi and Tencent, as well as LeTV, a streaming video and web-connected television provider.

Some, such as LeTV-funded Atieva and Faraday Future, have set up operations in California, in part to skim off talent and expertise that Tesla and others have developed there. Both aim specifically to create plush electric cars to compete with Tesla's Model S in the next 2-3 years.

While this looks ambitious, one industry official said it should be taken seriously given the start-ups' funding clout.

In a carrot-and-stick policy, Beijing provides subsidies for private buyers of more than $25,000 on an all-electric battery car and more than half that on a heavily electrified, so-called plug-in hybrid. It has also toughened fuel economy rules in a bid to force automakers to introduce more electric cars, and encourages global automakers operating in China to share electric car technology with their local partners.

At the center of the new wave of China's EV producers is Jia Yueting, the 42-year-old billionaire founder of LeTV, who has funded Atieva, Faraday and his own EV efforts.

LeTV founder Yueting Jia Screenshot Via YouTube

Jia wants to build a high-performance electric car, a potential 'Tesla killer' he has christened Le Supercar. He has also ploughed hundreds of millions of dollars into Atieva and Faraday, while LeTV has partnerships with state-owned Beijing Auto and with British sports car maker Aston Martin, which could accelerate his efforts to put high-performance electric cars on the road in 2017-18.

Other Chinese-funded EV start-ups also have Tesla in their sights. NextEV is backed by three Chinese Internet entrepreneurs and Tencent, while Pateo started out as a digital marketing agency before developing smart, Internet-connected car technology. It now aims to create its own smart electric car.

FILLING UP

Japanese Prime Minister Shinzo Abe's growth strategy includes calls for subsidies and tax breaks for buyers of fuel cell vehicles, relaxed curbs on hydrogen fuel stations and other steps on a roadmap to promote hydrogen energy.

The ruling party wants to bring down the cost of a fuel-cell car to about $20,000 by 2025, and the government aims to create 100 hydrogen fuel stations by March in urban areas where the vehicles will initially be launched.

"For the hydrogen car to take off, we need a fairly well developed infrastructure to make liquid hydrogen available everywhere. On that front, Japan is among the world's most aggressive and advanced," said Honda's Mibe.

Neither technology, however, comes without sizeable challenges - from regulation and subsidies to infrastructure.

Japan's Prime Minister Shinzo Abe (L) shakes hands with China's President Xi Jinping during a welcoming ceremony of Asia Pacific Economic Cooperation (APEC) forum, inside the International Convention Center at Yanqi Lake, in Beijing, November 11, 2014. REUTERS/Kim Kyung-Hoon

Both need to significantly expand the number of refueling and recharging stations and, while EVs still need to convince long-distance drivers, hydrogen's appeal to the masses may be blunted by its cost. "There's a lot more room for the fuel-cell vehicle to improve and evolve," says Mibe.

(Reporting by Norihiko Shirouzu, with additional reporting by Maki Shiraki; Editing by Ian Geoghegan)