toyota mirai hydrogenToyotaThe Toyota Mirai.

The hydrogen-powered car business is set to grow.

Honda just announced Thursday that it will begin selling its hydrogen-powered sedan, the Honda Clarity, by the end of 2016.

But it's not the only automaker making cars with the hydrogen fuel cell technology — Lexus showed off its hydrogen-powered LF-LC concept car at the Detroit Auto Show earlier in January, and Audi also showed a hydrogen-powered car with a 372-mile range at the same auto show.

And then there's Toyota, which has been working on hydrogen-powered cars the longest at 23 years. As of January 14, Toyota has sold 64 of its hydrogen-powered car, the Mirai, in California.

Here's a breakdown of how the cars work:

How it works

The best way to think of hydrogen-powered cars is as an electric vehicle that is capable of making its own electricity, Craig Scott, national advanced technology manager at Toyota, told Tech Insider.

Like a plug-in EV, hydrogen cars also use electric motors.

However, the difference lies in how the motor is powered. A battery powers the engine in traditional electric cars, whereas a fuel cell stack generates the electricity to power the motor in hydrogen cars.

hydrogen fuel cell graphicYouTube/Toyota Europe

The stack generates power for the engine by fusing pressurized hydrogen stored in a tank with oxygen from the air. During this process, electricity is created that is released to power the motor, and thus drive the car. Water vapor is also created, but is released as a waste product. 

Hydrogen powered cars also have battery packs. However, the batteries are much smaller than the battery packs in traditional EVs and are not used for primary propulsion. 

Instead, the battery packs are only used when the car has higher performance demands, like when it is accelerating.

The batteries are also charged differently in hydrogen powered cars.

The primary way the battery pack is refueled is by regenerative braking, which means the battery uses the kinetic energy created when the car brakes to recharge.