Navigant Research Blog

Japan Doubles Down on Fuel Cell Vehicles

— July 13, 2014

Two recent announcements out of Japan have dramatically cut the price that Japanese drivers will pay for a fuel cell car.  Toyota unveiled its completed design for the fuel cell vehicle (FCV) it will put on the market in 2015.  More importantly, the company revealed the price would be around ¥7 million, or $70,000.  This is a big drop from the $100,000 price tag floated, alarmingly, a few years ago.

A day earlier, Japan’s prime minister Shinzo Abe called for subsidies of FCVs beginning next year.  A part of the government’s economic growth strategy, these incentives reflect the hydrogen energy roadmap adopted by Japan’s trade ministry.

As described in my Fuel Cell Vehicles report, I’ve long said that the two impediments to fuel cell cars taking hold in the market are cost and infrastructure.  Automakers like Honda and Daimler have already shown that the technology works, resolving early issues such as cold-start capability.  FCVs will also deliver on the key performance characteristics that make them intriguing, as compared to battery electric vehicles: range and refueling.  The Toyota FCV will have a 420-mile range and refuel in 3 minutes.

The Post-Fukushima Strategy

For longtime fuel cell technology followers, I am stating the obvious.  The potential benefits of fuel cells in transportation have been well-understood for years.  Honda, General Motors (GM), Daimler, Hyundai, and Toyota have all shown they can make cars that meet those performance targets.  Nevertheless, in the U.S. media, the perception persists that fuel cells were made obsolete by the successful introduction of plug-in electric vehicles (PEVs).  In Navigant Research’s recent white paper, The Fuel Cell and Hydrogen Industries: 10 Trends to Watch, I noted that the U.S. media would continue to tie these two technologies together – and would misunderstand the rationale for pursuing them both.  Sure enough, this article asserts that the Japanese government’s goal is to crush Tesla.

Not quite.  The Japanese government’s plan is to promote technologies and fuels that will help ensure the country never has another experience like the Fukushima disaster in 2011.  The Japanese government also wants to grow the economy by supporting domestic industries.

The Market Will Decide

To take a phrase from President Obama, Japan has taken an “all of the above” approach in pursuing these two goals.  Nissan and Toyota have done well in the PEV market.  But fuel cells offer an alternative for consumers who may find that a plug-in car doesn’t meet their driving needs.

Japan has also made a huge commitment to fuel cells that provide residential power.  The country’s residential fuel cell program has supported the deployment of over 42,000 combined heat and power (CHP) fuel cells in Japan.  Manufactured by Toshiba, Panasonic, and Eneos Celltech, these residential units are sold through gas companies like Tokyo Gas.  After Fukushima, when the plant’s backup diesel generators were rendered useless and employees scavenged car batteries to power monitoring equipment, the Japanese government set a requirement that the fuel cells be capable of starting up when the power is off.  While these fuel cells employ a different technology from automotive fuel cells, the CHP program demonstrates both Japan’s commitment to pursuing whatever technology the country believes will support its energy resiliency (utilizing domestic expertise) and its willingness to support that technology in its early market introduction.

Japan has already committed to building 100 hydrogen fueling stations in key metro areas.  The country’s energy companies are partnering in that effort.  Note that the Japanese government is also supporting the automaker deployment of 12,000 charging stations in Japan.  Again, it’s not an either/or prospect for Japan.  The announcement on the FCV subsidies will put the cars at a price point where they might have a chance in the market.  If the infrastructure is in place to make fueling reasonably convenient, then it will be up to consumers to decide whether FCVs will succeed in the market or not.  Success will be measured over many years, not in 18 months.

 

Automakers Go for MPG Records

— July 10, 2014

Automakers have had some poor publicity recently, with safety recalls and financial penalties imposed for exaggerating fuel efficiency performance.  In the United States, Ford was forced to apologize and offer customers compensation when its vehicles did not deliver the promised number of miles per gallon.  Honda and Hyundai suffered a similar fate in 2012 in the United States, and Hyundai and Ssangyong have also recently incurred the wrath of legislators in their home country of South Korea.

Fuel economy has risen to the top of the list of factors that influence new car purchases, even in North America, where historically cheaper fuel has made miles per gallon a low priority for consumers, until recently.  Thus, many manufacturers have shifted their marketing emphasis from 0-to-60 miles per hour (mph) times to average miles per gallon (mpg) under standardized testing.

Taking the Long Way

The big problem with standardized tests is they don’t represent anyone’s actual driving, so the prospect of achieving the stated figures is unlikely.   Most people have bad driving habits (from a fuel economy perspective), such as hard acceleration and braking, driving with under-inflated tires, and carrying excess weight around without realizing that all of these factors affect how much fuel is used.   Others make it their life’s work to squeeze the most miles from a gallon of fuel, and there are competitions for those who want to be the best.

Mercedes periodically attempts long-distance driving feats with its production cars.  In July 2005, three standard Mercedes-Benz E 320 CDI cars drove from Laredo, Texas on the Mexican border to Tallahassee, Florida, covering 1,039 miles on a single tank (80 liters/21.1 gallons) of fuel.  This was part of Daimler’s introduction of diesel vehicles to the U.S. market.  In 2012, a Volkswagen Passat TDI made it 1,626 miles from Houston, Texas to Sterling, Virginia, again on a single tank of fuel.

Out of Africa

Now, a Mercedes-Benz E 300 BlueTEC HYBRID has driven the 1,223 miles from Tangier, in Northern Africa, to the United Kingdom in 27 hours, arriving at the Goodwood Festival of Speed with an estimated 100 miles of range still available.  The BlueTEC averaged 73.6 mpg on the journey.  This type of demonstration shows what can be accomplished in a production vehicle in driving conditions that included heavy rain, intense heat, rush hour traffic jams, and significant elevation changes.

This sort of feat is one of the biggest challenges facing electric vehicle sales.  Although few people would actually want to tackle a journey of over 1,000 miles on a single tank of fuel, many people are happy that their vehicles can do that, just in case.  And few would want to undertake such a journey where they have to stop every 100 miles to recharge for a couple of hours, even if there was a network of charging stations in place.

 

Leasing EV Chargers and Profiting

— July 10, 2014

There are about as many business models for operating electric vehicle (EV) charging stations as there are flavors of Baskin-Robbins ice cream, but so far, none of them have been clearly profitable.  While worldwide sales of plug-in electric vehicles (PEVs) have grown to more than 12,000 monthly, in most locations today, there isn’t enough traffic for EV charging stations to directly pay back their cost within 3 years, which is a typical required return on investment.

Several hardware companies are trying to lower the cost of the equipment, which could reduce the payback period.  In the United Kingdom, electric vehicle supply equipment (EVSE) company POD Point is now leasing charging stations to lower the upfront cost.  For approximately £50 ($85) per month installed, POD Point will provide a commercial charger, which the company says requires just two charging sessions per day to be profitable.  Leasing can be a viable option for companies looking for an easy way to enter the market, and the leasing company has a vested interest in making sure that the stations remain operational.

Dig It

For companies that prefer to purchase the hardware outright, ClipperCreek recently began to offer a commercial charger for just $395 before installation costs.  A pay-by-mobile phone system from Liberty Access Technologies that manages up to 10 charging stations and enables fees to be collected can be added on.

The cost of installation, which can require trenching, running conduit curbside, and upgraded power delivery to the location, remains the Achilles’ heel of profitable EV charging, and unfortunately, there’s little leeway in reducing the contractor and cabling fees.

Automakers are getting involved to lower the cost and pain of EV charging.  Tesla bundles the costs of accessing its SuperCharger network with the vehicle purchase price, while Nissan is paying for the first 2 years of charging a LEAF with its recently announced No Charge to Charge program.  Nissan has teamed up with AeroVironment, NRG, and the Car Charging Group on the EZ-Charge program, which gives EV owners a single payment card for accessing chargers from these EVSE providers.  EV charging company ChargePoint was supposed to work with EZ-Charge too, but backed out of the agreement.

In Japan, Nissan has joined with Toyota, Honda, and Mitsubishi to form Nippon Charge Service, an EV charging company that will provide incentives for companies to offer commercial EV charging at retail outlets.

Lattes Not Included

As detailed in Navigant Research’s Electric Vehicle Charging Equipment report, to be profitable today, most commercial EV charging stations need to bundle the cost of charging with some other service or fee structure.  These include combining EV charging with conventional parking fees, valet service at a hotel, or offering subscription services that combine home and public charging (a la the NRG eVgo network).  Startup Volta in Hawaii and Juice Bar have taken another approach by using advertising revenue to reduce the cost of a charging station, a growing trend that is likely to increase in popularity.

There will come a day soon, however, when EV penetration will be sufficient in some regions to make pay-as-you-go EV charging services profitable.  Gas prices will likely continue to rise (gasoline in the United States  is up $0.16 from last year at this time, according to AAA) and EV charging service providers will have more flexibility in pricing, since electricity as a fuel will increasingly be a better deal ‑ making profitability easier to attain.

 

Hybrid Race Cars Dominate the Le Mans 24-Hour Race, Again

— July 6, 2014

The annual 24-hour endurance race at the Le Mans circuit is famous for presenting both car and driver with a grueling challenge.  The goal is quite simple – teams of drivers and mechanics battle to see who can complete the most laps of the circuit in 24 hours of driving.  The Fédération Internationale de l’Automobile (FIA) organizers set rules for the vehicles taking part, such as minimum weight and limitations on the use of four-wheel drive, so it’s not simply a case of developing the most powerful engine.

In this month’s 82nd running of the race, Audi secured its 12th victory in 14 years with a one-two finish.  The Audi team’s No. 2 car finished with 379 laps, three more than its No. 1 team, and Toyota took third place.  The winning team overcame turbocharger problems for its third success in the world’s most famous endurance race, watched by 263,000 spectators – the highest attendance in 20 years.  The  Porsche team was in second place overall with its new vehicle when it was forced to retire in the 22nd hour with technical issues.

Full Day’s Drive

The race is won by a combination of performance and reliability, and the winners had to replace key engine components, such as the fuel injector and turbocharger, along the way.  With speeds exceeding 200 mph along the straights, the Le Mans race gives auto manufacturers an extreme testing ground for the technology that often ends up in production vehicles.  With a lap distance of just under 8.5 miles, the winning car traveled just over 3,200 miles in 24 hours.

This year, Audi, Toyota, and Porsche all raced different variants of hybrid drive:

  • The Audi R18 e-tron quattro couples a mid-mounted 3.7-liter V6 turbo diesel injection engine powering the rear wheels with a hybrid system on the front axle, which uses a flywheel energy storage system.  The 2014 model features an electric motor linked to the engine’s turbocharger that converts thermal energy from the exhaust gas into electric energy.
  • The Toyota TS040 HYBRID also features a four-wheel drive hybrid boost system for the 3.7-liter V8 gasoline engine.  Toyota Racing is using an Aisin AW motor-generator on the front axle to complement the DENSO unit on the rear.  Under deceleration, the motor-generators apply braking force in combination with traditional mechanical brakes to harvest energy, which is transferred via inverters to store in a bank of ultracapacitors.  During acceleration, the stored energy delivers a power boost as required at each axle.
  • Porsche’s 919 Hybrid drive system is based on a 2.0-liter V4 gasoline engine.  The engine is a structural component of the chassis and features direct injection, a single turbocharger, and thermodynamic energy recovery capabilities.  Two different energy recovery systems charge the lithium ion battery pack used for energy storage.  One is the recovery of thermal energy by an electric generator powered by exhaust gases.  The second hybrid system is a motor on the front axle using regenerative braking to convert kinetic energy into electric energy.

It’s fascinating to see major manufacturers testing their hybrid technology under race conditions.  In 2012, Peugeot, which won Le Mans in 2009 with a diesel hybrid race car, had to withdraw funding for its team.  Motor racing is an expensive sport.  But lessons learned by all participants about thermal energy recovery, lightweight vehicle structures, and the relative performance of gasoline V4, gasoline V8, and diesel V6, as well as the different energy storage options, can deliver valuable benefits when translated into production vehicles.

 

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