Navigant Research Blog

In Europe, Fuel Cell Vehicles Accelerate

— July 16, 2013

Fuel cell cars have taken a beating in public perceptions in the United States over the past 4 years.  First, the Obama Administration significantly cut funding for the Department of Energy’s fuel cell vehicle technology program, and shifted the department’s focus to the plug-in electric vehicle (PEV) market.  Then, the launch of commercial PEVs and the steady growth of PEV sales cemented the impression that FCVs are a dead technology, made obsolete by PEVs.  As a result, Europe is now the hub of fuel cell vehicle and infrastructure development activity globally, supplanting the United States, which had led the way in this sector in the late 2000s.

The European Union, along with the national governments of Germany, the Nordic countries, and the United Kingdom, have made a clear commitment to prepare for FCV commercialization in 2015.  The main drivers for European interest in FCVs (as well as PEVs) are aggressive 2050 GHG emissions targets set by the EU; the growth of renewable energy, with hydrogen seen as a way to use excess renewable energy capacity; and economic growth, with Germany in particular seeing FCV development as a way to support its auto industry.  In addition, the PEV market has not taken off as quickly in Europe as it has in the United States, and there is some skepticism about how large a market share PEVs will ultimately take.  As a result, European governments are developing roadmaps to deploy hydrogen infrastructure in time for the automakers’ 2015 introduction plans.

Fuel Cell Light Duty Vehicle Sales by Region, World Markets: 2020-2030FCV Sales Chart

(Source: Navigant Research)

Of course, it doesn’t really matter which region is “leading” and which may end up following, as long as the world market does in fact take off – except that the current lack of activity in the United States means that very few vehicles will be brought to its shores when commercial FCVs are introduced in 2015-2016.  In the new Navigant Research report, Fuel Cell Vehicles,  I forecast that fewer than 1,000 FCVs will be sold in the United States in the first 2 years, virtually all in California.  This is well below the tens of thousands of PEVs first introduced in the United States in 2010 and 2011.  But FCVs simply will not be introduced where there is no infrastructure in place to support them.  Although the FCV market will grow much more slowly than the PEV market, Europe will start out ahead of the United States and stay there.

 

Toyota Bets on Fuel Cell Vehicles

— October 26, 2012

Toyota declared in September that it’s watering down its battery electric vehicle (BEV) plans by cutting back the production of the small Toyota eQ (known as the Scion iQ stateside).  The company has been hesitant on the idea of powering a vehicle solely by battery and currently only has plans to sell the updated RAV4 EV in California, so the move is not that surprising.  Instead Toyota is emphasizing its plans for fuel cell development.  The company currently operates a test fleet of fuel cell vehicles based on the Highlander SUV, and plans to deploy its first mass-market FCV in 2015.  Pike Research’s 2011 Fuel Cell Vehicles Report forecasts that the North American market for fuel cell vehicles will grow from around 9,600 vehicles in 2015 to more than 53,000 in 2020.

In retreating on BEV development, Toyota is making the bet that hybrids and plug-in hybrids are the greatest growth opportunity in the near term, and hydrogen vehicles, not BEVs, will be the greater opportunity for the future.  Considering the lackluster sales performance of BEVs vs. hybrids (HEV) and plug-in hybrids (PHEV) over the last 2 years, it seems like a safe bet.

Sales of Plug in Vehicles, North America (2011 & 2012)

Type

2011

2012 (YTD)

(Since 1/1/2011) Cumulative

HEV

268,807

322,516

591,323

PHEV

8,272

25,944

34,216

BEV

9,966

6,802

16,768

Source: Pike Research

Most BEVs skirt the edge of a 100-mile range, stretching up to the $100,000 Model S, from Tesla, which can go nearly 300 miles on a single charge.  EV advocates and battery manufacturers have long insisted that a battery breakthrough on the horizon will triple battery ranges while drastically reducing battery costs.  Regardless of how far the BEV can go on a full battery, however, it still takes hours to recharge instead of the minutes it takes to refill a conventional gas vehicle.

Toyota’s hydrogen vehicles can already achieve ranges and refill times comparable to conventional gas vehicles, but they have challenges of their own, including high vehicle costs, high fuel costs, and a lack of refueling infrastructure.  The costs of the vehicle technologies and fuel can be reduced through economies of scale, but the real challenge lies in infrastructure development requiring hefty investments.  According to the U.S. Department of Energy’s Alternative Fuels Data Center (AFDC), there are nine publicly available hydrogen refueling stations in the nation, mostly in southern California.  By comparison, there are more than 4,600 publicly available EV charging stations.

The ultimate question is which technology will develop faster.  Will hydrogen infrastructure be added in a manner that makes advanced vehicle battery development unnecessary, or will batteries achieve a breakthrough that makes refueling with either liquid or gaseous sources obsolete?  Toyota’s actions indicate that its executives believe a battery breakthrough is unlikely.  If the company is right, its efforts will pay off handsomely; if not, the Japanese maker will cede increasing portions of the alternative fuel market share to smaller and more enthusiastic EV believers such as Nissan, Renault, and Tesla.

 

On FCVs, Secretary Chu Changes His Mind

— August 8, 2012

In 2009 the new U.S. Energy Secretary, Steven Chu, gave an interview stating that fuel cell powered light-duty vehicles were in need of a few miracles to make them viable in the market place.  Earlier this year, Chu did a 180-degree spin, saying that, thanks to newly abundant natural gas supplies in the United States, fuel cell vehicles now – officially – have potential.

In the intervening three years Germany, the United Kingdom, and more recently France have all launched their own versions of H2Mobility to coordinate and promote the adoption of fuel cell vehicles in 2015.  At the start of 2012, Japan detailed a map of future hydrogen refueling stations that will serve the majority of the Japanese population, and China laid out targets for local production and adoption of fuel cell vehicles.  In other words, the United States was pretty much out of step with the rest of the world.

But now the American government is back on board in supporting the fuel cell vehicle (FCV) option.  Is this really a good thing? Probably.  But…

The fuel cell industry is still plagued with large, government-backed R&D projects that tend to shield companies from market realities.  The most successful companies to date, such as Bloom Energy, FuelCell Energy, Altergy, and SFC Energy, have focused on commercialization and not feeding on government handouts.  The government focus on targeted R&D in the early days was vital, and the U.S. Department of Energy, along with Japan, led the world.  But now an increasing number of countries are being weaned off of R&D subsidies as the technology becomes increasingly commercial.

My worry is that the shift in U.S. policy will re-open the door again to large-scale, long timeline R&D projects.  July 25th, 2012 saw the announcement by the U.S. DOE of a 2-year program to monitor and evaluate hydrogen infrastructure performance data.  Assuming the fastest possible kickoff, the program will launch in 2013, with a 2-year program out to 2015, say 6 months to write up the first draft report, and the wrap-up likely coming in 2016.  Four years from now.  By that time all the car companies should have fleets of fuel cell vehicles on the road, probably in Europe and Asia Pacific.

So unless this about-face includes a realistic roadmap to commercialization that focuses on the market and not R&D, the Energy Secretary’s support could actually delay the roll-out of FCVs in the U.S.

 

Fuel Cell Vehicles: Not Dead Yet

— July 3, 2012

In spite of many efforts to declare fuel cell cars dead, top automakers are moving ahead with plans to produce commercial fuel cell vehicles (FCVs).  That was one of the key messages from the World Hydrogen Energy Conference, held last month in Toronto.

Granted, it’s not surprising that a group of people willing to spend time and money to get together and talk about hydrogen are, in fact, bullish on hydrogen.  But from the automakers’ media panel, where representatives from Daimler, Toyota and Honda sat for a long Q&A with the press, and from the hydrogen plenary and a panel on hydrogen market demand that I participated in, it’s clear that companies are still committed to this effort even though there are real hurdles in the way.

The automakers once again stated their commitment to releasing commercial FCVs roughly in the 2015 timeframe.  Some are more specific than others.  Honda’s Steve Ellis said the Japanese maker has not announced a hard date, but the company is working on a full model change from its current offering, the FCX ClarityDaimler reiterated that it will have a next generation FCV on the road in the 2014/2015 timeframe, and Toyota gave 2015 as its target.

Even though they have been talking up this timeframe for a couple of years, to be honest, I was half expecting the manufacturers to start walking back their dates, since enthusiasm for FCVs in some parts of the world has waned.  But they did not.  What has been pushed back is the timeframe for large-scale uptake, which OEMs are now saying likely won’t happen until  close to 2020.

Daimler’s Christian Mohrdieck said his company plans to get the price of the fuel cell drivetrains down to around that of a diesel hybrid, through volume production and some materials cost reduction.  Here I think he is talking about platinum, and it would behoove the platinum industry to think about making that happen.  I don’t think Mohrdieck was including the cost of hydrogen tanks in this estimate, in which case you have to bump up the FCV price further.  Hitting a competitive price point is still a concern for OEMs, from what I see.

It’s clear that hydrogen infrastructure is still a thorny issue.  The three OEM representatives at the conference were unanimous that they should not have to foot the bill for infrastructure buildout.  Even though Daimler has partnered with Linde to build 20 stations in Germany, Mohrdieck referred to this a “triggering” signal of the company’s intent to produce cars that can use hydrogen fuel.  Toyota also noted that it’s partnering with energy and gas companies in Japan to build stations, which will be placed in the same regions where Priuses are popular.

From my conversations with hydrogen companies, it is clear that they’re enthusiastic about the potential market from fuel cells.  While they’ve been involved in building infrastructure, especially in terms of materials handling but also with early passenger cars and buses, the fact remains that distributed vehicle fuelling is not their traditional business.  Eventually retail gas station operators must step in if the FCV market is to become viable.  This is happening in Germany, where Total Germany is part of a new initiative to build 50 stations by 2015.

No one doubts the major obstacles ahead.  But the OEMs are spending a lot, in terms of money and reputation, to forge ahead with fuel cell cars.

 

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