Navigant Research Blog

Fuel Cell Vehicles Join the Carsharing World

— May 19, 2016

CarsharingGerman hydrogen company Linde is experimenting with a solution to the infrastructure problem for fuel cell cars. This summer, the company will launch an all-fuel cell vehicle (FCV) carsharing service in Munich. For this trial program, Linde is partnering with Hyundai to provide the fleet of FCVs. The service, called BeeZero, will have 50 fuel cell-powered ix35 crossover SUVs (known as the Tucson in North America), Hyundai’s current entry into the fuel cell market and one of only two FCVs commercially available today.

Linde is in good company in offering a carsharing service with zero tailpipe emissions, as a number of carshare programs around the world specialize in battery electric vehicle (BEV) fleets. In its 2015 Carsharing Programs report, Navigant Research estimated that around 20% of all carsharing vehicles in use globally were plug-in electric vehicles (PEVs)—mostly pure BEVs. Most of these EVs are in a handful of programs where the EV is a part of the service’s brand identity. The most famous is probably Autolib’ in Paris, run by Bollore. The Kandi carshare service in China also uses a fleet of micro EVs. Both Daimler and BMW’s carsharing services have deployed the automakers’ EVs, but not exclusively. Daimler recently switched out all EVs for gas cars in its San Diego carsharing service; the reason given was a lack of charging stations. (It will be interesting to see if the cars are reinstated once utility San Diego Gas & Electric launches its EV charging pilot program.)

The Challenge of Charging

Charging is one of the challenges for battery-powered carsharing vehicles, and likely explains at least in part why few carsharing companies integrate BEVs into their larger fleet of gas cars. Even if chargers are available, there can be problems with ensuring they are properly plugged in and that the charge stays full.

FCVs operating in fixed areas have the advantage of requiring a relatively small number of strategically located refueling stations in a city while offering longer ranges than EVs. Navigant Research predicted the introduction of fuel cell carsharing services for this reason in our recent white paper on the future of transportation. This makes an easier pathway to market for FCVs than having to build a network of refueling stations to service private car ownership.

Longer Ranges

Linde is also promoting the advantages of the longer driving ranges offered by FCVs. The Hyundai ix35 has a range of over 350 miles on a tank of hydrogen. While this is indeed a key benefit of fuel cell cars, it will be useful to see how much of a benefit this is for a carshare user. Carsharing services have a few typical use cases: short inner-city trips (the kind being served by one-way carsharing operations); planned trips with slightly longer range needs; and long-distance trips, typically on weekends. The BeeZero service would presumably be used for the latter two cases, but long-distance travel might require use of a hydrogen fueling station at the destination.

Linde has said it will use BeeZero to gather information on “day-to-day fleet operations” of fuel cells and hydrogen that can be fed back into its hydrogen development efforts. BeeZero presumably also offers Hyundai not only with an avenue to deploy more of its fleet of fuel cell ix35s, which have seen limited uptake to date, but also a chance to take lessons learned into its FCV development efforts. In the long-term, it is possible to envision FCVs being deployed in carshare services sponsored by automakers and infrastructure providers in cities where only low carbon or even zero emission vehicles are permitted.


A New Business Model for Fuel Cell Vehicles

— May 11, 2016

CarsharingWith the first carshare program served exclusively by fuel cell vehicles (FCVs) set to open in Munich, Germany later this year, it is time to examine how FCVs might be able to transition from early commercialization to large-scale deployment. For close to a decade, FCVs have been inching forward along the path to broader commercialization. However, they are still vehicles that automakers only make available in limited production runs and are typically only for lease for limited periods of time.

Toyota is one car company that is making the leap to selling its fuel cell car outright. With a suggested retail price of $57,500, Toyota’s Mirai has been priced at a level that (when combined with incentives) could allow it to compete against luxury plug-in electric vehicles (PEVs) in terms of price. However, the Mirai is being sold in an environment where battery electric vehicles (BEVs) are able to offer longer ranges and much lower prices than other long-range PEVs currently available.

Mixed Results

Toyota has said that it aims to have 3,000 Mirai models in operation in the United States by the end of 2017. As of the end of 2015, the automaker had around 2,000 orders in the United States alone, and Consumer Reports gave the Mirai a favorable write-up. However, Toyota is still closely managing sales to ensure that customers who may lease it have driving habits that match the limited availability of hydrogen refueling. Indeed, the company has been delayed in delivering some cars to its customers, citing the lack of fueling stations needed to serve their customers as the reason.

The mixed results of the Mirai rollout thus far—real interest followed by delayed delivery—highlights the problem OEMs will face in commercializing fuel cell technology. Although BEVs also faced limited public charging availability when they were introduced, early adopters were those that could charge up at home, an option not available for FCV customers. This hurdle is one reason why Navigant Research’s 2015 Fuel Cell Vehicles report forecast modest FCV sales over the next 5 years. Nevertheless, Toyota is forging ahead with its commitment to fuel cell technology. The company recently said it would introduce a new, lower-cost FCV ahead of the 2020 Olympics in Tokyo.

Are there other ways to get around the infrastructure barrier? U.K. company Riversimple is looking to solve the problem by embracing the trend toward on-demand mobility, as is the previously mentioned Munich fuel cell carshare pilot. Riversimple wants to use the small city car segment as the entry point for FCVs in the commercial market. Instead of building a car for customer ownership, the company is developing a two-seater runabout (called the Rasa) that would operate within a region and fill local driving needs.

Riversimple’s business model is to place a fleet of cars into service in a locality and offer the use of the vehicles as a paid service, rather than selling or leasing the cars. This strategy helps bypass the need for an extensive network of refueling stations; instead, a few stations—perhaps even just one—could serve a single fleet of FCVs. Riversimple unveiled its rather unusual looking car earlier this year and has also launched a crowdfunding campaign.

Mobility as a service is a growing trend; it will be interesting to see if this can be successfully combined with FCVs to help push the technology past the infrastructure barrier.


More Automakers Are Revisiting Fuel Cell Vehicles

— January 5, 2016

Consumers are waiting for the next big thing in clean transportation, yet nobody has a clear idea of what it may look like. While battery electric vehicles (BEVs) are a popular option in this niche market, fuel cells vehicles (FCVs) offer similar environmental benefits. Though the buzz surrounding FCVs has waned over the years, many believe that growing government incentives and advancements in the technology position this class of vehicles for a major breakout in the coming years.

Fuel cells are devices that convert chemical energy into electrical energy, much like a battery. Proton exchange membrane fuel cells (or PEMFCs) have been the leading type of fuel cell for light duty vehicles (LDVs) and buses due to their shock resistance, compact construction, and fast startup time. Toyota made headlines a few months ago with its rollout of the Mirai FCV in the United States. The fuel cell stack utilized within the car is Toyota’s proprietary stack with W.L. Gore’s polymer exchange electrolyte. Preorders well exceeded expectations, totaling just under 1,900 units by October. Toyota plans to sell 3,000 units in the United States by the end of 2017. Navigant Research documented the market for FCVs in its recently published research brief, Fuel Cell Vehicles.

New Developments in FCVs

In 2015, the Tokyo Motor Show served as a platform for auto manufacturers to showcase their efforts within the FCV space. Toyota made further news with its Lexus LF-FC Concept, which utilizes a fuel cell electric system that drives the rear wheels and also can send power to front in-wheel motors for all-wheel drive. Honda revealed its new production version of the Clarity set to go on sale early this year. The Clarity’s entire fuel cell stack and drivetrain is now packaged under the hood. This model will likely be the basis of Honda’s new BEV and plug-in hybrid electric vehicle in the next few years. Additionally, Daimler showcased its Vision Tokyo concept at the show, an autonomous-capable lounge on wheels with a plug-in hybrid fuel cell drivetrain similar to the F015 Concept shown at the Consumer Electronics Show. There is no lack of technological innovation in the transportation sector, but other issues like infrastructure and cost must be resolved before widespread FCV adoption can occur.

Research institutions, automakers, and cleantech manufacturers continue to push new developments with fuel cells, and new ways to improve them are underway. Through nanotechnology and advanced microscopy, scientists have found ways to decrease the amount of platinum used in PEMFCs by up to 84%, possibly even eliminating the need for it all together. This would translate to a significant decrease in vehicle cost if it is able to be fabricated at scale. Companies like Ballard Power Systems and Hydrogenics are frequently enlisted to have their fuel cell modules utilized in different applications (e.g., defense, aerospace, and stationary power), and have made developments to incrementally improve roundtrip efficiency. Furthermore, key partnerships (like BMW and Toyota and Daimler, Nissan, and Ford) dedicated to researching and improving fuel cells technologies will continue to be important in decreasing costs.

Electric drive is the leading opportunity to improve our transportation system’s efficiency. With fuel cells there is one more way to generate that electricity. Fuel cells also help ensure that there is an option for everyone as the push toward electrification and efficiency continues throughout the transportation sector. The years 2016 and 2017 should prove to be a breakout year for FCV announcements and deployments. Increased government, private sector, and public sector support will determine how deeply integrated FCVs will become in the global transportation fleet.


Tax Incentive Uncertainty Surrounds Fuel Cell Vehicles

— December 23, 2015

It’s no secret that incentives continue to play a key role in the progress of alternative energy technologies. Witness the significant media attention given to the last-minute U.S. federal funding legislation, which included a long-term extension for solar energy tax credits out to 2020. The solar industry association is claiming that the tax credits will help solar installations in the United States reach 100 GW by 2020. What’s unusual about this extension is the 5-year timeframe. In recent years, Congress has been loathe to pass legislation establishing long-term energy tax credits. Coupled with Congress’s tendency to pass annual spending bills at the last possible hour, this has led to a constant state of uncertainty regarding energy tax credits.

A sense of certainty is critical for potential adopters or investors, and this extends to knowing whether or not tax credits will be in place. This is not what happened for fuel cell vehicles (FCVs), which are among the technologies that received yet another short-term extension of the federal tax credit through 2016. As a practical matter, this incentive will do little to truly push the FCV market, since there are very few of these vehicles currently available in the United States. The FCV market is just beginning to enter the early commercial phase, with the Toyota Mirai and Hyundai’s fuel cell crossover vehicle (called the Tucson in the U.S. market). Both are available in California, but at limited volume. Toyota has indicated its plans to sell around 3,000 fuel cell Mirai models in the United States through 2017; the Mirai had close to 2,000 pre-orders in California as of October, so Toyota could reach that goal. However, the company has also set a production cap of 3,000 units annually. Honda will be next in the U.S. market with a new commercial FCV, the Clarity, set to be introduced in 2016.

The U.S. fuel cell car market will be in limited supply mode through 2016 while the tax incentives are in effect. Any real impact would be felt closer to 2020, when the market will need to ramp up to sales in the tens of thousands, as noted in Navigant’s most recent Fuel Cell Vehicles report. This next phase of the market is when incentives will be critical, unless the price premium for a fuel cell car has dropped close to parity with a hybrid.

Setting an Example

By contrast, the South Korean government is making a major move to encourage FCV adoption in the long term, announcing a huge new subsidy of around $23,250 for purchases, around a third of the price of a Hyundai FCV in the country. The government plans to build out hydrogen stations with an eye toward building the FCV market to 630,000 vehicles by 2030. It’s surprising that it took the government this long to develop an aggressive FCV adoption strategy, given Hyundai’s commitment to fuel cells and the incentives in place in South Korea for other fuel cell technologies. Nevertheless, it looks like the country is putting in place a long-term strategy of subsidies and investment to promote FCVs domestically.


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