As the automotive world accelerates towards the next generation of emission regulations and fuel economy targets, traditional emission reduction technologies related to the internal combustion engine (ICE) are being rendered obsolete.

The industry is in churn, with alternative fuel vehicle technologies for electric vehicles (EVs), hybrid electric vehicles (HEVs) and plug-in hybrid electric vehicles (PHEVs) gaining momentum. However, whilst EVs make rapid gains in consumer popularity and their performance relative to ICEs continues to improve, a dark horse – the fuel cell vehicle – has quietly emerged from among the slew of new passenger vehicle technologies. Fuel cell electric vehicles (FCEVs) have gone through several stages of proving their efficiency, safety, and reliability but have largely been overlooked as other electric-driven technologies, and in particular battery electric vehicles (BEVs), continue to monopolise the hype.

By comparison, fuel cell technology has been widely criticised for the number of challenges it faces ahead of commercialisation. These include poor hydrogen fuel infrastructure, complexity of design, high manufacturing and maintenance costs, and difficulty in matching the performance of an EV. In practice, the fuel cell stack is connected to an electric motor, which is connected to the wheels. The fuel cell stack acts as a battery, providing electric power directly to the electric motor, which then sends power to the wheels. Excess electric energy from the fuel cell is supplied to the battery, which uses the stored energy during uphill climbs or hard acceleration.

But while FCEV technology is established, is the industry ready to implement it? The answer is a resounding ‘yes’, as the global automotive market is ready and geared up to adopt a new energy vehicle segment in its portfolio; however, expect a slow yet steady start.

Japan paves the way for new-age technology

Japan has been at the forefront of adopting alternative fuel technologies, and was indeed the first automotive market to embrace HEV technology. The Japanese government and local OEMs have pushed to standardise the use of electrified powertrains, and not just in Japan, but globally. At the same time, the Japanese government has encouraged the use of hydrogen fuel technology for large-scale deployments and transport applications. Backing such intent, it has invested US$378m to develop infrastructure and offer purchase incentives. Approximately US$1m will be spent on each hydrogen station, while purchase incentives will be provided until 2020.

According to recent Frost & Sullivan FCEV research, Japan will leverage the expertise of leading OEMs Honda and Toyota, along with Hyundai of South Korea, to drive its leadership of the fuel cell systems market. Higher investments and funding of hydrogen refuelling stations will result in Japan and the US – particularly the state of California – emerging as major adopters of fuel cell vehicles. The global market for FCEVs is estimated to reach about 583,360 units by 2030, with Asia Pacific (APAC) countries such as Japan and South Korea dominating the market, with 218,651 and 80,440 units, respectively. FCEV markets in Europe and North America are projected to reach 117,000 units and 118,847 units, respectively, by 2030.

Market size of fuel cell vehicles by region

The global adoption of FCEVs in emerging markets will be driven by strong incentives and government policies that will not only boost consumer acceptance, but also private investments by companies seeking to establish a global network of hydrogen refuelling stations. In keeping with this trend, roughly 20 fuel cell car launches by leading OEMs are expected in global markets over the next five years. Asian OEMs with a first-mover advantage are expected to dominate the market. For instance, unit sales of Toyota FCEVs are projected at 165,000 and Hyundai FCEVs at 148,000 by 2030.

About time for OEMs to launch FCEV models

Honda and Toyota lead the industry in fuel cell technology development. Toyota has achieved the highest power output while dramatically reducing the system’s price and size from previous FCEV offerings, whereas Honda has pioneered a powerful and compact system that uses electric ‘turbo’ air compressors to produce an enhanced hydrogen-air mixture that generates the electricity required for propulsion.

Frost & Sullivan believes that a push for FCEVs will likely begin post-2020, when subsidies for BEVs phase out. With essential cost reductions and infrastructure in place, the growth post-2025 is expected to be exponential. Hyundai-Kia and the Honda group are expected to have the highest-selling fuel cell vehicles because they are offered as leasing options in California. As noted above, OEMs are preparing to launch a number of fuel cell cars globally, even as significant investments are being made to commercialise fuel cell stacks on cars. Backed by government incentives, the Department of Energy in the US aims to have about 500,000 fuel cell cars on the road by 2030. In the meantime, with an eye on the Tokyo Olympics, the Japanese government is pushing hard for FCEVs and related infrastructure development with an order of 6,000 FCEVs and 160 stations by 2020.

Hydrogen infrastructure and positive government policies are certainly paving the way for OEMs to launch FCEV models.

Is there a kink in the system?

OEMs need to overcome certain major challenges before fuel cell vehicles can be adopted at the same pace as EVs by the automotive mass market. These include the development of infrastructure, the production of zero-emission hydrogen and the cost of the fuel cell stack.

According to Frost & Sullivan, the California Energy Commission and the European Fuel Development Programme (HyFIVE) have committed to fund the H2 network globally; the above pie chart shows fuel cell technology being heavily funded – US$21m in the US and US$17m in the EU – by private companies in partnerships with OEMs.

The cost of implementing a variable hydrogen pressure nozzle fuel station is about US$750,000 to US$1m for storage and generation, which have been the primary choking points for infrastructure expansion. The creation of a modular approach will be the key technology trend for hydrogen fuelling stations in the US, as this will enable them to cater to commercial and passenger vehicles with variable pressures of 350–700 bar.

Companies and other industry entities and networks, such as Shell, Ricardo, Fuel Cell and Hydrogen Energy Association, Seven-Eleven Japan Co. Ltd, HyFIVE, Linde, California Fuel Cell Partnership, Ballard and UK H2 Mobility, have partnered with OEMs to share their expertise in hydrogen production, fuel station network deployment and investment. Co-development of fuel cell stacks and optimisation of fuel cell systems will be crucial to commercialisation.

Currently, power density and price are focus areas for vehicle manufacturers bidding to make fuel cell passenger cars a market reality. FCEVs have about 3,500 hours of durability at various speeds while buses have surpassed the 2016 target of 18,000 hours to reach about 23,000 hours of durability.

The US Department of Energy aims to reduce the price of an 80 kW fuel cell stack system to between US$30 to US$40. Along with reductions in the price of fuel cell stacks, efforts are also ongoing to lower the cost of hydrogen production to less than US$2/kg using the proton exchange membrane (PEM) electrolysis method. Hyundai and Toyota have pioneered PEM stack cell technology that reduces the overhead cost per unit, and was reported to cost about US$50,000 in 2015. As production volumes increase, costs will fall independently of the technology advancement and manufacturing process.

Upcoming investments – grip to influence

Over the next decade, an estimated US$10bn will be invested globally to develop hydrogen technology and infrastructure by a group of private investor companies in conjunction with BMW, Daimler and Toyota.

The Californian government has approved expenditure of US$20m annually on hydrogen station deployments, as private companies invested close to US$21.6m by the end of 2017. OEMs such as General Motors and Honda are accelerating the march toward alternative propulsion through the co-development of fuel cell technology and the establishment of a manufacturing facility in Michigan in the US. The two companies are making equal investments totalling US$85m in the joint venture, and plan to begin mass production in 2020, leveraging their integrated development teams and shared hydrogen fuel cell intellectual property to create more affordable commercial solutions for fuel cell and hydrogen storage systems.

Such partnerships and investments have created a new platform for FCEVs to enter the market through leasing options – offered by Hyundai and Honda – as well as through direct sales and support via Toyota.

Fuel cell vs. battery electric

There is no denying that, currently, BEVs are ahead of FCEVs in the competitive stakes. To some extent this is because, with only three FCEV models available in the global market, there is limited consumer awareness about the advantages of fuel cell technology. Developers have attempted to address consumer apprehensions by proving their superior performance in terms of high mileage, enhanced refuelling time and proven levels of safety.

Approximately two million fuel cell vehicles are expected to be on the roads globally by 2030. Japan and South Korea will be pivotal in advancing fuel cell vehicle technology as Toyota and Hyundai-Kia stake their claim to becoming global leaders in fuel cell technology. The phasing out of BEV incentives globally, starting in 2020, paralleled by government subsidies for FCEVs in Asian countries, including China, Japan, and Korea, will open the floodgates to private sector investments and herald the start of a new era in fuel cell vehicle technology.

This article appeared in the Q4 2018 issue of M:bility | Magazine. Follow this link to download the full issue