Frost & Sullivan Market Insight
Published: 7 Sep 2018
Fuel Cell Electric Vehicles: Genesis of a New Era or a Myth-Busting in New
Energy Vehicle Technology?
Date Published: 7 Sep 2018
By Arvind Noel Xavier Leo and Anjan Hemanth Kumar
As the automotive world accelerates towards meeting the next generation of emission regulations and fuel
economy targets, traditional emission reduction technologies related to internal combustion engines (IC E) are
being rendered obsolete. The industry is in churn with alternate fuel vehicle technologies for electric vehicles
(EVs), hybrid electric vehicles (HEVs) and plug-in hybrid electric vehicles (PHEVs) gaining momentum. Amidst
the hubbub of EVs making rapid gains with consumers and improving their performance relative to IC Es, a dark
horse—fuel cells—has quietly emerged from among the slew of new passenger vehicle technologies. Fuel cell
electric vehicles (FC EVs) have gone through several stages of proving their efficiency, safety, and reliability but
have been overlooked as other battery/electric driven technologies monopolise the hype and hoopla.
On the contrary, fuel cell technology has been highly critiqued for their poor hydrogen fuel infrastructure,
complexity of design, high manufacturing and maintenance costs, and inability to match the performance of EVs.
So how does the system work? The fuel cell stack is connected to the electric motor which is connected, in turn,
to the wheels. The fuel cell stack acts as a battery, providing electric power directly to the electric motor which
then provides power to the wheels. Excess electric energy from the fuel cells is supplied to the battery, which
uses the stored energy during uphill climbs or hard acceleration.
While FC EV technology is established, the question is whether the industry is 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 segment
vehicle in its portfolio; however, it will be a slow yet steady start.
Japan Paves Way for New Age Technology
Japan has been at the forefront of adopting alternative fuel technologies. The Japanese automotive market was
the first to embrace HEV technology. The Japanese government and local OEMs have pushed to standardise the
use of electrified powertrains, globally. At the same time, the Japanese government has been encouraging the
use of hydrogen fuel technology for large scale deployments and transport applications. Backing such intent, the
government has invested $378 million to develop infrastructure and offers purchase incentives. Approximately
$1 million will be spent on each hydrogen station, while purchase incentives will be provided until 2020.
According to recent Frost & Sullivan FC EV research, Japan will leverage the expertise of leading automakers
Toyota and Honda to drive its leadership (along with Hyundai from South Korea)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 C alifornia—emerging as major adopters of fuel cell vehicles. The global market for FC EVs 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. FC EV markets in Europe and North America
are projected to reach 117,000 units and 118,847 units, respectively, by 2030.
Fuel Cell Passenger Car Market: Vehicle Sales by Region Midline Scenario, Global, 2013–2030
The global adoption of FC EVs in emerging markets will be driven by strong incentives and government policies
that will boost consumer acceptance and higher private investments by companies seeking to establish a global
network of fuel cell refuelling stations. In keeping with this trend, about 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 FC EVs are projected at 165,000 and
Hyundai FC EVs at 148,000 by 2030.
About time for OEMs to Launch FCEV Models
Toyota and Honda 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 fuel cell vehicles offerings,
whereas Honda has pioneered a powerful and compact system that uses electric air turbo air compressors to
produce an enhanced hydrogen and air mixture that generates the electricity required for propulsion.
Fuel Cell Passenger Car Market: Expected Model Launches by OEM, Global, 2016 onwards
Frost & Sullivan believes that the push for FC EVs is likely to start post 2020, when the subsidies for BEVs will
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 due to
their being offered as leasing options in C alifornia. More than 20 models of fuel cell cars are being launched
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 targets having 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 FC EVs and related infrastructure development with an order of 6,000 FC EVs and 160 stations by 2020.
The establishment of hydrogen infrastructure and positive government policies are, therefore, paving the way
for OEMs to launch FC EV models.
Is there a Clinch 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:
Development of infrastructure
Production of zero emission hydrogen
C ost of fuel cell stack
According to Frost & Sullivan, the C alifornia Energy C ommission and the European Fuel Development
Programme (HyFIVE) have committed to fund the H2 network globally; the pie chart shows the FC technology
being heavily funded (~$21 million in US and ~17 million in EU) by private companies in partnerships with
OEMs.
Fuel Cell Passenger Car Market: H2 Station Establishment Targets, Global, 2020-2025
The cost of implementing a variable hydrogen pressure nozzle fuel station is about $750,000-$1 million for
storage and generation, which have been the primary choking points in 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.
C ompanies and other industry entities and networks, such as Shell, Ricardo, Fuel C ell and Hydrogen Energy
Association, Seven-Eleven Japan C o. Ltd, HyFIVE, Linde, C alifornia Fuel C ell Partnership, Ballard and UK H2
Mobility have partnered with OEMs to share their expertise in hydrogen production, fuel station network
deployment and investment. C o-development of fuel cell stacks and optimisation of fuel cell systems will be
crucial to commercialisation. C urrently, power density and price are focus areas for FC manufacturers bidding to
make fuel cell passenger cars a market reality. FC EVs 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 about $40–$30. Along with
reductions in the price of fuel cell stacks, efforts are also ongoing to lower the cost of hydrogen production to
less than $2 per kilogramme using the proton exchange membrane (PEM) electrolysis method. Toyota and
Hyundai pioneered PEM stack cells technology that reduces the overhead cost per unit and was reported to be
about $50,000 in 2015. As production volumes increase, costs will reduce independent of the technology
advancement and manufacturing process.
Fuel Cell Passenger Car Market: Technology Roadmap, Global, 2012–2030
Over the next decade, an estimated $10 billion will be invested globally in developing hydrogen technology and
infrastructure by a group of private investor companies in conjunction with auto majors Toyota, Daimler and
BMW. The C alifornian government has approved expenditure of $20 million annually on hydrogen station
deployments with private companies having already invested close to $21.6 million at the end of 2017. OEMs
such as Honda and GM are accelerating the march toward alternative propulsion through the co-development of
fuel cell technology and the establishment of a manufacturing facility in Michigan, US. The two companies are
making equal investments totalling $85 million in the joint venture. They plan to begin mass production from
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 FC EVs to enter the market both through leasing options (Hyundai
and Honda) as well as through direct sales and support (Toyota).
Fuel Cells vs Battery Electric Technology
There is no denying that currently battery electric vehicles (BEVs) are ahead of FC EVs in the competitive stakes.
To some extent this is because, with only three FC EV models available in the global market, there is limited
consumer awareness about their advantages. Fuel cell technology developers have attempted to address
consumer apprehensions by proving their superior performance in terms of high mile range, better
weight/volume, enhanced recharging/refuelling time and proven safety.
BEV, PHEV and FCEV Scenario Estimations, Global, 2015–202
About 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 claim to becoming global leaders in fuel cell technology. The phasing out of BEV incentives
globally from 2020 paralleled by government subsidies for FC EVs in Asian countries, including C hina, Japan, and
Korea, will open the floodgates to private sector investments and herald the start of a new era in fuel cell
vehicle technology.
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