The shift from internal combustion engines to electric powertrains is one of the largest automotive transformations expected in the coming decade. But while Tesla sightings are becoming normalized, few people have laid eyes on a FCEV. As of April 2021, there were only 9,961 passenger FCEVs sold or leased in the U.S., compared with more than a million BEVs on the road. What has prevented higher penetration of FCEVs so far, and what can we expect in the next ten years?
What are FCEVs?
FCEVs are electric vehicles powered by hydrogen. Hydrogen is stored in a fuel tank, and then routed to a fuel cell where it reacts with oxygen to produce electricity which powers the vehicle, and water — the only emission other than hot air.
FCEVs have several advantages relative to BEVs. First, FCEVs can refuel in less than 4 minutes while achieving a range of more than 300 miles, compared with BEVs where the average Tesla Supercharger session is still 45–50 minutes. Recharging a FCEV is more similar to the traditional ICE refueling experience, and may be more convenient for urban apartment dwellers who do not have access to at-home, overnight BEV charging.
Second, FCEVs have been described as a “holy grail” for vehicles in terms of environmental impact. Not only do FCEVs produce no harmful emissions, they actually “scrub” the air as they draw in oxygen to react in the fuel cell, emitting air that has fewer particulates than the air they take in. Manufacturing fuel cells is also less polluting than manufacturing batteries, which requires energy-intensive mining of lithium and cobalt.
Third, fuel cells have a better weight economy than batteries, meaning that for large vehicles in particular, fuel cells can be a good choice. The size and weight required for batteries to power large commercial vehicles detracts from freight capacity and currently appears unviable. Fuel cells offer a lighter, more compact alternative.
So what are the downsides of FCEVs that has led Elon Musk to declare: “Fuel cells = fool sells”?
The first downside is the cost of FCEVs. According to Deloitte: “In 2019, FCEVs are approximately 40% and 90% more expensive than BEVs and ICE vehicles, on a per 100km basis considering acquisition and operational costs together.” The cost of producing hydrogen is a large driver of FCEV total cost. There are several ways to produce hydrogen — from natural gas, coal, hydrocarbon / crude oil products, and electrolysis of water. Of course, in order for FCEVs to actually be “clean”, hydrogen would need to be produced through electrolysis (currently responsible for only 4% of global hydrogen production). The cost of producing hydrogen through electrolysis is currently relatively high compared to electricity for BEVs or gasoline for ICEs. On top of this, the cost of distributing hydrogen and creating fuel cells is also relatively high, in part due to lack of scale.
The second disadvantage of FCEVs is well-to-wheel efficiency. According to CleanTechnica, BEVs have an energy efficiency of 73%. By comparison, FCEVs have an energy efficiency of 22% — at least still better than ICEs at 13%. The largest sources of FCEV efficiency loss are during electrolysis to produce the hydrogen, transport and distribution of the hydrogen, and during hydrogen to electricity conversion within the vehicle. BEVs have fewer energy conversion steps as electricity is directly distributed to a car through wires, and do not require re-converting hydrogen into electricity. As a result, BEVs are much more energy efficient.
What can we expect for FCEV adoption?
Adoption today in the U.S. is extremely low. According to Automotive Logistics, FCEVs made up ~0.02% of global powertrains. Growth of FCEVs is expected to be +30% p.a. — but even so, they are only forecasted to be ~1% of global powertrains in 2030.
Growth in FCEV penetration will be driven by lowering costs, supported by regulation. Deloitte expects the total cost of ownership for FCEVs to be less than BEVs by 2026, and less than ICEs by 2027. This forecast is based on expected decreases in fuel cell cost with technological development and economies of scale. This is also based on assuming that the cost of hydrogen will decrease, as renewable energy begins to account for more hydrogen production, and more distribution infrastructure is built out.
Regulation is expected to contribute to the development of FCEV infrastructure, which drives lower cost as well as greater ease of use. In the U.S., the DOE launched H2USA, a public-private partnership focused on developing hydrogen infrastructure. In 2019, the U.S. announced up to $31 million of funding to support hydrogen production and distribution innovation. The California Fuel Cell Partnership has set a target for 1000 hydrogen refueling stations by 2030, and 1M FCEVs on the road in the same timeframe.
However, in the years ahead, FCEV penetration will likely still face key challenges that will keep them behind BEVs. In addition to the fundamental energy efficiency disadvantage mentioned above, FCEVs have seen less OEM investment, while BEVs have a first-mover advantage. In the U.S., there are only a few FCEV models currently available — the Toyota Mirai, Honda Clarity, Hyundai Tucson, and Hyundai Nexo. With other major OEMs such as Volkswagen publicly decrying FCEVs, investment will likely continue to be more limited vs. BEVs in the coming few years.
In general, the consensus view on FCEVs seems to be that they will find a niche in large commercial vehicles, buses, and forklifts. Barring any drastic technological developments that improve energy efficiency and the cost of hydrogen, there is little expectation that FCEVs will become a significant part of the passenger vehicle fleet.
