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01 September 2021

Hydrogen Vs Electric: The Charging Space, Race

When the 50-ton Apollo 11 rocketed humanity’s ambitions into space, it was thanks to a feat of collective human ingenuity, luck, and a small hydrogen fuel cell system weighing 100kg.

Heralded as the clean fuel of the future, hopes for hydrogen have sputtered in fits and starts. Fifty years later, with the engine coming into gear amidst a rapid personal and commercial electric vehicle revolution, can hydrogen stay in the race?

It is not for lack of trying that hydrogen has languished on the edge of the automotive industry’s horizon. Hydrogen fuel has long been exorbitantly expensive to produce yet, in recent years, this expense has fallen by 40%, from US$10/kg in 2017 to US$6/kg today, while production costs are projected to have fallen a further 60% by 2030. Is this too little too late?

The impressive fall in production costs fails to match the average cost of a lithium-ion battery pack, which plunged more than 60% from US$500 in 2013 to US$197 in 2019. A comparison between an average electric car and the new Toyota Mirai, the world’s first mass market hydrogen car, finds the Mirai’s fuel costs four times higher. While greater economies of scale could make hydrogen fuel more cost competitive, the industry might be suffering from a chicken and egg situation, and production of electric vehicles (EVs) is only increasing.
Other factors also play a role in consumer demand, such as convenience, style and choice. Major carmakers globally are racing to provide electronic vehicles, yet in the case of hydrogen vehicles (HVs), this scramble evaporates to provide UK consumers with only two cars available. Many manufacturers have quietly shelved their hydrogen projects to gather dust rather than eat up investor capital. It is in refuelling that HVs pick up the fight, with refuel times comparable to that of their fossil fuel burning cousins.

This is in stark contrast to an electric car, where refuel times are more akin to the process that created those same fossil fuels, while the infrastructure for providing these services is still in its infancy. Start-up Hydrogen Refuelling Solutions has installed 32 refuelling stations, which already amounts to 17% of the European total, and it expects to reach 3,700 in Europe by 2030, rising to a 15,000 in 2040. From China pledging over 1,000 refuelling stations by 2030 to the EU earmarking €35bn this decade for the same purpose, governments are committing to change. When placed beside Europe’s current total of 285,000 charge points this year though, these figures call into question the flexibility of HVs, a key trait of a successful personal vehicle.

If not personal vehicles, then, could HVs battle for pole position in the commercial vehicle market? While a timesaving convenience measure for consumers, quick charging times are vital to the smooth operation of logistics networks. In the age of next day delivery and just-in-time inventory systems, eight-hour charging times for electric trucks impede their suitability for long-range haulage. Although an issue for wider consumers, a smaller network of hydrogen refuelling stations could be more palatable for commercial vehicles which travel fixed routes, often directly between urban centres.

At present, regulations are restricting freight weights, with a focus on conserving weight to maximise loads. Here, too, EVs fall short, weighing between three and five thousand pounds more than hydrogen powered trucks. This weight advantage has hydrogen marked a lower-cost alternative to battery power in other forms of freight such as shipping.

All being said, issues still dog hydrogen in haulage. According to Volkswagen, EVs are two to three times more efficient at converting energy than a hydrogen fuel cell, the cost of hydrogen alone tripling the cost per km relative to a battery. New innovations could still rev hydrogen to life, with construction company JCB achieving a breakthrough in creating a hydrogen combustion engine. Such a technology could allow existing carmakers to retain decades of extensive expertise on combustion engines and shift existing production lines to provide a much-needed cost saving. It is up to declining hydrogen fuel costs, then, to swerve the economics of haulage in favour of HVs.

But is a race still a race if the officials play favourites? As EVs steal the show, the UK Government vies to dangle carrots over battery powered vehicles; charging electricity levies a mere 5% VAT, but hydrogen fuel is given no such grace. The average non-luxury EV is exempt from vehicle excise duties, but no HV is at present. Employees with electric company cars face no fuel taxes, while HV drivers receive them in full.

Where, then, does the future of hydrogen-powered vehicles lie? In the race for personal vehicles, it seems to have started as EVs finish lap three. In its battle for heavy vehicles, though, hydrogen has enjoyed deep advantages that could come to see it rocket cargo straight to consumers’ doors.

This article was taken from The Summer 2021 issue of 1875. To subscribe to our investment publications, please visit www.redmayne.co.uk/publications.
 
Hydrogen Vs Electric: The Charging Space, Race
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