The Future of Mobility: Transition from Fuel to Electric, or Hydrogen Vehicles
Author: EV Research Group
Manager: Kyle Wei
Researchers: Becket Foster
Yeyang Zhang
Christine Mao
One of the major changes in people's daily lives over the past decade has been the emergence of electric cars. Fuel cars, which have been with mankind for decades, seem to be slowly retiring from the stage of history. Electric cars and hydrogen cars seem to have taken over people's vision all of a sudden, making people think about the future of travel tools. In the end, how is the rapid growth of electric vehicles, hydrogen vehicles the future? Let's first understand how fuel cars are replaced by electric cars.
Look Back At How Electric Cars Rose To Prominence
Sales Data For Electric Vehicles
The United States and China are a main rapidly expanding market for purely electric vehicles.
U.S. Pure Electric Vehicle Market Data CAGR：71.9%
Source: Wind
China Pure Electric Vehicle Market Data CAGR: 87.7%
Source: IEA
As the two most important markets for pure electric vehicles, we can visualize more from the data how EVs are slowly taking over the market for cars. In the chart we note two key time points:
From 0 to 1: 2012-2014, which is the first time the EV market has significant growth
From 1 to 10: 2020, which is the second time the EV market has significant growth
What caused the change of these two time periods? For 0 to 1 point, it has many reasons.
Significant product effects
Tesla released the model S in 2012：
Sales data for Tesla Model S and EV in US
Source: tridens technology
Tesla contributes a lot to US sales data. Other than that, the performance of Tesla can already compete with the traditional fuel car in the same price range, such as the super popular car BMW 5 series, which raises consumers' interests.
Technology breakthrough for the Industry (Lithium-Battery)
From 2010-2012, the US automobile market experienced a revolution seen rarely in such a consistent field. During this period, billions of dollars were being put into electric vehicle research, and the results, while slow, were substantial. One of the most impactful developments was the transition of the largest EV developers to lithium-ion batteries.
The Lithium-Ion Battery was quickly implemented into almost all future EVs. It made a significant impact on consumer interest, especially during the release of the Chevrolet Volt and the Nissan Leaf.
Strong government support
This technological shift was realized through billions of dollars of research and development. During this time, the government was pivotal, offering funding and better loans for companies willing to do extensive research developing EVs.
These grants expedited the creation and improvement of some of the first EV cars to be mass-produced, such as the Chevrolet Volt. This also encouraged other companies, such as now market leader Tesla, to continue developing their own cars to create the explosion in 2011.
For the 1 to 10 point, this shift is more of a mature choice by the market
From the graphs below, we can see that EV performance gradually catches up with the traditional fuel cars. Also, the cost of the EV falls as the expansion of the industry scales. Electric vehicles have seen significant reductions in both the cost of use and the cost of ownership. Combining price and performance, more and more consumers are favoring electric vehicles.
EV Performance 2012 vs. 2020
Predicting the Future of Hydrogen Vehicles
After reviewing the evolution of electric vehicles, we'll use it as a basis for exploring the future of hydrogen-powered vehicles.
Sales data for Hydrogen vehicles
Hydrogen vehicles have been called the ultimate form of future human automobiles due to their ultra-high energy conversion efficiency and the ultra-clean form of the energy conversion process, which generates only water.
First look at the current market situation for hydrogen vehicles：
Comparing this picture with the growth trend of electric vehicles, we can observe that
- The growth curve is relatively smooth
- No explosive nodes yet (0 to 1)
- Insufficiently stable or even regressive growth (rely on policy)
Current performance
We conducted a comprehensive analysis of hydrogen cars, assessing various aspects and comparing them with electric vehicles (EVs) to examine their appeal in influencing consumer purchasing decisions.
Safety
In terms of safety, hydrogen exhibits an advantage over conventional cars, as despite its high flammability, it burns in controlled amounts similar to other fuels. The lightweight nature of hydrogen, approximately 57 times lighter than gasoline fumes, enables it to disperse quickly in case of a fire, enhancing its relative safety.
Driving Range
Moreover, hydrogen cars are long believed to have an advantage in driving range of approximately 400 miles, depending on tank size, which is comparable to traditional cars (see Chart 1). However, we believe that the advantage is not substantial, as the Tesla Model S is also able to reach a similar range (320 to 405 miles).
Refuel/Recharge Time
Hydrogen-powered vehicles present significant advantages, particularly in refueling time when compared with recharging electric vehicle (EV) batteries. To illustrate, the 2023 Toyota Mirai and Hyundai Nexo models have a refuel time of around 5 minutes. In contrast, the Tesla Model S and Model X require 25 to 45 minutes, respectively, to achieve a full charge at a 440V level with a supercharger. However, hydrogen refueling times are similar, and even slightly longer than that of traditional gasoline, making it less competitive when compared to conventional cars.
Environmental Perspective
From an environmental standpoint, hydrogen holds the potential to contribute to lower pollution levels during its generation. Many EVs are powered by lithium-ion cells, which rely on raw materials associated with significant environmental concerns. Even with a fully decarbonized grid, EVs cannot be considered entirely zero-emission vehicles due to the environmental impact of battery production, mineral extraction, and transportation.
In contrast, hydrogen cars offer three main types of hydrogen: Grey, blue, and green hydrogen.
- Grey hydrogen, the most prevalent type, is currently produced through processes like steam methane reforming (SMR) or coal gasification, relying on non-renewable energy sources and emitting greenhouse gasses during production.
- Blue hydrogen is also produced using the SMR process, but the carbon dioxide produced during the process is captured and stored, making it a cleaner form of hydrogen.
- The future ideal for hydrogen cars lies in "green hydrogen," a process that utilizes clean electricity to extract hydrogen from water. With green hydrogen, companies can produce hydrogen anywhere with access to water and clean energy, paving the way for a more environmentally sustainable option.
Cost and its future reduction curves
Battery Cost
As the power source of new energy vehicles, the power battery is the most important system in the vehicle, accounting for 40%～50% of the cost of the vehicle. Analyzing battery costs becomes crucial when predicting the future price of hydrogen fuel cell cars.
In terms of purchase costs, the price of hydrogen fuel cell stacks has decreased from 1500 USD/kW to 300~400 USD/kW and is expected to reach 150 by 2030. However, hydrogen fuel cell vehicle costs remain 2-3 times higher than traditional fuel vehicles and 1.5-2 times higher than electric vehicles.
Because the key components of the upstream of the hydrogen fuel cell system have not yet fully realized localization and mass production, the road to cost reduction is still long.
If production is increased from 1,000 units to 100,000 units, the unit cost of both the fuel cell system and the fuel cell stack can be reduced by more than 70%.
In the near future, even though the price of hydrogen fuel cell stack might decrease, according to research from Bloomberg New Energy Finance, the cost of lithium-ion batteries is also anticipated to decrease by an additional 52% by 2030, coupled with a projected 42% growth in their energy density.
Charging cost
The current usage cost of hydrogen vehicles is 4 times the EV usage cost. And it’s even higher than traditional gasoline vehicles.
Currently, the cost of hydrogen production accounts for 60% of the total cost, which directly leads to high hydrogen prices. The high price of hydrogen will lead to high operating costs for vehicles, which lack economic advantages compared to similar pure electric or gasoline vehicles.
Besides, downstream fuel cell vehicles have not yet achieved large-scale use of hydrogen, also leading to unstable hydrogen demand and high hydrogen prices. Unstable amounts of hydrogen do not have sufficient economic viability, so the price of hydrogen fueling is high.
To make hydrogen fuel cell vehicles become strong competitors with EV, the price of fueling has to be reduced by over 50% from the current price. But due to these limitations, it is unlikely to see a sharp decrease in price over the next 5 years.
Fueling Station Construction Cost
At present, the investment cost of building a 35MPa, 500kg/d fixed hydrogenation station is about 2~3 million yuan, even after deducting the government subsidy, the investment cost of hydrogenation station is still 2 to 3 times that of traditional gas stations.
The high cost of hydrogenation station construction is mainly reflected in the equipment, from hydrogen compressor to construction and hydrogen storage, the equipment and cost of each link are very expensive, which also leads to the construction cost of hydrogenation station is quite high, which means that hydrogenation station is difficult to achieve profit in the short term.
From the market point of view, the hydrogen refueling station needs a certain hydrogen vehicle loading to make a profit, China currently has more than 300 hydrogen refueling stations, theoretically need to support more than 30,000 vehicles, but due to the lack of domestic fuel cell vehicle production and sales, hydrogen vehicle acquisition costs are high and other reasons, resulting in the number of hydrogen vehicles put into operation to reduce the hydrogen station load rate.
Source: Century new energy network
The Feasibility of Accessible Hydrogen Fueling Stations in the US
One of the most significant restrictions on the growth of hydrogen vehicles is the accessibility of charging stations. In 2023, there are only about 60 fueling stations in the US, with the vast majority being in California. The cost to build a public fueling station today can range from $1.9-3.2 million, not only dissuading governments but also private corporations that would significantly ease the process of switching for the average consumer.
Comparison of Hydrogen Fueling Stations to EV Chargers in the US
Private companies have been working to make these stations more accessible, with some developing stations costing only about $350,000. Additionally, since 2012, the cost of filling stations per dispenser has decreased by about 80%. However, this price is still well above those of EV charging stations and will require heavy development and government funding before they can be implemented across the country.
Government Policy
China
In conclusion, China's national policy to promote the development of hydrogen-related industries was first proposed in 2019, and was first written into the government work report as well as the 14th Five-Year Plan; since then, hydrogen-related policies have been introduced, with the main policy being about points (subsidies) incentives.
1) 2020-2025 is the initial demonstration stage:
- commercial scale will reach 10,000 vehicles
- 100 hydrogen refueling stations
2) 2025-2030 is the stage of accelerated promotion:
- accelerate the promotion and application of hydrogen energy and fuel cell vehicles
- the number of vehicles will reach 50,000~100,000 units.
3) 2030-2035 is the stage of large-scale application:
- large-scale popularization and application of hydrogen energy and fuel cell technology will be realized.
In 2020, five ministries and commissions jointly issued the Notice on Demonstration and Application of Fuel Cell Vehicles.
- In the field of commercial vehicle use, up to 15,000 points (corresponding to a subsidy of about 1.5 billion yuan).
- In the field of hydrogen supply, up to 2,000 points (corresponding to a subsidy of about 200 million yuan).
Compare to policy for EV
- RMB 18 billion has been spent on subsidies and after-tax exemptions for new energy vehicles
- RMB 11 billion has been spent on the construction of charging infrastructure.
- In 2014, 16 national policies supported the development of electric vehicles
US
US Government Hydrogen Funding and Policies:
- US Department of Energy Pledge (2018): 200 US Hydrogen Fueling Stations by 2025.
- Clean Tax Credit (2023): Fuel cell electric vehicles purchased new in 2023 or after may be eligible for a federal income tax credit of up to $7,500.
- Qualified Commercial Clean Vehicles Credit (2023): 30% credit for commercial fuel cell vehicles through 2032, capped at $40,000.
- Bipartisan Infrastructure Law (2021): $7 Billion in Federal Funding for Hydrogen Development distributed across six to ten hydrogen hubs
- California Legislators (2023): $106 Million spent on Hydrogen Fueling Stations Through 2023
- No Current Hydrogen Vehicle Production goals
While significant funding has been invested in hydrogen research and development, there is little investment in hydrogen vehicles specifically. Given that large companies like Toyota and Hyundai have had stunted sales with their hydrogen vehicles, the government is unwilling to fund this unproven industry. It has not yet begun to provide the amount of funding that was seen in 2009 with EVs. Given that we have not seen a similar amount of development and funding that led to the rapid growth of EVs, Therefore, we believe that it is difficult for the development of hydrogen vehicles to have a breakout point like electric vehicles, and even if there is a technological breakthrough, the cycle of waiting for hydrogen vehicles will be longer than that of electric vehicles, which is 8 years.
