Fuel cell cars are once again in the spotlight! Hyundai is leasing its Tucson Fuel Cell model and aiming for 1000 units by 2015. Honda plans to start selling their model in 2016 while Toyota revealed its Mirai (Japanese for “Future”) that is slated for release this month (Japan) and later next year in USA and Europe. Ford, Daimler and Renault-Nissan are jointly developing technology for “affordable, mass market fuel cell vehicles by 2017” while General Motors and Honda initiated a development partnership last year. Even the New York Times ran a supportive editorial on November 29th titled, “Hydrogen Cars, Coming Down the Pike”. But despite the big headlines and model releases, it’s still a long, bumpy road ahead for fuel cell cars. Unfilled promises and lofty projections have generated a healthy dose of skepticism. At Pangaea Ventures, we have been and are still on the lookout for game changing technology solutions to remove the high barriers in the way of mass deployment of fuel cells (FCs).
Fuel cells deliver remarkable benefits. The use of hydrogen (an energy storage medium) as the fuel for vehicles removes the dependency on polluting gasoline and diesel. In a fuel cell, electrocatalysts mediates the reaction of hydrogen and oxygen to generate electricity, water and heat. These systems can run continuously once hydrogen is available. Carbon dioxide, a greenhouse gas, emission is eliminated while the systems run quietly and more efficiently compared to the conventional fossil fuel fired combustion engines. There is also none of that particulate matter and other noxious pollutants generated like in fossil fuel combustion systems. But we need to be careful here: most hydrogen today is produced by reforming natural gas. This process is accompanied by significant release of carbon dioxide. However, the net emission is still significantly less than gasoline-powered cars. Getting to zero-emission status requires the use of renewable energy sources, such as wind and solar, to generate hydrogen from water, technologies that are not yet ready. Among the types of fuel cell technologies, the polymer electrolyte membrane or proton exchange membrane (PEM) is the applicable system for fuel cell vehicles (FCVs). The general market is growing, as evidenced in a recent Department of Energy (DOE) fuel cell technologies market report noting that the global market for fuel cell systems (all technologies) surpassed $1 billion for the first time.
But why has this taken so long? Quite simply, the pioneering companies underestimated the technology challenges, economic competitiveness and did not seem to worry about the non-existent infrastructure. Significant investment dollars have been poured into numerous startup companies claiming to have the secret sauce! But success was very elusive. The major issues are related to hydrogen, costs, durability and re-fuelling infrastructure. Another challenge has been put in motion as electric vehicles are now firmly in the transportation mix. In addition, with record low natural gas pricing and availability, there is talk of natural gas being the alternative fuel.
Hydrogen is the driver for fuel cells. While there is ample supply of hydrogen, the daunting challenge lies in the absence of a supply infrastructure. The problem is making it available for refueling, as in gasoline refueling at gas stations. There are some efforts underway but much more will have to be done before drivers can pull up to a refueling station for a hydrogen fill up. The State of California is installing 100 hydrogen-fueling stations to meet their goal of 1.5 million zero-emission vehicles (ZEVs) by 2025. Honda has agreed to contribute $13.8 million to the effort. Toyota plans to help set up a fueling network in the Northeast. Japan is spending $71 million to build these fueling stations. More initiatives to move fuel cell vehicles into the mainstream have been announced in other countries. It should be noted that there are still ongoing concerns on hydrogen storage and safety.
Fuel cell technology is still costly. The Department of Energy (DOE) has set up a cost goal of $30/kW by 2017, quite a milestone! A key effort is based on addressing the use of platinum catalyst, the major cost in the membrane electrode assembly (MEA), the “heart” of the fuel cell. Many alternative catalyst materials have been evaluated but none so far have approached the performance of platinum. So the emphasis has been sort of “more with less”, that is, improving performance while lowering the amount of platinum. While Toyota had earlier reported some success in reducing platinum costs, the Toyota Mirai still comes with a price tag of $57,500. Exact production costs for fuel cell cars are not generally known but $50,000 to $100,000 has been reported. Still very expensive but a major step forward from the original million dollar costs for such cars. Some of Pangaea Ventures strategic partners have been involved in these efforts aimed at lowering costs and improving durability. Success depends on advanced materials innovations, thereby putting us in an advantaged position to monitor progress and identify breakthrough solutions.
The competition with battery electric vehicles (BEVs) is interesting. BEVs are now a reality but it did take a long time and more still has to be done to address costs and range anxiety. One of Pangaea’s portfolio companies, Envia Systems, has partnered with the DOE and USABC to reduce electric vehicle battery costs. It is estimated that a hydrogen fill up will take less than 5 minutes and allow a 300-mile driving range. Tesla’s Model S BEV has a range of 265 miles, with a price tag starting at $70,000 and about a 20 minutes recharging via its Super-charger. Tesla has broken ground on its $5 billion Gigafactory aimed at both mass production of batteries and a making big dent on costs. Bets have been now been placed!
Will fuel cell cars occupy just a small market niche or enjoy success in the mass market? It’s good to see some progress from decades of development but it’s still a long haul. Not everyone is convinced about the success of fuel cell cars. Elon Musk of Tesla has been reported describing the fuel cell technology as “fool cells”. But success on one approach should not necessarily mean death of the other. Certainly, both types can co-exist in the market place. In the end, as usual, the consumer will make the decision.