Fuel cell tech pushes against BEV headwinds

While the Inflation Reduction Act and other federal legislation double down on battery-electric vehicles, many automakers continue to invest in hydrogen-powered transport.

Toyota is the most significant player. It already sells the Mirai fuel cell sedan, and it is using a modular system based on the Mirai's technology to develop a hydrogen-electric powertrain for heavy-duty trucks. Hyundai also sees a future in fuel cell vehicles.

Hyundai has 47 Xcient fuel cell trucks hauling goods for retailers in Switzerland and began exporting the vehicle to Germany in August. It plans to deploy 30 of them at the Port of Oakland in California next year. The South Korean automaker also sells small numbers of the hydrogen-powered Nexo crossover in the U.S.

Elsewhere, BMW began producing fuel cell systems last month for its upcoming iX5 crossover.

"The momentum behind this in the last two to three years is greater than anything I've seen in the previous 20," said Craig Scott, fuel cell solutions group manager at Toyota Motor North America.

Indeed, U.S. sales of fuel cell electric vehicles are growing fast but from a tiny base. Sales of the Mirai, the hydrogen sales leader, surged to 2,629 in 2021, up from 499 in 2020. Nexo deliveries jumped 107 percent to 430.

The Mirai, however, has failed to maintain that momentum: Sales fell 15 percent to 1,358 in the first half of this year compared with the same period in 2021. Nexo sales more than doubled to 271 during the same period.

But fuel cell sales are almost an immeasurable percentage of all new-vehicle volume. The total U.S. new-vehicle market topped 15 million in 2021, according to the Automotive News Research & Data Center. Sales of fuel cell vehicles totaled just 3,059 last year. The figures don't include the Honda Clarity, which was sold in hybrid, electric and fuel cell configurations and was discontinued.

Even when compared with battery-electric vehicles, the fuel cell market is minuscule. In the first half of 2022, Tesla registered about 229,000 BEVs in the U.S., according to data from Experian. Other automakers recorded 109,620 more BEV sales. First-half fuel cell sales, again excluding the Clarity, stood at 1,629, according to the Data Center.

Industry investment reflects that disparity. Fuel cell technology spending will make up only a small portion of the $526 billion AlixPartners estimates the industry will invest in BEVs over the next five years, said Arun Kumar, a managing director at the consulting firm.

For the fuel cell market to grow to meaningful volume, experts say the industry must address significant questions: Can more green sources of hydrogen be developed? Will the fledgling hydrogen fueling infrastructure grow large enough to satisfy consumers and fleets? And what will fuel cell vehicles offer potential buyers that BEVs cannot?

With its modular fuel cell stack system that works in vehicles ranging from passenger cars to heavy-duty commercial trucks, Toyota is betting hydrogen has a vital transportation role.

"When you look at two-vehicle households, there will be one that's a BEV and one that's a fuel cell," Scott said.

He said the fuel cell car will allow people to take longer journeys free of range anxiety because they will be able to quickly refill their hydrogen tanks. That will free them of the charging delays of BEVs.

That makes easy access to hydrogen refueling stations the first step to fuel cell vehicle growth.

Hydrogen-powered vehicles need to be re- fueled at a station, not unlike today's gas stations. But there are almost none: The U.S. has roughly 50 hydrogen fueling stations total, Kumar said. And there is nowhere near a national network. Most are in California.

As the network grows, it must be supplied with hydrogen that comes from clean sources or else the vehicles won't be considered a form of green transport, analysts and environmental groups said.

Much of the country's current hydrogen supply is sourced from natural gas or other nonrenewable sources.

The auto industry is working on ways to produce green hydrogen.

Robert Bosch, the world's largest auto supplier, plans to invest about $500 million to build components for hydrogen electrolysis. Bosch said it would make electrolyzer stacks that can split water, collecting the hydrogen atoms and leaving oxygen as a byproduct.

Toyota is working on a fuel cell power generation plant at the Port of Long Beach in California that will use agricultural waste as feedstock to generate about 1 ton of hydrogen per day. That's enough to fill the tanks of 25 to 30 big rigs per day and far more passenger vehicles, Scott said.

"We want to put our money where our mouth is on this and show that we can help build the market," Scott said.

But even after green hydrogen is available, the industry must still get it to vehicles. That requires an exponential and nationwide increase in the number of filling stations.

Auto executives have lobbied state and federal governments to do more to boost the nation's hydrogen network.

The North American CEOs of Toyota and Hyundai were among the executives to sign an August letter to California Gov. Gavin Newsom urging the state to allocate $300 million in the state budget to fund the construction of 1,000 hydrogen stations over the decade.

"At this still very early stage in market development, the signal California sends on hydrogen will impact private investment decisions," they wrote.

For now, suppliers can move hydrogen long distances using existing steel pipeline systems, said Conrad Layson, an alternative propulsion analyst at AutoForecast Solutions.

As the smallest of elements, hydrogen molecules can escape through the latticework of steel pipes and bind with the metal, he said. That makes the pipes brittle over time.

"The long-term answer will be to replace the existing right-of-ways with hydrogen-friendly pipes with some substance that resists penetration," Layson said.

Once hydrogen is at a filling station, it offers a key advantage over BEVs: It fills at the same rate as gasoline. Customers, however, are learning that there are other complications, as the stations are frequently down.

On a good day in California, hydrogen refilling stations work about 80 percent of the time, though that number has sometimes been as low as 50 percent, Scott said.

"When it doesn't work, people understandably kind of lose their minds," he said.

Scott said "more robust" compressor and precooling systems are needed. Both are crucial to a refueling station's reliability.

The industry is working to improve its equipment and create a better supply chain for the fuel, he said.

"We put people on the moon," he said. "I promise you this is less challenging than landing a rover on Mars."

Even as the industry addresses these issues, hydrogen-powered vehicles are expected to remain a niche offering.

Most industry experts see commercial vehicles as the foremost opportunity for hydrogen fuel cell technology in the coming years.

For example, electric truck maker Nikola plans to produce a fuel cell truck in 2023.

Kenworth partnered with Toyota to add a fuel cell drivetrain to T680 Class 8 trucks. Hyundai's hydrogen truck plans represent a small program to alleviate pollution at a large California port.

Class 7 and Class 8 trucks are "overwhelmingly better served by hydrogen" than by battery-electric technology, said Tom Stephenson, CEO of New Mexico catalyst manufacturer Pajarito Powder.

"The numbers just bear that out in terms of the weight and the cost of batteries and the amount of time that's necessary to recharge," he said.

The passenger market will remain a steep climb, AlixPartner's Kumar said.

Most public interest and government incentives are for BEVs and constructing an extensive charging network. AlixPartners projects that about 60 percent of all new-vehicle sales in North America will be battery-electric by 2035, with hydrogen vehicles still playing a niche role.

And the technology is running out of time as BEVs proliferate across the transportation landscape.

"If you can't develop a technology that can be viable, and investments are not going into it now, chances are five or 10 years down the line, you're not going to see that much investment," Kumar said.