Electrification of Transport is Coming at a Rapid Pace!

• The 2015 Paris Agreement established a consensus target to keep global warming “well below 2°C above pre-industrial levels and pursue efforts to limit the temperature increase even further to 1.5°C by the end of the century”.
• Transport represents about 23% of global energy-related GHG emissions and is thus a key sector to tackle.
• To achieve the “below 2°C” target, the International Energy Agency estimates that at least 20% of all road transport vehicles globally must be electrically powered by 2030.
• The global Electric Vehicles (EVs) fleet is estimated at more than 5mn in 2018 (vs. 2mn in 2017), and forecasts go up to >500mn EVs by 2040.
• The vast majority of EVs are Battery Electric Vehicles (BEVs), but Fuel Cell Electric Vehicles (FCEV) may still benefit from the booming EV market.
  • FCEVs have a distinctive advantage in long-haul and heavy duty vehicles (trucks, buses, tractors, etc.)

FCEV: What is it about?

• FCEVs store energy in the form of compressed hydrogen gas which is then converted into electricity through an onboard fuel cell.
• The fuel cell is made of an electrolyte membrane placed between a positive electrode (cathode) and a negative electrode (anode).
• The anode is fed by hydrogen while oxygen (from the air) is introduced to the cathode.
• The electrochemical reaction breaks the hydrogen molecules into protons and electrons.
• Electrons are forced to travel through an external circuit, thus powering the car.
• Protons go through the membrane and recombine with oxygen molecules on the cathode side to form water (the only direct emission).
• A small battery is used to store energy generated by regenerative braking and provide additional power to the motor.

Public & Private Commitments to Boost the Take Off

Governments

• According to a recent study by McKinsey, global commitments into hydrogen and fuel cell technology total about $850mn annually.
  • Japan, South Korea, Germany, and USA (California) lead the race.
  • Japan intends to become the world’s first hydrogen society and plans to have 900 stations and 800’000 FCEVs by 2030.
  • South Korea recently unveiled a roadmap for boosting its hydrogen economy and targets production of 100’000 FCEVs by 2025, 1.8mn by 2030 and 6.2mn by 2040.
• The Hydrogen Council, a global initiative of 60 leading energy, transport, and industry companies, estimates that $280bn are needed to improve production, storage, distribution of hydrogen and build up refueling infrastructure.

Companies

• The leading manufacturers currently are Toyota, Honda, and Hyundai, who sold respectively 75%, 13% and 11% of all 11’200 FCEVs produced so far.
  • Toyota plans to move to “mass production” starting in 2020 with a target of 30’000 FCEVs per year.
  • Hyundai recently announced in its “FCEV Vision 2030” an annual production target of 500’000 FCEVs by 2030
• Eleven automakers have already committed on launching new FCEVs by 2021, including Toyota, Honda, Hyundai, Kia, Lexus, Mercedes-Benz, and BMW.

Catalysts:

• Government incentives could speed up the adoption of FCEVs enabling carmakers to reach economies of scale.
• FCEVs could benefit from the emergence of “shared mobility” where uptime (and thus reducing charging time) is increasingly important.
• BEVs and FCEVs could play complementary roles and grow together, as they would equip different types of vehicles.
  • BEVs mainly for personal cars, FCEVs for long-range and heavy duty vehicles (trucks, buses, etc.)

Risks:

• High Cost of Vehicle: the competitiveness of FCEVs depends on the ability to bring down costs of fuel cells and on-board hydrogen storage.
  • For FCEV to catch up with BEV in terms of price competitiveness, significant investments in R&D are still needed.
• Limited Distribution Infrastructure: FCEVs will require the deployment of a new infrastructure to cover the entire hydrogen value chain, from transport, through storage and delivery to vehicles. Lack of infrastructure remains an obstacle to adoption.
• Non-Ecological Hydrogen Production: Ecological footprint of FCEVs will depend on primary energy used to produce hydrogen
  • Use of non-renewable resources to produce hydrogen could tarnish the image of FCEVs.
• Breakthrough in Battery Tech: any new-coming technological breakthrough in batteries which would provide the same benefits of FCEV (charging time and energy density) at a lower price.