Electric vehicles (EVs) are all the rage now. With EV popularity and adoption rapidly increasing worldwide, they are projected to have a market volume of $1,084 billion before the decade is over.
2021 was a big year for EV sales as they doubled from 2020 to 6.75 million, then surpassed 10 million in 2022. Meanwhile, the unit sales of EVs are anticipated to reach 18.84 million vehicles by 2029.
EV vehicles, unlike conventional gasoline-powered internal combustion engines, use electric motors and rechargeable batteries to move.
There are actually several types: Battery EVs, which are entirely powered by a rechargeable battery pack; Plug-in Hybrid EVs, which use both traditional gasoline engines and an electric motor that can be recharged from an external power source; Hybrid EVs, which have a battery-powered motor as well as an internal combustion engine, and Fuel Cell EVs that utilizes hydrogen to power the electric motor.
Like all EVs, fuel cell electric vehicles (FCEVs) also use electricity to power an electric motor, but instead of using a battery to provide it with electricity, FCEVs produce electricity using a fuel cell powered by hydrogen.
The way FCEVs work is that a fuel cell has two electrodes — an anode, which is a negative electrode, and a cathode, which is a positive electrode. They both are sandwiched around an electrolyte. A fuel like hydrogen is then introduced to the anode while air is supplied to the cathode.
Now, at the anode, a catalyst is used to split the hydrogen molecules into electrons and protons.
A catalyst is used to speed up the chemical reaction, and scientists have been looking for a catalyst that would reduce the cost of making hydrogen fuel cells. Platinum is the most common catalyst, followed by others such as nickel, palladium, and iron.
In hydrogen fuel cells, the electrons travel through an external circuit to create electricity, while protons pass through the cathode, where they unite with oxygen and electrons to produce water and heat. In this way, a fuel cell acts as an energy converter, unlike a battery, which is a storage device.
Click here to learn why fuel cell electric vehicles are the future mode of tranport.
Hydrogen Fuel Cells: A Sustainable Future for Vehicles
A fuel cell basically uses the chemical energy of fuels like hydrogen to produce electricity efficiently and cleanly. Hydrogen is the lightest element, which releases abundant energy in reaction with oxygen and produces only water.
The invisible gas has been heralded as a clean fuel of the future. The Hydrogen Council, a global initiative of members from leading energy, transportation, and industrial companies, sees hydrogen not only as a sustainable drive for vehicles in the future but also as a clean energy source for heat and electricity.
However, not all hydrogen is clean. The zero-emission “green hydrogen” actually comes from electrolysis, where water is split into hydrogen and oxygen using clean electricity.
Using clean hydrogen, fuel cells can achieve lower or zero emissions and help address climate challenges. Since hydrogen fuel cells do not produce any harmful emissions, they eliminate the costs associated with handling and storing toxic materials. Additionally, they operate quietly and release no air pollutants that contribute to health problems.
Fuel cells, compared to batteries and internal combustion generators, also save money by eliminating the need to change, charge, and manage batteries. Simple maintenance and fewer site visits further lowers operational costs.
Compared to traditional combustion-based technologies, fuel cells also operate at higher efficiencies. It is by converting the chemical energy in the fuel directly to electrical energy that fuel cells can achieve high efficiencies.
According to the US Department of Energy, the energy efficiency of hydrogen fuel cells is between 40%-60% compared to the 25% of a typical internal combustion engine of a car.
Additionally, hydrogen cars provide a driving experience similar to electric cars, and they take a short time to refill their hydrogen tanks. They also have a range similar to other electric vehicles that have large battery storage. This brings FCEVs availability and flexibility into line with those of a regular car.
The energy produced by hydrogen fuel cells can actually be used to power anything from drones and commercial vehicles to industrial, commercial, and residential buildings. And as a reliable and clean alternative energy source, this technology has been seeing a growing number of applications.
If we look at the statistics about fuel cell electric vehicles (FCEVs), they saw a 40% increase in 2022 from the previous year, with more than 72,000 FCEVs reported to be on the world’s roads, as per the International Energy Agency’s (IEA) new Global EV Outlook 2023 report.
However, global sales dropped by more than 30% in 2023, with only 14,451 fuel-cell vehicles sold worldwide in 2023, compared to 20,704 in 2022. This slump was driven by South Korea, where FCEV sales fell by as much as 55.2%.
Meanwhile, China saw modest growth and became the world’s largest FCEV market, as per Korean consultancy SNE Research.
The Chinese government is actually aiming to build at least 1,200 hydrogen refueling stations across the country by next year, which would help it maintain its lead, much like how the country is dominating the EV sector. China produces almost two-thirds of the world’s EVs and over three-quarters of EV batteries.
The European Hydrogen Observatory meanwhile reported Germany having the largest number of FCEV registrations and fleet in 2023, followed by France.
As for the types of vehicles, passenger cars are the most registered FCEVs and have seen the highest increase in activity in recent years. FCEV buses and trucks are also becoming more common, with 464 buses and 215 trucks in 2023.
The Challenges Facing Fuel Cell Electric Vehicles
The International Energy Agency believes that hydrogen will account for 16% of road transport in 2050.
Infrastructure, however, presents a problem as hydrogen is refueled through special pumps. For instance, there are only 178 hydrogen filling stations across Europe, and half of them are in Germany alone. In the UK, there are about nine hydrogen stations compared to 31,000 public charging locations.
Having said that, the infrastructure is slowly expanding. Also, an infrastructure with electric charging and hydrogen refueling stations is found to be cheaper than a pure electric charging infrastructure.
Cost is another factor limiting the adoption of hydrogen cars. The few fuel-cell-powered models that are currently available on the market cost more than EVs with batteries or internal combustion engines.
One of the reasons for hydrogen cars being more expensive is the cost of platinum, which acts as a catalyst. However, the amount of precious metal needed for automotive fuel cells has been reduced significantly, and scientists are also looking for cost-effective alternatives.
As for the cost of fuel, it is about the same as that of combustion vehicles and is expected to fall as hydrogen production increases worldwide, which is currently being foreseen.
Currently, many top automotive companies are hoping for hydrogen to replace the battery as the technology of choice to achieve zero emissions.
This includes Oliver Zipse, the CEO of BMW, who has called hydrogen the “missing piece in the jigsaw when it comes to emission-free mobility.” While the German manufacturer is heavily invested in battery technology, it also has a BMW iX5 Hydrogen fuel cell car in testing, which uses Toyota fuel cells.
The auto manufacturer doesn’t see FCEV as a competitor to battery-powered e-cars; rather, it sees them as complementary.
“One technology on its own will not be enough to enable climate-neutral mobility worldwide.”
– Zipse said last year
According to the company, hydrogen vehicles will be a suitable solution for those who need high flexibility and travel a lot. BMW is also looking into utilizing hydrogen technology in production and logistics.
Japan’s Toyota’s (TM +1.15%) Akio Toyoda is another huge proponent of hydrogen fuel cells, who said last month that he believes the share of battery cars would peak at 30% while hydrogen, along with traditional combustion engines, would make up the rest.
The leading automotive manufacturer has Mirai as its hydrogen-powered car, which is widely available to the public.
Despite all the interest and development, another problem with FCEVs is having easy access to clean hydrogen. Toyota has also acknowledged that hydrogen in cars has so far “not been successful” due to the lack of fuel supply, according to its technical chief, Hiroki Nakajima.
However, things may be about to change as Toyota unveils its breakthrough hydrogen fuel cell batteries that can be swapped.
Toyota’s Breakthrough: Portable Hydrogen Cartridges
At the Japan Mobility Show Bizweek 2024, Toyota Motor Corp (TM +1.15%) displayed its portable hydrogen cartridges to the world, and the auto manufacturer aimed to change the world of FCEVs by providing swappable power for these vehicles.
Source: Toyota
The event, being held from October 15 to October 18 at Makuhari Messe in Chiba Prefecture, is attended by mobility startups working towards a sustainable future. At the event, Toyota exhibited its technology related to carbon neutrality.
The company is pursuing carbon neutrality through a multi-pathway approach, which includes realizing a hydrogen society and renewable energy management. Both of these efforts help stabilize the energy supply and reduce environmental impact.
Portable hydrogen cartridges were one of the main developments from Toyota, which has a market cap of $267.8 billion as its shares traded at $169.55, down 7.54% YTD. The automaker first introduced its working prototype in 2022 through its mobility tech-focused subsidiary Woven.
Toyota Motor Corporation (TM +1.15%)
These large cartridges of hydrogen look like big AA batteries that you simply jack into your car to provide power. When all their energy is used up, you can swap them out for a new cartridge to keep your cars and devices running.
More importantly, Toyota has reduced the size and weight of these tanks, which allowed them to be carried by hand. Previously, these hydrogen tanks were too large and difficult to handle. The company said:
“They are designed to make hydrogen a familiar and safe energy source that can be used in a variety of everyday situations.”
While hydrogen car manufacturing and, in turn, usage is extremely low, now that Toyota has addressed a big problem of these vehicles, it’s possible hydrogen cars may get their time of the day and, over time, may even surpass battery-powered electric vehicles.
But this is not all. At the event, Toyota also showed off a non-standard race car powered by hydrogen. The company first started racing its GR Corolla, which runs on gaseous hydrogen, three years ago, and since last year, it has been competing in endurance races both in Japan and abroad.
Besides incentivizing car makers to get on board with hydrogen vehicles, Toyota plans to have many other uses for its portable hydrogen cartridges.
This interesting aspect of the new development is that these cells can also be used to power your home. They can even provide hydrogen to burn for cooking, for which Toyota partnered with Rinnai Corporation and demonstrated a concept cooker that does exactly that.
In fact, Toyota is planning to work with companies to get its cartridges into the market and find its various applications. In its official press release, the company said:
“(It) aims to find matches with the technologies and ideas of various companies and startups from a variety of perspectives, including both providing services and developing and selling devices using portable hydrogen cartridges.”
With this move, the auto manufacturer, which is also involved in finance and other businesses, “will further strengthen its efforts to use portable hydrogen cartridges and help create a hydrogen society.”
Leading Players in the Fuel Cell Electric Vehicle Market
Now, if we look at some of the most prominent names in the Fuel Cell Electric Vehicle (FCEV) sector, Plug Power (PLUG +0.49%) has been among the leading ones. The company has produced fuel cell-powered forklifts and expanded into green hydrogen production and distribution, however, its shares are currently down 54.22% YTD as they trade at $2.08. Click here to learn all about investing in Plug Power.
Plug Power Inc. (PLUG +0.49%)
Then there’s Ballard Power Systems (BLDP +0%), which focuses on fuel cell solutions for buses, trucks, and other heavy-duty vehicles. Its shares are also down 55.95% as it trades at $1.66, much like Nikola Corporation (NKLA -2.12%), whose shares are down 83.81%. Its Truck business unit uses both FCEV and BEV technology.
Ballard Power Systems Inc. (BLDP +0%)
Now, let’s take a deeper look into the company whose stocks have performed well this year.
#1. Cummins Inc. (CMI +0.36%)
Trading at $332.68 at the time of writing, Cummins shares have seen an increase of 38.87% this year. With that, the company has a market cap of $45.59 billion while having an EPS (TTM) of 3.79, a P/E (TTM) of 24.13, an ROE (TTM) of 19.55%, and a dividend yield of 2.19%.
Traditionally known for its diesel engines, Cummins has also made significant investments in hydrogen technology, including fuel cells for commercial vehicles. For Q2 2024, the company reported record revenues of $8.8 billion and net income of $726 million. EBITDA in the quarter was 15.3% of sales, while diluted EPS was $5.26.
Cummins Inc. (CMI +0.36%)
Through its acquisition of Hydrogenics in 2019 for $290 million, Cummins has been pushing forward with hydrogen fuel cell solutions for buses, trucks, and other heavy-duty vehicles. In 2023, the company also announced the buyout of Air Liquide’s 19% interest in Hydrogenics, which Cummins said “reinforces its commitment to these technologies and the increasing importance they will play in creating value for all stakeholders and decarbonizing our world.”
Back in 2022, Cummins started providing proton exchange membrane (PEM) fuel cell systems to Scania, a world-leading provider of trucks and buses for heavy transport applications, for use in 20 FCEV. This collaboration on hydrogen began in 2020 when Scania’s four electric trucks, powered by Cummins’ fuel cell systems, started operating as part of a pilot project with Norway’s largest grocery wholesaler ASKO.
Earlier this year, the company announced the integration of advanced software and electronics in BEVs and FCEVs to optimize performance, improve safety, and help make the transportation industries more sustainable. Cummins’ zero-emissions business segment Accelera also launched new versions of its hydrogen fuel cell engines. FCE300 and FCE150 fuel cell engines offer advanced durability, improved system efficiency, and increased power density for larger systems.
“Through constant innovation, real-world testing in the field, and collaboration with customers and partners to tailor solutions, we continue to improve our next-generation technologies, helping accelerate adoption and the shift to zero.”
– Amy Davis, President of Accelera
Conclusion
The colorless, tasteless, odorless, and flammable gaseous substance, Hydrogen, showcases great potential as an energy carrier of the future. Its storage and transport capability particularly makes hydrogen suitable for use in a wide variety of applications.
In the automotive industry, with its high efficiency and clean energy profile, hydrogen fuel cell technology presents a compelling alternative to battery-powered EVs. More importantly, this ultimate clean energy not only emits no CO2 during use, but its CO2 emissions can further be minimized during the production process by using renewable energy sources like solar and wind.
While the adoption of FCEVs faces challenges, innovations like Toyota’s portable hydrogen cartridges could pave the way for broader use. With that, hydrogen can be expected to make an increasingly important contribution to sustainable mobility.
