What’s Propelling Fuel Cell Electric Vehicles: Global Market Research Insights

FCEV fuel cell bus Japan H2 Mobility

Fuel cell electric vehicles (FCEVs) or fuel cell vehicles (FCVs) are electric vehicles that use a fuel cell to power the drive system. A major benefit of fuel cell vehicle technology is no tailpipe emissions. By combining hydrogen and oxygen, a fuel cell generates electricity through an electrochemical reaction, not combustion. These vehicles only emit water vapor and warm air.

While the benefits—no harmful tailpipe emissions, significantly longer driving ranges than battery electric vehicles (BEVs), flexibility in installation and operation, and reduced dependence on oil—are strong, there also are challenges. Widespread FCV adoption challenges include noncompetitive vehicle costs, developing hydrogen (H2) refueling station infrastructure, and public and private sector acceptance.

What’s next for fuel cell electric vehicles?

While weighing the benefits against the challenges, scalability is critical to FCV success. In some countries, predominantly in Asia and Europe, this technology is starting to scale already.

FCEV fuel cell bus Japan H2 Mobility

Unprecedented partnerships between governments and within the private sector are propelling the manufacturing and adoption of fuel cell electric vehicles. Investments by manufacturers – like that of Japan H2 Mobility (JHyM), a group founded by 11 Japanese companies, including Toyota, Nissan, and Honda – are lowering the costs of automotive fuel cell parts by increasing production. They’re able to make investments like this in part because Japanese fuel cell components are being used in a growing number of Chinese buses.

The Chinese government recently rolled out subsidies to companies developing core fuel cell technology, particularly for buses and other commercial vehicles. Toyota expects a windfall from the subsidies—slated to last four years.

Long-established friction between Japan and China makes FCV development even more interesting. China has made substantial investments to solidify their BEV dominance. In the next five years, it’s projected that Chinese battery manufacturers will aggressively enter the overseas electric vehicle market. While BEV technology has near-term potential written all over it, China is not about to completely settle for foreign FCV technology.

The electric vehicle market is scaling and transitioning rapidly. BEVs continue to pave the way for an all-electric vehicle future. However, with BEV technology closely connected to the power grid, issues persist with charging station infrastructure and potential citywide brownouts. FCV refueling methods more closely mirror current combustion engine refueling methods; thus, demand for FCVs may surpass demand for BEVs as the electric vehicle market evolves.

Broader FCV adoption presents a slightly longer-term growth strategy for China. By methodically updating fuel cell industry subsidies, Chinese companies have the opportunity to improve their technology and develop refueling infrastructure.

Major opportunities exist globally

Developing H2 refueling infrastructure is a hot topic around the world. According to H2stations.org at the end of 2019, more than 430 H2 refueling stations were in operation worldwide. Asia and Europe each supported about 40% of the refueling stations.

The total number is set to grow significantly in the next five years. Germany, Japan, and South Korea have the most hydrogen refueling stations in operation currently. But China, France, Norway, the Netherlands, and California (U.S.) are fast-tracking the development of H2 refueling infrastructure.

Getting hydrogen to consumers will continue to be an opportunity to explore through the next decade. With a bright and clean future outlook for fuel cell electric vehicles, market opportunities – from parts to refueling station locations and more – will continue to advance.

Bonus read: The Future of Automotive Fuel Cell Technology by 2030

For your next automotive market research study, contact us.

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