VDMA study analyzes fuel cell vehicle market

Starting in 2030, fuel cells will be making significant inroads in the passenger car, commercial vehicle and heavy equipment markets. Their importance, as well as the required hydrogen infrastructure, will grow steadily in the coming years, mainly thanks to heavy-duty applications. By 2040, the technology will power 12 percent of all vehicles sold in those markets, creating 68,000 new jobs in Europe in the process. These are the key takeaways from “Engine of change – Fuel cells’ impact on the machinery and industrial equipment industry and its suppliers,” a study conducted by FEV Consulting for Germany’s national engineering federation VDMA. Unlike battery-electric motors, fuel cells have quite a lot in common with internal combustion engines when it comes to production and supply chains, a boon to traditional automakers and machinery manufacturers.

Nevertheless, the regions and sectors analyzed in the study are moving at a very different pace. Japan and South Korea will continue to lead the market for passenger vehicles. By 2030, 6 percent of all cars sold in Japan will run on fuel cells, a share that will rise to over 20 percent by 2040. Besides setting strict well-to-wheel emissions limits, the Japanese government is pushing for social and political change in order to establish a hydrogen economy.

Fuel cell demand will not grow quite as fast in South Korea, where FCEVs will make up an estimated 3 percent of the market by 2030 and 14 percent by 2040. They will also contribute 2 percent to total sales in China by 2030 and 14 percent by 2040. In the United States and Europe, however, their share will remain below 1 percent in 2030 but rise to 10 percent by 2040.

The Zero Emission Vehicle Index developed by FEV Consulting indicates that China, Europe and the United States will have a chance to catch up to the first-mover markets later this decade. The index uses a variety of factors to determine the competitiveness of new engine designs compared to traditional ICEs. It shows that currently, battery-electric vehicles, also known as BEVs, are gaining traction in Europe and China and will, in the next two years, achieve a level of popularity that will allow them to easily compete with ICE cars. Fuel cells, FEV said, will reach 100 on the index in the 2030s, putting them on an equal footing with conventional powertrains.

“Our study shows that the FCEV and BEV markets are about 10 years apart,” said Michael Wittler, FEV’s principal consultant. Overall, the consultancy expects FCEV sales to grow from one to 10 million between 2030 and 2040. This translates into a 12 percent market share and an around 25 percent growth rate per year.

Strict emissions regulations

Heavy-duty equipment will play a key role in bringing fuel cells to market, mainly because of the strict emissions limits that are to be introduced in Europe, Japan and South Korea. The new rules will force automakers to sell a certain number of zero-emission vehicles each year. “In long-distance and heavy-duty transportation, it makes no sense at all to haul around a battery that weighs multiple tons. We simply need to come up with another approach,” Wittler said. He considers both fuel cells and hydrogen ICEs viable contenders for solving the weight issue.

It is still unclear which option will come out on top. In any case, what is more important than the choice between fuel cells and hydrogen-powered ICEs is that those who provide the refueling infrastructure can count on regular customers. “This is why heady-duty vehicles are so crucial,” Wittler said. Their energy-hungry engines will most likely more than make up for their comparatively low sales figures.

Additionally, fuel cells could very well take a notable chunk of the pie in non-road transportation, specifically in the forklift, railroad and maritime markets. Promising high daily operating hours, the technology is already in use in some forklift trucks. By 2030, FEV predicts that fuel cells will also power materials handling equipment with an output of 19 kilowatts or more.

From an industrial policy perspective, there are other benefits to producing fuel cell engines, as they have much more in common with ICEs than electric motors. “Fuel cell manufacturers rely on roughly the same supply chain components as companies making ICEs. Sometimes, the value added during production even slightly exceeds that of conventional engines,” said Wittler. In the BEV market, the value-add is considerably lower.

Total revenue potential in the passenger car market across the regions analyzed is expected to increase to nearly EUR 86 billion annually by 2040. FEV said that 68 percent of the estimated revenue will come from fuel cell stacks, balance-of-plant components and hydrogen tanks, while the other 32 percent will be generated by selling electric powertrains, including batteries and electric motors.

The manufacturing process itself will contribute 28 percent, that is, EUR 16 billion a year, to the fuel cell value chain, the study says. Crucial value-adding processes in the sector are forming, coating and methods that change material properties. This is especially true in stack component manufacture, which will add EUR 2.6 billion to the total by 2040. Work on these components, mainly on compressor/expander modules for fuel cell air systems, hydrogen control equipment, valves and gaskets, will come to EUR 5 billion a year. Another notable value-add is the production of composites used to make hydrogen tanks, a process estimated to contribute EUR 1 billion a year by 2040.

Similarities to combustion engines

Today’s automakers stand to benefit from the similarities between some fuel cell and ICE components, including turbochargers, instruments, valves and cooling systems or channels. For example, a vehicle’s fuel cell air system also contains a compressor/expander assembly. “This assembly could be delivered by companies manufacturing turbochargers. Both components serve similar functions and have similar designs,” said Wittler. In his view, the necessary changes to vehicle fleets will not be as dramatic as expected.

… Read more in the latest edition of H2-International October 2020

Author: Michael Nallinger