Elon Musk says the tech is 'mind-bogglingly stupid,' but hydrogen cars may yet threaten Tesla

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Safety is a concern, as hydrogen is flammable, but so is gasoline and lithium-ion batteries. The transportation of hydrogen for use at refueling stations poses additional safety risks — stations use sensors to monitor for leaks. There have not been serious incidents reported in California, and the industrial sector has been transporting hydrogen for decades.

According to the National Fire Protection Association, alternative-fueled vehicles, a category that includes both hydrogen fuel cell and battery-powered electric, are not more hazardous than traditional internal combustion engines. The NFPA’s statistics reveal that approximately every 3 minutes there is a car fire in the U.S. from an internal combustion engine vehicle.

The biggest hurdle, however, may be cost.

The average price for hydrogen fuel in California is about $16/kg — gasoline is sold by the gallon (volume) and hydrogen by the kilogram (weight). To put that in perspective, 1 gal of gasoline has about the same amount of energy as 1 kg of hydrogen. Most fuel cell electric cars carry about 5 kg to 6 kg of hydrogen but go twice the distance of a modern internal combustion engine car with equivalent gas in the tank, which works out to a gasoline-per-gallon equivalent between $5 and $6.

Hydrogen fuel cell cars now average between 312 miles and 380 miles in range, according to the EPA. They will cost about $80 to refuel from empty (most drivers don’t let the tank run down to empty before they refuel, so end up refueling at a cost of $55 to $65). That cost is currently being paid for by automakers, who provide lessees with prepaid cards for three years of fueling, up to $15,000. In California, which has the nation’s highest gas prices, filling up a conventional car with a large gas tank can cost $40 or more.

Kelley Blue Book estimates annual fuel costs for the Toyota Mirai, Honda Clarity Fuel Cell and Hyundai Nexo at $4,495, which is three to four times the cost of gas-powered alternatives.

“We recognize the automakers can’t keep paying for fuel, and we see the line of sight to get there, but it is a volume game and we need to hit a critical mass,” said Shane Stephens, principal and chief development officer at FirstElement Fuel, which runs 19 of the 39 hydrogen refueling stations in California and is developing 12 of the 25 additional stations for the state. His company’s near-term target is $10/kg, which would equate to roughly $4/gal of gas. “That is a good near-term acceptable number to hit in the next three to five years and get people off automaker-subsidized fuel,” Stephens said.

The biggest problem: The cars remain expensive. Nexo, for instance, is the most expensive Hyundai on sale in the U.S., with a starting price of $59,345 (starting prices for the brand’s comparably-sized Santa Fe start at $24,250). The Toyota Mirai and Honda Clarity fuel cell models have a similar MSRP in the $59,000 range. These car purchases are eligible for government rebates — in California there is a $5,000 tax rebate available.

Leasing has been a popular consumer choice for fuel cell and battery electric cars because the technology is new and early adopters don’t want to be tied into a current model for a long time as the technology advances and efficiency improves.

As with any new technology, fuel cell costs should come down if the market grows and achieves economies of scale in manufacturing and infrastructure. “Honda has a long-term commitment to hydrogen, but you can’t sell vehicles without infrastructure,” Kumaratne said.

Stephens said if the market can reach “a few hundred thousand cars” in California, it can be cost-competitive with gasoline. That represents a big jump from the 6,000 cars sold so far, but most new auto markets start with limited production runs. Toyota has said it plans to increase production from 3,000 Mirai units per year to 30,000 cars by 2021. “That is a tenfold magnitude increase.”

“A few hundred thousand cars in California is not that far off. And that is just Toyota,” Stephens said. “This is not about subsidizing the entire growth of the infrastructure but just helping us get over the hump, and that is on the horizon. If we get to a few hundred thousand cars, we can really start to sunset government subsidies and be self-sustaining.”

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