carmageddon!
Notwithstanding the stock-market performance of Elon Musk’s leccy Teslas, this has been the worst of times for the car industry and, having witnessed over £100bn wiped-off its value, things are about to get Darwinian. Even before the pandemic kicked in, the industry was facing massive disruption following the worldwide economic slowdown, restrictive EU emission tests, falling demand for diesel vehicles and mounting concern over trade wars and border tariffs. Factor in the transition to electric motors, autonomous vehicles and ride/car sharing and it’s going to be a tough ride for car firms.
Conventional wisdom and the popular view holds that the cars of our future will be powered by batteries and is certainly bolstered by the fact that BMW is planning for half of its cars to be electric by the end of this decade and VW will be producing at least seventy electric models sooner than this. But not all manufacturers are convinced. By 2020, there were over seven million electric vehicles worldwide but Toyota and Hyundai, amongst others, are driving down the apparent one-way street and betting that hydrogen will win the race.
The obvious appeal of hydrogen is that it’s a pure fuel and releases nothing but energy and water when burnt. Furthermore, it is one of the most, if not the, most abundant elements on Earth and will always remain so. Unsurprisingly then, hydrogen is being championed as a way of reducing greenhouse gases and combating our collapse into the climate-change abyss. It’s versatility has never been in doubt but currently it accounts for only 1.5% of our total energy use and so begs the question, why?
There’s an old joke in the sector that hydrogen is the fuel of the future – and always will be! This is in no small measure due to its production as, surprisingly, it has to be manufactured by one of three very different processes, to be of use to us. ‘Grey’ hydrogen, the cheapest and most common method, involves the burning of CO2-releasing fossil fuels. Not good. ‘Blue’ is pretty much the same but the carbon is supposedly captured and either buried or offset. Little better. ‘Green’ tries to live up to its moniker and uses renewable wind or solar energy to extract pure hydrogen from water by electrolysis. Predictably, this is both the most complex and most expensive, about six times the cost per barrel as oil, but ‘clean’ hydrogen is currently enjoying unprecedented political and business momentum.
The EU (remember them?) recently revealed plans to attract up to E470bn of investment into the sector and our own government is stumping-up £240m in hydrogen production, though admittedly blue as opposed to green. Toyota has now shipped its first hydrogen saloon, the Mirai (meaning ‘future’), and China aims to have over a million hydrogen-fuelled cars in the next few years and is committing to the infrastructure necessary to support this. Looking farther ahead, Goldman Sachs believes the green hydrogen could justifiably be a E10trn market by the middle of this century.
Electric vehicles are way further along the development process and, perhaps more importantly, the investment curve, are currently more efficient, less complex and cheaper but hydrogen allows for faster refuelling, far greater travelling distances and doesn’t require energy-intensive batteries. In this hare and tortoise tussle, Elon, the man who named his child X Æ A-12, refers to hydrogen fuel cells as “fool cells” but it’s too early to write-off hydrogen as a serious contender as a fuel for the future.
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