Market Challenges for Fuel Cell Vehicles in North America

Key OEMs have made several big fuel cell vehicle (FCV) announcements and investments in 2019. Audi announced it will increase its investment in fuel cell technology, Valmet Automotive has focused on fuel cells, BMW showcased the i Hydrogen NEXT at the IAA Cars 2019 show, and Honda released the new Clarity Fuel Cell in California.

The future of mobility may include several zero-emission powertrains, including FCVs. While plug-in EVs (PEVs) are expected to have a strong portion of the market, some customer mobility needs may exceed the capabilities of the plug-in powertrains. FCVs can fill this gap, but still have much to prove and face several challenges in terms of scaling-up in the market.

Challenges to Adoption

FCVs have many of the same challenges that PEVs faced, or still face, in the early stages of adoption. First, FCVs are expensive relative to their combustion engine counterparts and to some PEV models. The 2019 Honda Clarity Fuel Cell has a manufacturer suggested retail price (MSRP) of over $58,000, while the 2019 Honda Clarity Electric has an MSRP of $36,620. There are some purchase incentives available for FCVs on a state level, but they are not as abundant as PEV purchase incentives.

Hydrogen refueling infrastructure is only available in select locations around the country. New facilities to produce, transport, and dispense hydrogen would need to be developed to make FCVs viable in the market. Unlike PEVs, which can charge wherever electricity is present in theory, FCVs require the buildout of an entire gasoline-like distribution system. However, remote generation of hydrogen is also possible using either electrolysis or the natural gas network, which makes creating an entirely new fueling infrastructure system less daunting.

OEMs must feel confident that their FCV model will have nationwide market traction, which is highly dependent on customer acceptance. Like PEVs several years ago, FCVs are primarily only available in California. Most hydrogen fueling stations in the US are located in California because nationwide acceptance of the technology is scarce.

Other challenges that FCVs face are somewhat unique to the technology. For example, some FCVs store enough hydrogen to be range competitive with combustion engine vehicles—over 300 miles—but these storage systems are still too bulky and expensive for the vehicles. Other challenges FCVs have include:

• Fuel cell durability and reliability: FCVs may not perform well in extreme temperatures, particularly cold weather, although, this issue is being resolved.

• Competition with other technologies: Since PEVs are more widely adopted than FCVs and the market for PEVs is more mature, FCVs need to offer a viable alternative to be competitive.

• Safety concerns: Handling compressed hydrogen will be new for most consumers, so the properties and risks of hydrogen will need to be highly publicized.
  

Investment from OEMs Is a Positive Sign for FCV Technology

Despite challenges faced by FCVs for high market adoption, OEMs are investing in the technology and bringing vehicles to the market. This is the first step in overcoming market barriers. The commitment of some automaker’s to FCV development may spur investment and development of more hydrogen infrastructure, especially in California where the vehicles are currently available.