Lux Research: fuel cell vehicles lag other drivetrains in terms of cost of ownership; ICE and HEV lowest cost
Based on an analysis of various cost of ownership scenarios for various drivetrains, including internal combustion engine (ICE) gasoline and diesel; hybrid (HEV); battery-electric (EV); plug-in hybrid electric (PHEV); and fuel cell vehicles, Lux Research concludes that fuel cell vehicles (FCVs) are “solidly in a laggard position.”
The Lux analysts ran scenarios associated with operation and ownership, broken out into fuel cost alone; fuel cost plus operation, but excluding purchase or lease; and fuel cost plus operation, including purchase or lease (total ownership cost). When looking at fuel cost only, EVs lead the way due to the relatively low price of electricity, followed by various types of hybrids (HEVs and PHEVs). Fuel cell vehicles can match EV fuel costs at $3/kg dispensed H2—a price highly unlikely in near-term, Lux said.
When including purchase price (broken out as a five-year loan at 6% interest plus 10% down-payment) in the scenario, the HEV and ICE drivetrains lead in terms of affordability, with EVs and low-cost FCVs behind.
|Source: Lux Research. Click to enlarge.|
A $30,000 price point and hydrogen at $3/kg makes the FCV option less costly than both the PHEV and EV option, and approaching the cost of ownership of ICE and HEV drivetrains. However, Lux notes, this optimistic case requires a major OEM to commit to producing hundreds of thousands of units, independent of proven demand, with an EV-like $5+ billion risk (similar to Nissan-Renault or Tesla-Panasonic factories) that built huge scale first. There is no guarantee to OEMs that such a risky bet would work out, Lux cautions.
OEMs will enter markets cautiously, each selling only thousands of FCVs per year this decade, and deploying a total of 700,000 FCVs on the road by 2030, in an effort to meet regulations while minimizing their losses on these initially unprofitable vehicles. Why so pessimistic? Despite attempts to entice initial buyers with free hydrogen and subsidies, the long-term economics do not enable these strategies to scale to mass-market success; subsidies will eventually expire and FCV costs will remain high. This will also require some pretty remarkable infrastructure investment to go along for the ride.
We anticipate that between $180 billion to $800 billion will be required by various individual regions to adopt a full-fledged hydrogen economy. In the likely absence of such funding, a shift to hydrogen will not happen before 2040, if ever.—Lux Research
The Lux analysts also observed that, due to aggressive cost reduction efforts on fuel cells, automotive OEMs will have an opportunity to enter stationary energy and offer financing. Lux expects most to overlook this opportunity, but those who don’t may pick up hundreds of millions in revenues.
It is the strength of partnerships (and the creativity thereof) between OEMs, infrastructure gas specialists, Tier 1 suppliers, and chemicals and materials leaders that will separate the fuel cell survivors from those that fail.
Lux Research report “Hydrogen Under Pressure: Driving Fuel Cell Adoption Now and In the Future” client registration required