Road Transport: “Fool Cells?”
Elon Musk’s “fool cell” quip has become fodder for anyone looking for a snarky, attention-getting quote about the battery electric vs. hydrogen fuel cell debate (including this article). But as we pursue decarbonization of the transportation sector, which accounts for the most emissions of any sector in the US, what are the best alternatives to fossil fuel-based powertrains — not just in cars but also trucks, ships, and planes?
Given the massive electrification commitments made by the major auto manufacturers, the passenger vehicle argument seems settled in favor of battery electric vehicles (BEVs). Volkswagen released a public statement illustrating how a BEV dominates a hydrogen fuel cell vehicle (FCEV) on “well-to-wheel” efficiency (76% to 30%).
But how do the efficiency numbers translate to the end cost to the consumer? We’ll explore this question for different modes of transportation in the next few posts. This first article of the series will focus on road transportation — light duty passenger vehicles, medium duty commercial vehicles, and heavy duty trucks.
Let’s cut to the chase here. Our calculations show that fuel cells really are “fool cells” when it comes to passenger vehicles. Oliver Wyman projects that BEVs will still cost slightly more than their internal combustion engine (ICE) counterparts by 2030. While the fuel and maintenance costs of BEVs are substantially less than those of ICE vehicles, insurance is likely to cost more (although we’re being conservative by using the higher insurance costs of Tesla owners). Combining CapEx and OpEx over the average 13-year lifespan, we see the total cost of ownership (TCO) of a BEV edging out that of an ICE by low single digit percentage points.
In contrast, even if we assume that hydrogen FCEVs cut their prices by a third over the next ten years through substantial adoption and scale, the TCO would be 30% worse than that of an ICE or BEV. Much of this can be attributed to the cost of hydrogen, which captures the inherent inefficiency of the conversion, storage, and transportation processes. The average price to refuel today in California is $16.51 per kg; given that a kilogram of hydrogen has roughly the same energy content as a gallon of gasoline and diesel, that’s equivalent to paying $6 per gallon of gasoline! (In our analysis, we assume that delivered hydrogen can eventually reach $8 per kg.)
While passenger vehicles fall decisively in favor of BEVs, what about commercial vehicles that travel more miles and carry heavier loads, such as delivery vans and trucks? Not a major barrier, according to NACFE. Aside from a few applications such as linen, paper, and beverage delivery, weight is not typically a factor for medium-duty vehicles as they tend to cube out before overloading becomes a constraint.
Furthermore, the weight disadvantage of commercial BEVs may be overstated. Diesel powertrains include fluids, emissions systems, exhaust systems, cooling systems, and mountings — elements that aren’t present in electric vehicles. The simpler electric powertrain also means fleets have been experiencing slightly lower maintenance costs, which are expected to improve as the technology improves.
Charging downtime is not a concern for most medium duty fleets. According to NACFE, over 75% of commercial vehicles are parked for more than six hours per day — plenty of time for replenishing the battery.
One big question is the lifetime of BEVs and their residual value. While there isn’t sufficient data to answer either question, most fleet operators expect a lifetime of seven to 10 years before major refurbishing or salvage, and NACFE expects batteries will likely exceed this lifetime before degrading to 80% capacity.
Finally, it’s worth noting that while the internal combustion engine has the benefit of a hundred years of refinement, this also means it’s become devilishly difficult to eke out incremental gains. In contrast, electric vehicles are on a different point on the innovation S-curve and are expected to improve rapidly.
When we take a look at our calculations for medium duty vehicles, we see that the TCO of BEVs beats that of conventional ICE vehicles by 18%, while the TCO of hydrogen FCEVs is about 15% worse. Of course, these calculations assume the charging and hydrogen refueling infrastructure is already available. While we’ve omitted a few factors and relied on high-level metrics rather than complex models, our directional conclusion is very similar to that reached by scientists at Argonne National Laboratory.
If any road transportation application makes sense for hydrogen, it would be heavy duty trucking, where loads are heavier and vehicles tend to operate for more hours each day. In particular, 24-hour operations for on-highway loads and regional hauls reinforce the positives of fuel cell operations, as fuel cells operate better in steady-state operation than in stop-and-go operations. This means a substantial portion of heavy duty trucking could be served by hydrogen FCEVs.
That’s not to say that hydrogen is a clear winner, however. Our calculations show that hydrogen FCEVs would still be 10% worse than a conventional ICE vehicle without a price on carbon. Hydrogen may simply be the best “clean” answer to specific applications of heavy duty trucking.
But while some applications of heavy duty trucking are best suited for hydrogen FCEVs, the harsh truth is that not enough trucks are sold each year to create sufficient demand to scale up hydrogen and fuel cell production and reduce costs fast enough. Production of heavy-duty trucks varies widely by year, but the 20-year market average is just short of 200,000 Class 8 builds per year, with a peak of around 300,000 in one year.
In truth, most heavy duty needs could be satisfied with electric trucks. NACFE expects that a 500-mile range battery electric truck could be viable for at least 50% of 53 ft trailer loads. Again, this is because most loads aren’t constrained by weight. One trucker points out that “over 90% of rigs weigh less than 73,000 pounds fully loaded, well under the 80,000 pound limit in the US.”
If battery energy density advances as projected by the National Academy of Science, then a commercial BEV Class 8 may be suitable for all but the routes running near 80,000 lbs gross vehicle weight. Therefore, NACFE believes that the long-term future of trucking is electric, with hydrogen FCEVs serving as a stopgap measure for some applications that cannot be electrified.
So is hydrogen completely useless for road transportation? Not necessarily. The military, in particular, is keen on hydrogen-powered vehicles, as electric vehicles struggle to handle the range of operating temperatures and other requirements some military vehicles undergo. In 2015, GM began experimenting with the Army on a fuel cell pickup truck, and more recently collaborated to develop the Chevrolet Colorado ZH2 fuel cell powered vehicle. Military applications are outside the scope of this analysis, but if anyone has insight into it, we’d love the input.
Regardless, BEVs will be the dominant winner for all forms of road transportation. There are a few niche applications that are better suited for hydrogen fuel cells, but those alone do not generate sufficient demand to achieve the required scale and cost targets. If we are to address those applications, we’ll have to find other use cases for hydrogen. We’ll explore those in future posts.