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Sunday, June 1, 2014

There is No Market for Hydrogen-fueled cars!


I recently did an 11-part article on hydrogen fuel cell cars. I covered H2 generation, infrastructure, costs, and many other aspects. One thing I touched on in part 9 is that fuel cells vehicle manufacturers have alienated many current EV drivers.

This article (link) in the SFGate, they expand on the point. Who are the potential buyers of a hydrogen fuel cell car? People that have been waiting for zero emission vehicles have bought plug-in cars. New people are being brought to the market by seeing how great their friends and neighbors vehicles are. More plug-in vehicles are coming to market each year and they can "fill up" in your garage.

What market does that leave for H2 cars? The gas-die-hards are not going to use anything other than liquid fuels and plug-ins dominate the alternative market. Perhaps there are a few people waiting for H2, but that alone would be a small market.

Another point from the SFGate story: If it is so apparent that there is no viable H2 car market, why are Hyundai, Honda, & Toyota continuing to push this technology? In part 4 of my series I suggested that it may be "island thinking". On an island, a small amount of infrastructure can meet the needs of the population. This is not the case for the US.

The SFGate story offers three financial possibilities to why these companies continue to push H2 cars. One, the companies have been investing research money into H2 development for more than a decade. The article suggests (although they don't use this term) that they are suffering from the sunk cost fallacy. Secondly, the article suggests that Hyundai specifically would likely have to pay licensing fees and/or patent royalties to develop plug-in vehicles. This would make plug-in cars less profitable to the company than a car without these licensing burdens. The third reason offered in the SFGate story is that car companies don't manufacture batteries. This means that they would be sharing the profits for a major price component of the car with another company. I have written previously, that I believe this is the primary reason that the EV1s were crushed.

Auto manufacturers don't want their cars to be just a shell wrapped around someone else's batteries. Today, range and performance depend on batteries. For most car companies that means another company's technology. And worse, much of the profits go to the battery company.

It was nice to see an article that examined these aspects of the H2 car market. If you ever find market research data that shows the prospective market demographics for FCEVs, please share the link below.