How WWII Put Germany & Japan on a Failure Path for EVs

Some of the biggest car brands in the world are from Germany and Japan; Volkswagen, Toyota, BMW, Mercedes, Porsche, Honda, and Audi to name a few. The auto industries in these countries share a reluctance to embrace electric vehicles. Today, we'll explore why that may be and what the implications could be for these countries and the world.

The auto industry is experiencing more change now than it has since its origin. Electric vehicles, self-driving cars, ride-sharing services, micro-mobility...

China has embraced electric vehicles and is a rising star in the global auto industry. As EVs gain market share, China will gain market share. This means someone has to lose market share, and that someone is likely to be German and Japanese automakers.

Germany and Japan didn't anticipate the transition to EVs; they even fought against it. Their plan was hybrids, diesel, and (eventually) hydrogen fuel cells. Even today, Toyota proclaims that EVs will be "at most 30 percent of the vehicles on the road." 

Why are these two countries aligned in their entrenched automotive thinking? What factors pushed them to maintain the status quo even when the rest of the auto industry sees the disruption that EVs are causing? Why are they unflappably convinced that hydrogen will be the next fuel of choice? 

When a German and Japanese alliance is mentioned, World War II quickly comes to mind. Surprisingly, the origin of this government and cultural direction toward hydrogen (H2) may actually trace back to WWII.  

World War II - Germany

Fuel was a strategic resource during WWII. Historian Anand Toprani describes WWII as "The First War for Oil." Oil was in desperately short supply for the Axis powers.

Fuel shortages directly played a critical role in Germany's defeat in World War II. The scarcity of fuel undermined many of their military operations, disrupted their economies, and led to a decline in civilian morale.

The fuel shortages also had a devastating impact on the Luftwaffe pilot training program. The Allies' bombing of the German oil industry reduced the production of petroleum, oil, and lubricants by more than 90 percent. This resulted in widespread shortages of fuel for German mechanized and motorized divisions.

In 1945, the Wehrmacht was grounded for lack of fuel and their new Tiger & Panther tanks were running on fumes. In the later stages of the war, the Germans were never more than 30 days away from running completely out of fuel.

To address this, Germany created synthetic oil from their abundant coal supply via a process called liquefaction. However, the German synthetic oil infrastructure suffered devastating attacks from Allied bombers. German High Command launched the Ardennes Offensive in mid-December 1944 to capture Allied fuel supplies at Antwerp. The offensive failed to achieve its objectives and burned most of Germany's fuel reserves.

Even after the war, fuel shortages continued and contributed to:

• Industrial output down by a third
• The country's housing stock was reduced by 20%
• Food production was half the level it was before the start of the war
• The Germans' diet became more monotonous, with lots of bread, potatoes, and preserves
  
  

World War II - Japan 

Oil shortages were also a key factor in Japan's military operations during WWII. Japan's combined output of natural and synthetic oil was only 3,459,000 barrels annually. Japan's war needs had to be drawn mainly from reserves.

Japan's oil shortage severely impacted their naval operations. Due to the lack of fuel, some ships were converted into stationary anti-aircraft platforms in port.

The oil shortage precipitated the Japanese attack on Pearl Harbor on December 7, 1941. The United States government had prohibited all oil exports to Japan in reaction to the advance of the Japanese military into Southern Indochina.

Fuel Shortage Mentality Lives On

When fuel was such a strategic commodity and shortages were devastating, this will not be soon forgotten. The people who lived through the shortages after the war will bear the mental scars. This means the post-WWII politicians of Germany and Japan wanted energy independence. Without domestic oil supplies in either country, something else was needed. Hydrogen looked promising as the solution.

Hydrogen is a resilient resource that can be generated in many ways, making it harder to cut off supplies. It can be stored in strategic reserves. It appeared to be a promising pathway to energy independence in the latter half of the 20th century. Governments put industry research and development policy and incentives in place to move down this promising path. 

 

Only now, decades later is it apparent that H2 was not the energy independence panacea that it once promised to become. Just as the return on energy models began to make it clear that Hydrogen would not be viable for energy independence, H2 found a new lease on life: carbon-free.

Germany's Hydrogen Plans

Germany began actively supporting hydrogen product development in the 1980s. BMW pioneered hydrogen-powered vehicle prototypes based on the BMW 7 Series. 

The German government formally announced a comprehensive "National Hydrogen Strategy" in June 2020, significantly increasing public funding for hydrogen research and development. 

Germany is investing in hydrogen as a future energy source to reduce greenhouse gas emissions and dependency on imported fossil fuels. Germany's National Hydrogen Strategy aims to speed up the development of a hydrogen market.

Hydrogen can be used in steel production and other industrial sectors that are hard to electrify.

Germany's government is targeting at least ten gigawatts of electrolysis capacity by 2030.

Water Electrolysis

Japan's Hydrogen Plans 

Japan began its research on hydrogen energy in the 1970s, with the "Sunshine Project." This project included investigations into solar and wind power as well. 

This government-led initiative is considered the starting point for Japan's substantial hydrogen research. Alongside H2 production, Japan began developing hydrogen fuel cell technology in the 1980s.

Japan formally established a national hydrogen strategy in 2017. This strategy solidified their commitment to hydrogen as a key energy component. Japan is investing in hydrogen because the leadership believes it can help the country achieve energy independence and net zero greenhouse gas emissions goals by 2050. Japan's government considers hydrogen an industrial sector that can achieve decarbonization, a stable energy supply, and economic growth.

Japan's Green Growth Strategy aims to increase hydrogen consumption to 3 million tonnes annually by 2030, 12 million tonnes by 2040, and 20 million tonnes annually by 2050. Japan plans to import about 300,000 tons of hydrogen from Australia and Brunei by 2030.

Japan planned to use the 2020 Tokyo Olympics to demonstrate a “hydrogen society”.  They wanted the 2020 games to be remembered as the hydrogen Olympics – a showcase for hydrogen as the clean fuel of the future and to signal to the world that Japan was the vanguard of this movement. The Tokyo Games “will leave a hydrogen society as its legacy,” the Tokyo regional governor promised in 2016.

This is not what came out of the 2020 games. The fleet of hydrogen-powered buses expected to ferry athletes and others was replaced by diesel buses. Despite the lofty goal, the hydrogen vision failed to materialize for predictable reasons including the cost of the fueling stations and vehicles.

Wrapping Up

Decades ago, Japan and Germany started on what seemed to be a reasonable path, hydrogen. The initial impetus was energy independence. As CO2 concerns began to arise, hydrogen promised to also help in this area, sending the two countries further down the hydrogen rabbit hole. 

Electric vehicles will be the vast majority of personal transportation, crossing 50% of new sales in the 2030s decade. EVs will win because; one, the infrastructure is much more scalable; two, the 'fuel' is much more affordable, and; three, the vehicles are much more affordable than fuel cell vehicles. Yet, Japan and Germany are ossified in their hydrogen strategy because they have invested decades of time and billions of dollars. They are stuck in the sunk-cost fallacy of their hydrogen investments.

China has no hydrogen albatross holding them back. As the world transitions to EVs, China will gain auto market share and it will come at the expense of the slow-to-transition automakers.