ELECTRIC VEHICLE REVOLUTION SERIES: Report 3 – Li-ion vs. Hydrogen Vehicles

The decarbonization of the light mobility sector, which accounts for 27% of the world’s oil consumption, is a major target for achieving climate neutrality by 2050. As such, the automobile industry is at a historic turning point. Increasing regulatory and consumer pressure to unroll ever more price competitive zero carbon emitting vehicles is presenting car producers with big technological dilemmas. Will battery electric vehicles (BEVs) or fuel cell electric vehicles (FCEVs) win? Or will they cohabitate ? In this report, we compare the economic and carbon costs of internal combustion engines (ICEs) with that of electric vehicles (EVs which encompasses both BEVs and FCEVs). We follow by a detailed comparison between the two “electric” technologies. Our conclusion is that whilst FCEVs offer some technical and environmental advantages over BEVs, the increased use of the former at the expense of the latter requires the generation of considerable scale effects in the next 10-15 years . In concrete terms, for FCEVs to compete seriously with BEVs, three, somehow intertwined conditions must be met: The production of FCEVs will have to be industrialized to replicate the first perceptible scale effects in the BEV segment; The cost of producing the hydrogen molecule must also drop substantially for the utilisation cost of FCEVs to converge towards that of BEVs; National governments will have to incentivize the deployment of refuelling infrastructure to help tackle the chicken and egg dilemma for the prospective buyer of an FCEV. For these reasons, we expect FCEVs to continue to occupy a marginal place in light mobility, at least until 2030.