Tuesday, November 06, 2007

Fuel Cell Test Drive - Part II

In a posting at the start of this year, I described the competition among various advanced technology vehicle options as a race that still had many laps to go. Moreover, it's a race in which the finish line keeps moving, as the technology of conventional cars improves--nudged along by a stricter CAFE standard, or by consumers placing a higher priority on fuel economy and emissions. Yesterday I described my experience test driving a hydrogen-powered Chevrolet. The Equinox Fuel Cell affirms that it's possible to build a fuel cell vehicle (FCV) that consumers might want to buy, although its future retail price remains highly speculative. Today I want to tackle the larger and more complex question of whether anyone should build such a car.

As I mentioned yesterday, the GM team that came to Washington to brief the media on the Chevrolet Equinox Fuel Cell didn't just bring a half-dozen or so of the cars; they also brought detailed presentations on their advanced vehicle strategy and the experts to answer our questions. They painted a picture of the progressive electrification of personal mobility, ranging from the kind of hybrid systems featured in some of their new SUVs to cars that are powered entirely by electricity, generated either onboard or externally: by a fuel cell, as on the Equinox FC, or by an internal combustion engine and the electric grid, as in the much-anticipated Chevrolet Volt plug-in hybrid (PHEV) car. That view of electric drive as the next big step in transportation is consistent with what I saw in Texaco's long-term scenarios, going back a decade.

Good strategy isn't just about having a sound and compelling vision; you must be able to implement it. As I discussed last month, the implementation of a successful fuel cell car must overcome a number of parallel obstacles dealing with hydrogen generation, storage and distribution, while also driving the cost of both the vehicle and its fuel down to a level at which the system becomes competitive with other options, or the status quo. GM's plans cover all of these bases, though I wonder whether they can achieve the simultaneous convergence of all of the factors necessary to go from a 100-car demo to full production. Let's look at the elements:
  • Production - GM anticipates capitalizing on spare hydrogen production capacity from existing industrial operations--refineries, fertilizer plants, industrial gas facilities--to supply the H2 for the first large increment of fuel cell cars. That means relying on H2 made mostly from natural gas, at least initially, with its associated costs and emissions. In this regard, the "zero emissions/zero petroleum" label on the Equinox I drove only accounted for the vehicle's inputs and outputs, not a "well-to-wheels" lifecycle energy and emissions profile. While GM's figures on total US hydrogen production looked accurate, all of that output is currently spoken for, making cleaner gasoline, ultra-low-sulfur diesel, and other products. GM and its partners are apparently still working on an estimate of how much incremental H2 might be available from these sources. The energy and environmental benefits are likely to vary regionally and locally, depending on the source of H2, though all should be an improvement over the internal combustion engine (ICE).
  • Storage - The Equinox Fuel Cell has three high-pressure H2 tanks. H2 at 10,000 psi is dense enough to give the car a 150-mile range, and it is manageable enough to allow the car to be refueled in 5-7 minutes, a bit longer than your typical gasoline fill-up, but far quicker than recharging any existing electric vehicle. Compressed H2 entails some trade-offs, however. While not subject to the venting concerns and boil-off losses that have plagued liquid H2--BMW's chosen mode--it is still not dense enough to provide as much range as gasoline, even after the 2X efficiency improvement from the fuel cell. And while the tanks are carbon-fiber-wrapped and the safety systems include sensors that close all the H2 valves in a collision, I will never be thrilled with a storage system that bottles up that much mechanical energy, even if it were compressed air, rather than H2. In the long run, metal hydrides or carbon nanotubes may provide a welcome upgrade, but I can appreciate that compressed H2 is what was doable now.
  • Distribution - GM has mapped out how many refueling facilities would be necessary in each of their target markets. For example, in L.A. they foresee 30 local stations, supplemented by another 10 along the routes to Santa Barbara, Palm Springs, etc., handling up to 40,000 FCVs. The logistics of that seem a little snug to me, but that aspect has presumably been vetted by GM's fuel partners, including Shell. The economics of the required investment, cited at up to $3 million/station, look daunting, however. Absent government subsidies, the margin on retail H2 would have to be commensurately high, approaching $2/kg, to ensure positive returns on these facilities. Will GM's fuel partners have the stamina to put down in excess of $100 million against what could easily prove to be a negative NPV? But how many cars can GM sell, without pre-positioning enough stations to refuel them conveniently?

Many experts have written off hydrogen as a bad idea. As I mentioned in last Thursday's webinar (here, in case you missed it) I believe that view ignores the substantial well-to-wheels efficiency and emissions benefits that hydrogen fuel cells offer, and which the GM team highlighted in their presentation. It also presumes that we already know what will induce consumers to trade in their reliable-but-inefficient conventional cars. I give GM a lot of credit for getting the FCV to the point at which they can put it in the hands of real consumers, as Toyota is currently doing with a similar demonstration fleet of Priuses modified into plug-ins. Such market tests are essential to establish the viability of these concepts, though in neither case is consumer acceptance the only hurdle on the path to commercial viability. Manufacturers must still cut the cost of these cars to a level justified by their energy and emissions savings, and complex infrastructure issues--technical and economic--must be solved. For now, the race proceeds, but the finish line remains distant.

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