On June 9th, Chen Kele, the deputy director of the intelligent manufacturing promotion department of the Shanghai Economic and Information Technology Commission, announced that the Shanghai City Cluster plans to introduce 5,000 hydrogen fuel vehicles within 4 years, including 3,400 trucks, 1,400 passenger cars and 200 buses. Five thousand hydrogen fuel vehicles, it seems like a small objective to achieve. However, by the end of 2020, there were only about 7,000 hydrogen vehicles in China. Recently, the gap in the market and the support of the Chinese government are making hydrogen cars the next hot topic of development.
Hydrogen cars are much more complex than electric cars. Unlike pure electric vehicles, which rely on energy storage to obtain electricity, the fuel cell inside a hydrogen car is a power generation device, which needs to continuously output electricity through the electrochemical reaction between hydrogen and oxygen.
The Hydrogen vehicle market in China
Unlike the EV market, China’s hydrogen-powered vehicle market is still in its infancy. From 2012 to 2020, the market size of electric vehicles increased nearly 100 times. According to the China Association of Automobile Manufacturers, 1,177 hydrogen vehicles are sold in 2020, down nearly 57% year-on-year; while the same period coincides with an explosive growth year for electric vehicles, with 1,115,000 pure electric vehicles sold, the sales increased about 14.75% year-on-year, 1,000 times more than hydrogen vehicle sales.
Although hydrogen vehicles in China are relatively weak at present, there is still a possibility to catch up. According to SAE-China’s estimation, driven by national policies and improved technology and infrastructure, the number of hydrogen vehicles in China will reach 100,000 by 2025. In 2035, the number is likely to be 1 million. Such estimation indicates that the market is expected to grow more than tenfold in the next three to four years.
Hydrogen vehicles in China currently are mainly used in enterprises, for logistics and passenger transportation. The top 10 companies with the most hydrogen vehicles already account for over 90% of hydrogen vehicle ownership. Such circumstance indicate that there is a huge gap in the consumer market.
Main Players in the China hydrogen car market
Grove is an early mover in the Chinese hydrogen car market. In 2018, Grove has launched a hydrogen vehicle that claimed to have an endurance of 1,200km. This number is far more than the battery life of standard electric vehicles. In 2021, Groove introduced a hydrogen-powered heavy truck with an endurance of 1,000km under ideal conditions. At present, Groove is regarded as one of the most promising hydrogen car companies.
Auto maker GAC Group also launched its first hydrogen-powered vehicle, the Aion LX FUEL CELL, at the end of 2020. Aion LX FC is able to run for more than 650km after single refuel.
Saic Group has its own hydrogen cars as well. As an established car manufacturer, Saic Group has four hydrogen vehicles under its product portfolio, making it one of the brands with the most variety of hydrogen vehicles. In addition, Saic Group plans to increase this number to 10 by 2025. To achieve that goal, SAIC has also invested 2 billion yuan to build an industrial chain capable of producing modern hydrogen trucks in Inner Mongolia.
Government’s effort to push the hydrogen car market in China
The Chinese government’s support for hydrogen cars is obvious. The government will give financial subsidies to enterprises that promote hydrogen cars and contribute to the supply of hydrogen energy:
- The total subsidy for production and promoting hydrogen-powered vehicles is 1.5 billion yuan each selected city
- The total subsidy for hydrogen energy supply is 200 million yuan each selected city.
The challenges in the hydrogen car market in China
Nevertheless, cost is the main reason why hydrogen cars have such a low share. From upstream supply chain (hydrogen production and transportation) to downstream supply chain (hydrogen stations and refueling), all aspects of the hydrogen industry require a cost reduction.
Hydrogen energy can be divided into three categories based on its production:
- Grey Hydrogen: Hydrogen which produced from fossil fuels such as coal which causes pollution in the form of carbon emissions..
- Blue Hydrogen: Hydrogen made from fossil fuel, but with efficient means of capturing and sequestering the carbon emissions in the process
- Green Hydrogen: Green hydrogen refers to hydrogen energy that is completely clean, such as using wind power and Hydropower to produce hydrogen by electrolysis of water.
The production of green hydrogen
China’s current production of hydrogen is mainly grey hydrogen and blue hydrogen. However, such production tends to cause high treatment costs, and is not consistent with the intention of environmental protection. Therefore, an affordable production, transportation and storage solution of green hydrogen is essential for the development of hydrogen vehicles in China.
However, there is no mature green hydrogen production industry chain in the world, including China, which leads to a high cost of producing green hydrogen. According to Zeng Tao, the Chief New Energy Analyst of CICC, compared with the cost of grey hydrogen (7-8 yuan per kilogram), the cost of green hydrogen (20 yuan per kilogram), is obviously not competitive.
Transportation and storage of Hydrogen
The transportation and storage of hydrogen in China is also very costly, and there is still a relatively large gap in technology with western countries.
- Using tubetrailer to transport gas and hydrogen is the most common means to transport hydrogen over a short distance. At present, the pressure of the gas storage tank used in China is 20MPa, which is lower than the foreign standard of 50MPa. As result, tubetrailer in China can only deliver a small amount of hydrogen each time, so it will incur huge logistics costs to meet the large amount of hydrogen demand in the future.
- Converting hydrogen to liquid hydrogen and ultilizing liquidtruck for transport can significantly increase the amount of hydrogen in a single transport, but maintaining the hydrogen at a liquid state requires a temperature of -252.8 ° C , which tend to create significant energy costs.
- Although transporting hydrogen through pipelines can avoid the disadvantages of the above two methods, the construction of pipelines requires a large amount of initial investment, which is obviously unrealistic in the current situation of weak profitability of hydrogen energy enterprises.
Hydrogen stations and refueling
A hydrogen station which can supply 500 kilograms of hydrogen a day requires an initial investments of 7-12 billion Chinese Yuan, about three times as much as a regular gas station. In addition, because of the property of hydrogen, the maintenance and operation costs of a hydrogen station is higher than those of a gas station.
- How close is a future with hydrogen vehicles in China? Although hydrogen vehicles in China have great market prospects, they are still not competitive comparing to electric vehicles due to the supporting industry chain.
- A number of outstanding hydrogen car manufacturers have emerged in China
- The Chinese government attaches great importance to hydrogen cars, and the subsidies will give a strong boost to the players in this market
- In China, only when the upstream of the supply chain can provide a cheap, clean supply of hydrogen effectively, the downstream of the supply chain can offer applicable scenarios, including hydrogen cars.