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Lithium vs. Hydrogen: Can They Coexist?

This industry-leading CEO thinks so!

Written by Megan Dailey
Posted November 11, 2017

Two weeks ago, we talked a bit about Tesla.

Okay, I gushed. But we did eventually get down to one of the company’s main problems: price.

See, Tesla’s cars are beautiful, clean, and still just a little too pricey for the average buyer.

There’s only so much the company can do about that, however.

The batteries themselves are the most expensive part of the car, and the whole world has been working on the problem of cheaper lithium batteries for decades now.

It’s not a problem that will be solved overnight.

Of course, not everyone is working toward the same solution. In fact, some companies are focusing their efforts on another technology altogether.

All In on Hydrogen

It’s pretty common knowledge by now that nearly every major carmaker in the world is working on an all-electric offering.

What’s less commonly known, however, is that not all of them are working on lithium-ion battery cars.

Some have instead shifted their focus to hydrogen fuel cells.

GM and Honda have formed a partnership to invest millions into the technology and have plans to bring as many as 20 hydrogen fuel cell (HFC) vehicle offerings to market in just a few years.

There's one other brand that caught my eye earlier this week, one with even bigger implications if it succeeds.

You know this brand. You see its cars on the streets every single day. If I had a nickel for every one of these cars I saw on the road, I could build a retirement fund on that alone.

It’s the company that makes these common hybrid cars:

2010 Toyota Prius

Toyota, creator of the wildly successful Prius, is going all in on hydrogen fuel cell technology.

The company’s current hydrogen offering, the Mirai, suffers from the very same problems as the Tesla Model 3.

Though it was designed to be a consumer car, it sells for nearly triple the price of an average Prius.

And that’s not even considering how difficult it can be to gas these cars up if you’re not living in California, where the majority of the country’s public fueling stations are.

But Toyota’s not giving up on its HFC cars just yet.

In a recent article by Autocar, Toyota’s general manager of new business planning, Naomichi Hata, was quoted, saying:

In the early 2020s we will launch the next generation hydrogen fuel stack technology, and that will provide a substantial move forward… As a result of these gains we expect… the same car type to cost the same price whether it is a hybrid or powered by hydrogen.

Essentially, the company expects that it will be able to bring down the cost of a hydrogen fuel cell car enough that they will be competitive with hybrids like the Prius by 2025.

Could the Mirai be as common as the Prius within the next decade?

We’re not the only ones who think it’s more than possible...

Hydrogen Fuel Cell Spotlight: Plug Power Inc. (NASDAQ: PLUG)

Last week on Investing After Hours, hosted by Alexandra Perry, we got the chance to talk to the CEO of Plug Power Inc.

Plug Power is a company that designs and sells hydrogen fuel cell batteries for use in both stationary (think backup generators) and motive (forklifts and trucks) operations.

CEO Andy Marsh had quite a lot to say about not only his business but the industry at large.

Most interesting, to me at least, was that he quite clearly believes hydrogen fuel cell and lithium battery vehicles will be able to coexist in the future.

“Let me be clear,” he states in the podcast, “I think there’s a place for both technologies.”

He specifies that in the future, when hydrogen fuel cells and lithium batteries alike are more affordable and more common, they will each have different uses.

For short-term use, say, if you’re only driving 100 miles a day or so, Li-ion battery cars will remain the better option.

However, for longer distances or more continuous energy use, Mr. Marsh believes hydrogen fuel cells will be the logical answer.

His reasons for this mirror a few of mine from a few weeks back:

  • Fuel cell cars can be refueled more quickly

  • Fuel cells have a longer range

  • Infrastructure would be cheaper

Mr. Marsh does clarify one point, the very point we began this discussion with, in fact.

Fuel cells over the coming 10 years need to continue to decline in cost.

Additionally, he notes that we’ll need to grow the hydrogen fueling station network, not only within the U.S. but all over the world. This includes finding economical ways to produce the high-purity hydrogen needed to make these fuel cells function.

I encourage you to listen to the entire podcast to learn more about this industry from an insider perspective.

For now, keep taking note of the electric cars on the road and the opportunities they present to drivers and investors alike.

And consider the question: would you rather drive a Tesla or a Mirai?

It’s one that may need an answer sooner than you think.

Until next time,

Megan Dailey Signature

Megan Dailey

follow basic@energyandcapita

Megan Dailey is a fresh young face on the investment scene. In her years as a research analyst with Angel Publishing, she’s learned that adapting fast to new investment situations is critically important to successfully navigating today’s volatile market. Her research has helped individual investors identify fast-growing companies in the energy industry that pay actionable investors back in spades. In an age of boundless information, her research is razor-focused on the most lucrative opportunities in energy and beyond. Megan’s research can be found in her weekly editorials on the Energy and Capital site. She also manages the Energy and Capital social media, and is always ready to answer your questions about energy investments via Facebook or Twitter!

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