Hydrogen Fuel Cell Vehicle Investing

Brian Hicks

Written By Brian Hicks

Posted July 3, 2013

The global auto race is taking a swing at hydrogen fuel cell vehicles, as strict emissions standards are being enforced around the world.

It’s not the first time. If you might remember, hydrogen was supposed to be the next big thing in clean automotive fuel. But that was ten years ago, and the millions of hydrogen powered fuel cell autos that were predicted never did quite make it onto the road.

But now, with emissions limits being pushed in China, Europe, and the U.S. in years to come, automakers are once again taking a look into hydrogen.

A mass market like the one predicted a decade ago might still be another ten years from becoming a reality, but the idea is already in the works.

There are only two hydrogen fuel cell vehicles available in the U.S. market now. There’s the Honda (NYSE: HMC) FCX Clarity, whose next model will be available in 2015, and the Mercedes-Benz F-Cell.

Toyota Motor Corp. (NYSE: TM) will also release a fuel cell sedan in 2015 and plans to reveal it this coming November. Hyundai Motor Co. (KSE: 005380) has something in the works for 2015, and Bayerische Motoren Werke AG (ETR: BMW) says it will use Toyota’s fuel cell system for its own production.

The way it works: hydrogen gas passes through a stack of plastic cells and metal plates and in turn produces electricity by combining hydrogen with oxygen that’s already in the air.

The only emission this produces is water vapor. Hydrogen vehicles can run five times longer than any electric car on the market, and re-fueling is a cinch – it takes just a few minutes to fill up a hydrogen tank.

With trending environmental rules encouraging automakers to sell more earth-friendly vehicles, many innovations have taken off including hybrids, lighter cars with smaller engines, and all-electric car companies like Tesla Motors Inc. (NASDAQ: TSLA), which is thriving in its emerging market.


Coming out of the gate strong this time around is General Motors Co. (NYSE: GM) and Honda Motor Co., which are partnering up for a clean slate in hydrogen fuel cell technology. It was GM, partnered with Toyota, that predicted hydrogen fuel cell cars would be a great success in the early 2000s. We all know what happened there – crash and burn.

But with reinvigorated hope, the two automotive superpowers will set their sights high, seeking to produce a cheaper hydrogen fuel cell and storage technology that will be used by both brands. The goal is to have the all-new hydrogen fuel cell vehicle on the roads by 2020.

The two sides will be able to bounce ideas off each other between the U.S. and Tokyo, where Honda is headquartered.

From a joint statement provided by the Los Angeles Times:

“GM’s knowledge of chemical reaction and advanced material is class leading,” American Honda President Tetsuo Iwamura said at a news conference in New York. “With GM and Honda sharing our technical expertise, we believe we can achieve the world’s strongest partnership in the area of fuel-cell technology.”

The two companies will exchange engineers, use the same research facilities, and share parts and materials.

1,200 hydrogen-related patents have already been filed between the two automakers. For GM, the idea of hydrogen never really went away. The company tested a fleet of 120 hydrogen-powered cars in 2007 to see how they would function in the real world. And Honda’s FCX Clarity was named World Green Car of The Year in 2009.

The main goal is to make these vehicles more affordable. No specifics have been released about production plans or design, but future models will rely on high-pressure gaseous storage and carbon-fiber reinforced tanks.

The one major drawback right now, and the reason many of these vehicles remain on the production line, is the price. The high cost of platinum used to start the chemical reaction with the fuel cell adds thousands of dollars to the price of each vehicle.

Once matters like this are curbed, we will be left with a smart, highly functional vehicle that is environmentally friendly and affordable.

The final matter that would need to be addressed in order to see any real success for a hydrogen fuel cell vehicle would be refueling stations. The U.S. Department of Energy lists only 10 public hydrogen stations, and most of these are in California.

That’s why GM and Honda will also be developing refueling infrastructure to support the long-term viability of the new fuel cell vehicle. Each station would cost roughly $1 million to build, but it’s all part of the plan. Exactly how many stations will go up initially is still unknown.


Compared to Other Vehicles

If prices can be brought down, this new technology offers many advantages aside from the zero CO2 emissions.

Compared to your conventional gasoline vehicle, the fuel cell has just as good a range as any vehicle out on the road today, and it takes the same amount of time to refuel, so you’re definitely not losing anything there. And you’re doing it with zero CO2.

And if you stack it up against an all-electric car, like Tesla’s Model S, which is simply blowing its competition out of the water right now, the two vehicles share similar parts: electric motors to power the wheels, brakes, and much of the software for the electric interface.

The main difference between the two: the electric car battery stores its energy in a large, heavy lithium-ion pack, where the fuel cell generates its electricity through the chemical reaction of hydrogen and air.

And it runs five times longer than an electric car without the hassle of a long, drawn-out battery charge that can take up to eight hours for a full recharge.

Before investors ever start backing the idea, there’s got to be more infrastructure, and right now the cost to build one still outweighs that of electric vehicles.

If consumers are going to buy, there needs to be major changes in those two departments – only then can we talk seriously about the long-term.

But for now, if you look at GM, the company has had successful collaborations in the past. GM and Ford (NYSE: F) have had success on multiple occasions in the last decade as a team, most recently creating a transmission that allows for smoother shifting and higher fuel efficiency.

And others are jumping on the bandwagon. Companies like Renault SA and Nissan Motor Co. Ltd. (OTC: NSANY) announced early in the year that they would work with Ford Motor Company and Daimler AG (OTC: DDAIF) to develop a fuel cell vehicle system that would reach the road by 2017.

A lot of this recent attention the hydrogen fuel cell has received might be due in large part to the success, or lack thereof, of the electric car. If you take Tesla out of the equation, electric cars aren’t meeting sales expectations, even with heavy subsidies around the world. And hybrids haven’t fared much better.

This might be the right time to reintroduce hydrogen as a real alternative.


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