Special Report: Fuel Cells: The Future of Electric Vehicles

We all know the electric car revolution is in full swing.

Countries all over the world are curbing emissions. Consumers are trying to stretch their miles per gallon and geopolitical concerns over oil never seem to go away.

Gas guzzlers are on the way out...

But while Tesla is getting the lion’s share of the media attention, there is another fuel that is a far better bet for investors.

Now I’ve driven Teslas, Priuses, and Chevy Volts...

But when I drove this vehicle, I was blown away.

Jimmy Fuel Cell

It’s a new kind of vehicle that could transform the way we travel.

It doesn’t involve lithium or batteries or rare earths.

It doesn’t involve solar, wind, water, biofuels, or any other form of renewable energy you’ve heard of.

And of course, it doesn’t involve oil, coal, or any other fossil fuel.

Best of all, it’s 100% emissions free...

I’m talking about hydrogen fuel cells.

Sir William Grove first came up with the idea of a fuel cell in 1842. He was the inventor of what was once called the "Grove voltaic cell." It pulled together zinc and platinum electrodes that were exposed to two acids while simultaneously separated by a simple ceramic pot.

This led to the world’s first fuel cell: the gas voltaic battery. It combined two of the world’s most abundant resources for a revolutionary technology.

Francis Thomas Bacon took this cell a step further when he came up with the Alkaline fuel cell — or the “Bacon” fuel cell — which got its power from hydrogen and oxygen.

This reaction releases electrons and creates energy so the only things remaining are heat and water. It was one of the most brilliant discoveries, ever.

NASA has used this technology in the Space Shuttle program and the Apollo missions since the 1960s.

So, what is a hydrogen fuel cell? And how is a hydrogen fuel cell different from the typical electric, battery-powered cars that we’ve seen for years?

Here’s a quick primer on what a hydrogen fuel cell is…

Simply put, it’s an electromagnetic cell that converts the chemical energy of a fuel (for our purposes, hydrogen) and an oxidizing agent (oxygen) into electricity through a chemical reaction.

Here’s a graphic that explains it a bit better:

energy fuel cell CN

There are a number of “futuristic” benefits to this technology that will end up being a game changer for the future of automobiles, and energy as a whole.

First things first, you don’t have to plug it in overnight to “charge up” your car.

Second, it’s completely clean: You can even drink the exhaust water.

I did just that...

Jimmy with Water

It was a bit warm, but other than that, I would have never known that it came out out of the back of a car...

Hydrogen is the most abundant resource in the universe. So while we continue to find novel and environmentally destructive ways to pull oil and gas from the earth, hydrogen is plentiful.

That’s right — fuel cells produce nothing but electricity and water, and they basically achieve it by breaking apart the most common element in the universe and then putting it back together.

Fuel cell electric vehicles (FCEVs) combine hydrogen stored in a tank with oxygen from the air to produce electricity, with the water vapor I drank being the by-product. Unlike battery-powered electric vehicles, fuel cell vehicles don’t need to be plugged in, and current models all exceed 300 miles of range on a full tank.

They’re filled up at fueling stations as quickly as traditional gas and diesel vehicles.

The biggest problem with FCEVs is it can be hard to find fuel unless you live in very specific locations. I actually had trouble finding a place to fill up, even in one of the biggest available areas.

There are currently 39 public hydrogen fueling stations in California, with another 25 in development.

However, the East Coast is now getting its own infrastructure. A handful of stations are up and running, and more are in the works in New York, New Jersey, Massachusetts, Connecticut, and Rhode Island.

These projects should continue to progress until most major metropolitan areas have them.

I say this because the bulk of auto executives believe that fuel cell vehicles are the future. According to the recent Global Automotive Executive Survey:

The majority (62%) of executives to believe that BEVs will fail. In contrast, a significant amount of 78% of executives believe fuel cell electric vehicles will be the golden bullet of electric mobility while also ranking it under the top 3 key trends. The faith in FCEVs can be explained by the hope that FCEVs will solve the recharging and infrastructure issue BEVs face today. The refueling process can be done quickly at a traditional gas station, making recharging times of 25–45 minutes for BEVs seem unreasonable.

Another issue with FCEVs has been the cost. For reference, the Toyota Mirai I was driving cost around $60,000 retail, which produces some serious sticker shock.

But that should be changing as well.

Research led by Professor David Antonelli, Chair of physical chemistry at Lancaster University in the U.K., could bring costs down for the technology. His team is working with a material that enables fuel tanks to be smaller, cheaper, and more energy-dense than existing hydrogen fuel technologies and as battery-powered vehicles.

fuel cell

“The cost of manufacturing our material is so low, and the energy density it can store is so much higher than a lithium-ion battery, that we could see hydrogen fuel cell systems that cost four times less than lithium-ion batteries, as well as providing a much longer range,” said Antonelli.

Toyota’s European head of sales and marketing Matt Harrison told Automotive News Europe earlier this year that the automaker expects the price of hydrogen fuel cell vehicles to match hybrids within 10 years, adding that price parity would happen by the third generation.

Growth

Analysts are estimating a compound annual growth rate (CAGR) of 21% for fuel cell technology through 2025.

As I mentioned, in the short term, I’m not into fuel cells for consumer vehicles. I’m in it for commercial ones.

Trucks

As we all know by now, emissions standards have been a big deal. In fact, the Mirai I drove didn’t even have a spare tire because that extra bit of weight would mess up its drag time. It turns out, I really needed a spare tire at one point in the trip (don’t ask), which is just one factor in why I’m looking for fuel cell technology for other things.

That’s why I’m looking deeper into the commercial trucking industry.

From Automotive World:

Tightening emissions standards around the world are forcing truck manufacturers to rethink whether diesel and natural gas will cut it in the long-term—and alternative propulsion technologies are looking increasingly attractive by comparison.

Questions remain around infrastructure, total cost of ownership and simple practicality, but the writing is on the wall: fleets cannot avoid the adoption of zero emissions technology.

Hydrogen fuel cells will battle it out with battery electric variants over the coming years, but it remains unclear which solution will capture the greatest market share. With longer driving range and shorter stops between refueling compared to a plug-in vehicle, the fuel cell truck looks set to prevail in the long-haul space at least.

fuel truck

Depending on the annual mileage, a heavy-duty (HD) diesel truck in Germany can accrue yearly toll costs of between €20,000 to €40,000 (US$22,450 – US$44,910). The cost is even steeper in Switzerland, with an eye watering €90,000 to €190,000 worst-case scenario for a truck running 200,000 kilometres (124,274 miles) per year.

The general expectation is that electric trucks will be exempt from such tolls in coming years, while diesel trucks will still have to front up. Fleet operators may weigh up the cost of investing in zero emissions trucks against the fees that arise at toll bridges, which steadily eat into profit margins. Failure to meet fleet average emissions would also incur hefty fines, and investing early could well prove more palatable.

“The message is that CO2 regulations will continue to get stricter, and the industry has to move towards cleaner alternative powertrains,” said William Resende, Global Product Manager, Fuel Cell Systems at AVL.

That is a argument that simply cannot be ignored. The U.S. Department of Transportation has anticipated that the freight volume in the U.S. alone will grow by 29 billion tons. That’s a 45% increase and will clearly disturb the amount of air pollution and greenhouse gas emissions.

What’s more, the International Energy Agency has estimated that the trucking industry in the U.S., the E.U., and China sucks up 17 million barrels of oil each and every day.

As we ship more and more goods to more and more people, there will be pressure to reduce emission in every one of those countries.

Due to the strict timelines that most operators like Amazon deal with, these trucks wouldn’t be able to sit at a charging station for hours on end. But fuel cells can help solve that problem.

Forklifts

Speaking of Amazon, they have bought over $70 million of fuel cell forklifts.

It doesn’t take a scientist to see why…

A two to three minute fill time for a hydrogen vehicle versus a 15-minute time frame to complete a battery swap can add up to a lot a labor.

According to Hygen.com, a 100-truck fleet with one battery swap per shift totals over 20,000 operator hours per year.

And Amazon isn’t the only one...

Walmart announced an $80 million deal to provide hydrogen fueling stations and fuel cell solutions for up to 30 additional North American sites over the next three years.

Honda, Mercedes‐Benz, and Volkswagen also run fuel cell forklifts in the U.S.

There are currently more than 23,000 fuel cell-powered forklifts in operation at warehouses and distribution centers across the U.S. in more than 40 states, and that number will increase.

There are only a couple of companies that are operating in the space.

Click here to learn more about those and how you can invest.

Outsider Club will fill you in on the best ways to play this revolutionary market each and every week.

Godspeed,
jimmy-mengel-signature-fixed

Jimmy Mengel

follow basic @mengeled on Twitter

Jimmy is a managing editor for Outsider Club and the investment director of the personal finance advisory, The Crow's Nest, and cannabis stocks advisory, The Marijuana Manifesto. For more on Jimmy, check out his editor's page.

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