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Hydrogen or battery? That is the question

Compared to battery-powered vehicles, hydrogen-powered e-cars are not only more expensive to purchase, but also more expensive to operate. A study by Horváth & Partners, which compares the two drive systems, identifies the reasoning behind this.

Their numbers are extremely small: a total of just 500 fuel cell cars had been registered on German roads up to the beginning of January 2019. During the same period the number of battery-powered electric cars reached 83,000, yet the majority of vehicles on German roads remain petrol- or diesel-powered, equivalent to more than 47 million vehicles in total.

Nevertheless, it has long been clear, and thus a general consensus, that combustion engines have passed their zenith. Since the diesel crisis and the ever-stricter emission limits being introduced in the coming years, their share will decrease.

The crucial question in the automotive industry is therefore: Should we commit ourselves to the battery when changing drive options? Should hydrogen be given a chance to drive electric motors? Or should we continue to experiment and research with alternative fuels?

Volkswagen Group’s position is clear: as a large volume manufacturer, it is banking on battery-powered electric cars. This will intern drive more than one million future sales of these vehicles each year. 

In its study “Automotive Industry 2035 – Forecasts for the Future” management consultants Horváth & Partners have now examined exactly whether battery-powered or hydrogen-powered electric cars will prevail in the future. And how alternative fuels will present themselves to manufacturers and users from an efficiency and financial point of view. To be more precise: Which of the three drive types will pay-off better for manufacturers and consumers?

The study was carried out over six months, accompanied by 80 people/interview partners and financed by the management consultancy itself. “The main reason for our survey was that Horváth & Partners serves many clients in the automotive supply industry. They naturally want to know what to expect in the next 10 to 15 years,” says Dietmar Voggenreiter, head of the study.

The study first analyses the reasons for the purchase. Why should customers switch to e-cars? The most likely scenario at the moment is a two-phase model, according to the study: the push-phase and the subsequent pull-phase.

In the push-phase from today to 2023/2025, manufacturers will push e-mobility. The main reasons for this are the strict CO2 standards. Added to this are the initially high investment costs. Both of these factors mean that purchase incentives must be set in order to bring e-cars onto the market. In the subsequent pull phase until 2030 and above all until 2035, e-cars will also become more financially interesting for customers. 

The introduction of the Euro 7 standard will make combustion engines more expensive, and the purchase price delta will drop. This development is also reinforced by the fact that a CO2 tax – however that will look in detail – will make fossil fuels even more expensive.

At the same time, many customers experience the consumption cost advantage compared to petrol and diesel as very positive (stronger in countries with lower electricity prices than in Germany). This cost advantage is supplemented by lower service costs: because the e-car has fewer service-relevant components such as oil and petrol filters than a combustion engine, less maintenance and repair is required. And: the costs for oil and lubricant changes are completely eliminated.

Depending on the model, the study shows that fuel costs are about 400 to 600 euros lower and service costs between 200 and 400 euros lower annually. A price advantage of 600 to 1,000 euros in just twelve months is very interesting for consumers. Voggenreiter: “There will come a time, and quite quickly, when rational reasons will trigger major economies of scale in e-mobility.”

But then there are the emotional issues: Fear of range anxiety and fast charging. The authors of the study are convinced that both of these issues will be solved and will no longer inhibit the expansion of e-cars in the pull phase from 2023/2025. The ranges will increase, more charging points, including fast charging points, will minimize the fear of becoming stranded. Finally, there is the discussion about the actual CO2 savings: Because the electricity used to produce e-cars is still “dirty”, at least not green everywhere, an e-car today has a comparatively large “rucksack” when it is produced. Studies calculate that it only saves more CO2 than a combustion engine after more than 100,000 kilometers in total (production and operation). According to the study, this, too, will change in favor of electric cars over the next few years: more green electricity in the production of electric cars and batteries will gradually make this “initial backpack” smaller, and the electric car will save more CO2, more quickly. Horváth & Partners have also confronted the criticism of many hydrogen advocates that the so-called dark lull in battery operation should be taken into account. Dark lull means the time when electricity cannot be generated due to darkness and/or calm. For this purpose, the primary energy requirement of the battery was added to the corresponding additional requirement.

The most interesting part of the study remains: Which energy has the best efficiency and is the most cost-effective for driving e-cars? Battery or hydrogen operation?
With battery-powered e-cars, only eight percent of the energy is lost during transport before the electricity is stored in the batteries of the vehicles. When the electrical energy used to drive the electric motor is converted, another 18 percent is lost. This gives the battery-operated electric car an efficiency level of between 70 to 80 percent, depending on the model.

With the hydrogen-powered electric car, the losses are significantly greater: 45 percent of the energy is already lost during the production of hydrogen through electrolysis. Of this remaining 55 percent of the original energy, another 55 percent is lost when hydrogen is converted into electricity in the vehicle. This means that the hydrogen-powered electric car only achieves an efficiency of between 25 to 35 percent, depending on the model. For the sake of completeness: when alternative fuels are burned, the efficiency is even worse: only 10 to 20 percent overall efficiency.

“In addition to the very real potential of green hydrogen, there is currently a dangerous hype,” warn experts from the management consultancy Boston Consulting Group (BCG) in a new study quoted by the Handelsblatt. The Horváth&/Partners study also comes to the same conclusions.

Instead of spending billions on the vision of a hydrogen society, the study authors concluded that investments in this promising technology should concentrate on applications in which they also make economic sense. “We believe that there is great potential if green hydrogen is promoted in applications in which it can really become established in the long term. Above all in industry, but also in heavy goods, air and sea traffic,” says Frank Klose, co-author of the study.

The conclusion is clear: fuel cell e-cars have many advantages (range, fast refueling, no heavy battery on board), but one decisive disadvantage: it is comparatively inefficient – both in terms of efficiency and cost. “No sustainable economy can afford to use twice as much renewable energy to drive fuel cell cars instead of battery-powered vehicles,” says Dietmar Voggenreiter, head of the study. Hydrogen could only be used in niches, in trucks and buses, and over long distances. Battery weight, range and fueling time play a decisive role here. It increases extremely with increasing capacity, which makes batteries uninteresting even for trucks. In addition, existing truck filling stations could be converted to a hydrogen filling station network with manageable effort due to their lower numbers.

And what does the consumer gain from this? What is clear is that hydrogen-powered e-cars will increasingly become more expensive to drive than battery-powered vehicles, not only in terms of purchase, but above also in terms of operation. The double primary energy requirement of hydrogen-powered vehicles compared to battery-powered vehicles will be reflected in consumer prices. Drivers are already paying around nine to twelve euros per 100 kilometers for hydrogen-powered cars, but only two to seven euros per 100 kilometers (depending on the electricity prices in the individual countries) for battery-powered e-cars, depending on varying individual mobility habits. 

This should make it clear what the majority of consumers will be buying in the future ....

Horváth&Partners have even taken on board the criticism of many hydrogen advocates that the so-called dark lull period should be taken into account. Dark lull means the time when electricity cannot be generated due to darkness and/or calm conditions. For this purpose, the primary energy requirement of the battery was added to the corresponding additional requirement.

Fuel consumption

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