The Emerging Fuel Cell Electric Vehicle Market

Catherine DunwoodyExecutive Director

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“Fuel cells are making the shift from a research project to a real consumer choice.” John Krafcik, Hyundai

President/CEO

Last year, Hyundai announced the Tucson Fuel Cell for $499 per month, which includes unlimited free hydrogen fuel and valet maintenance beginning in late Spring 2014 at select Southern California Hyundai dealers. And Hyundai is also partnering with Enterprise Rent-A-Car to make the Tucson Fuel Cell available to consumers at select locations in the Los Angeles/Orange County region.

“Fuel cell electric vehicles will be in our future sooner than many people believe, and in much greater numbers than anyone expected.”Bob Carter, Toyota Sr. VP of Automotive

Operations

Toyota is planning market launch in 2015 with initial roll out in California. Toyota has had its FCEV-adv in the hands of customers for several years. One of the Sacramento-area drivers wrote, “I am a realtor and spend much of my time driving from house to house. It was a great car for my typical day. Filling was as fast as filling up any other car with gasoline. I drove without worrying about performance or efficiency.”

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“People always ask me the same questions: How do I get one? How much does it cost? How far does it go?”Jon Spallino, about his third Honda

FCEV

Honda presented a new concept car at the 2013 Los Angeles Auto Show that previewed the styling of a vehicle scheduled for launch in 2015. Just this month, Honda installed a state-of-the-art hydrogen station on its Torrance campus to demonstrate and validate Honda’s enhanced hydrogen fueling protocol. In the meantime, FCX Clarity drivers are extending their leases.

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“If I could design my dream car, this would be it. It’s the best car in the world and I’m never driving a gas car again. When infrastructure is there, they’ll sell themselves.” Leo Nordine , Mercedes F-CELL customer since

2011Mercedes continues to lease vehicles in Northern and Southern California. Four of their customers were interviewed for an article in Autoweek. All four expressed their love of the car, and their desire for more places to fuel.

What is infrastructure?

Production Delivery Stations

When I started at CaFCP, we were all about the cars. Can the automakers build cars that would match the range, performance, reliability, durability and refill time of a gas car? Once we knew the answer was yes, our focus shifted to infrastructure. Hydrogen is widely used in manufacturing, and an extensive production and delivery system is already in place. When we talk about infrastructure, we’re talking about stations. Gas stations are independently owned businesses—most are not owned by oil companies—and as small businesses, they need to see a good business case for adding a new fuel. The good news is that to start the market for fuel cell electric vehicles, we need only a fraction of the 12,000 gas stations to offer hydrogen.

Open Today:• Burbank• Emeryville• Fountain Valley• Harbor City• Irvine #1• Newport Beach• Thousand Palms• Torrance• West LA #1

• Beverly Hills• Diamond Bar (upgrade)• Hawthorne• Hermosa Beach• Irvine #2• Los Angeles-CSULA• San Juan Capistrano• Santa Monica• West LA #2

Status of H2 stations today• West Sacramento• Westwood – UCLA• Anaheim• Chino• Cupertino• Foster City• Mission Viejo• Mountain View• Woodland Hills (LA)

In Development:

CaFCP’s roadmap calls for 68 stations throughout the state to provide coverage for early customers. The stations are in five urban clusters, and in what we call connector and destination locations that ensure customers can get fuel where they want to travel. We currently have nine public hydrogen stations open and 19 additional public stations or station upgrades in development. Up to now, stations have been built one at a time, and each has a unique design.

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Hydrogen-only stations

The Emeryville station fuels buses and cars. AC Transit operates a fleet of 12 fuel cell electric buses, so this station demonstrates high throughput and shows how to improve the business case. AC Transit is building a transit-bus only fueling station in Oakland that will be in line with their diesel pumps and will enable them to fuel 30-40 buses, highlighting the capability of hydrogen FCEBs to meet all operating requirements of regular transit service.

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Hydrogen-only stations

The Fountain Valley station makes hydrogen, electricity and hot water from biogas derived from the wastewater treatment process.

The Torrance station uses hydrogen from an existing pipeline.

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Retail hydrogen stations

Hydrogen can be:• Liquid delivery• Compressed gas delivery• On-site generation• Renewable

Most new stations are being integrated into existing fuel stations. Some are making hydrogen on site. Many are taking delivery via compressed gas or liquid tanker trucks, similar to how gasoline is delivered today. Whether the H2 is delivered or made onsite, if can be made from renewables that include wind or solar power, and biomass or biogas.The challenge with retail sites has been to reduce the equipment footprint so it can be seamlessly incorporated into the retail operation, and we are seeing new station designs that meet this challenge. The 19 stations under development will be the first time that several stations with similar designs are built simultaneously. An important step to becoming a retail product.

The business case for H2

www.einow.org for the full report

Energy Independence Now developed a model that looks at selling hydrogen the same way a fuel retailer looks at selling gasoline today. A retailer gets a loan to install new equipment, and expects to incur negative cash flows for a period of time as their business grows and they eventually become profitable.

One of the key results is that today the break-even point for hydrogen will be much longer than station owners are willing to tolerate. This is because FCEVs are just entering the market, yet the stations need to be there even if they are underutilized in the early years. This is why government incentives are so important to launch this new market.

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Customer experience• Convenient

locations and hours• Same process

everywhere• Fast fueling at peak

hours• No range anxiety• Standard payment

methods• Safe and easy

We’ve learned a lot about how people fuel vehicles and what customers expect from fueling locations. For FCEVs to be successful, fueling must be successful as well. Through their customer lease programs, Honda and Mercedes have shown that convenient, reliable stations are crucial. One Mercedes customer turned in her car and said. “I love Mercedes, and I loved the B-Class, and I loved driving on hydrogen. I would have continued to lease, but the catalyst that caused me to finally return the car was the fueling infrastructure's fragility.” So, what needs to happen in California in the next 2-3 years to ensure a successful market for FCEV?

Next steps to market growth1.Given the fast paced developments in the hydrogen fuel market,

code cycles inevitably lag the latest innovations. So it is essential to reach permitting officials with current information. This is the case for any alternative fuel.

2.New fuels may not fit the mold on which local codes were designed. Local jurisdictions may need to change codes to replace references to “gasoline” with “vehicle fuel”

3.Government and businesses can find innovative ways to partner so we encourage early market participants, and share and reduce risks.

4.We must prepare the workforce for constructing, installing and maintaining hydrogen stations.

5.Dispensers must be certified to sell hydrogen as a retail fuel – we are on track to accomplish this in the coming year.

6.We can take the next steps to commercialize fuel cell electric buses by supporting 40-bus pilot programs at public transit agencies

7.We can define the roadmap for bringing fuel cell medium- and heavy-duty vehicles to market – this is underway now at CaFCP.

The opportunities are huge, and the challenges will be many.

MembersAir LiquideAir ProductsAlameda-Contra Costa Transit District

(AC Transit)Automotive Fuel Cell CooperationBallard Power SystemsBay Area Air Quality Management DistrictCalifornia Air Resources BoardCalifornia Department of Food and

AgricultureCalifornia Energy CommissionCalifornia State University - Los AngelesCALSTARTThe Center for Energy Efficiency and

Renewable Technologies (CEERT)Center for Transportation and the

Environment (CTE)ChryslerDaimlerEnergy Independence NowGeneral Motors

HondaHydrogenicsHyundaiInstitute of Transportation Studies, UC

DavisLinde North America, Inc.National Fuel Cell Research Center, UC

IrvineNational Renewable Energy Laboratory

(NREL)NissanPowertech LabsProton OnSiteSandia National LaboratoriesSouth Coast Air Quality Management

DistrictSouthern California Gas CompanySunLine Transit AgencyToyotaU.S. Department of EnergyU.S. Environmental Protection AgencyUS HybridUniversity of California, BerkeleyVolkswagen