Internal combustion engine, or ICE, vehicles have been around for a while. Unfortunately, gasoline consumption is neither good for the environment, nor cheap. That's driving automakers to search for the next big technology to power tomorrow's cars -- and fueling a fight for the future between two competing technologies.
Car giants like Toyota Motors (NYSE:TM), Hyundai Motors (NASDAQOTH:HYMTF), and Honda Motor (NYSE:HMC) are betting on hydrogen fuel cells. But Tesla Motors (NASDAQ:TSLA) is going all in on lithium-ion, or li-ion, batteries. The victor in this contest could determine what powers our vehicles for decades to come.
Believe it or not, electric vehicles have been around since the 19th century. But they declined in popularity due to their limited range, and improvements to gasoline-powered vehicles effectively drove them into oblivion. Now, however, they're making a comeback. There are currently a number of battery electric vehicles, or BEVs, available, and they absolutely cut out the cost of fuel, and reduce our dependency of foreign oil. That's the good news.
Unfortunately, there are a number of big issues with BEVs. Unless you're willing to shell-out for Tesla's Model S, range is still a significant issue. And even if you do opt for the Model S, the battery can take 20 minutes just to reach 50% charge, compared to a few minutes' refueling for ICE cars. The National Academy of Sciences, or NAS, lists both of these issues as significant deterrents to mass-market appeal for BEVs.
But those aren't the only problems with batteries. Li-ion, the battery of choice for most BEVs, is expensive. And even though the price has dropped significantly, even under optimistic conditions, by 2030 the price is not expected to get below $200-$250/kWh. For an 85KWH battery with 300 miles of range, this translates to $17,000 for the battery alone.
By 2050, under optimistic conditions, the NAS stated : "The practical cost limit of Li-ion cells is probably about $80/kWh, and the corresponding pack cost would be $150-$160/kWh." That's still $12,750-$13,600 just for the battery. Further, the NAS said: "The present average auto has a range of about 300 miles on a tank of gasoline. Very few affordable BEVs will greatly exceed 100 miles for the next several years." In other words, the affordable 300-plus-mile range BEV won't be arriving anytime soon.
Plus, while li-ion vehicles sound "green," as I previously wrote, BEVs are only as green as what charges the battery. Consequently, even with estimates from advances to grid power in 2035, charging a BEV on the U.S. average electricity grid mix will produce anywhere from around half to 80% of the greenhouse gas emissions of a gasoline-powered vehicle. (That's only slightly better than diesel engines, which are expected to produce 85% of a gasoline engine's emissions.)
Furthermore, manufacturing one battery for a BEV releases between 10,000 and 40,000 pounds of carbon dioxide into the atmosphere. To put that into perspective, Climate Central estimated that manufacturing a gas powertrain for a 3200 lb car would create only 1,486 pounds of CO2 . Consequently, according to Climate Central, the only way to recoup a battery's carbon debt relative to a gas-powered car would be to subsequently charge it only with green, carbon-free energy, and then drive the car it powered for tens to hundreds of thousands of miles.
But wait -- the picture gets worse. The most popular way to get the lithium for li-ion batteries is through salar brines -- underground pools of water that have absorbed abundant lithium and other minerals. According to the European Commission on Science for Environmental Policy, pumping and processing these salar brines causes a significant environmental, health, and social impact to the places where li-ion is located.
In short, while li-ion cars emit fewer greenhouse gases than ICE vehicles, the techonology isn't nearly as "green" as it seems.
Hydrogen fuel cells
Enter hydrogen. Hydrogen fuel cell vehicles, or FCVs, aren't yet available, but both Toyota and Honda are showcasing their concept fuel cell vehicles at this years Tokyo Motor show, with plans to launch around 2015. Furthermore, Hyundai has already developed a production fuel-cell electric vehicle, the iX35, and just delivered its first line-produced ix35 to Copenhagen, Denmark. Plus, Hyundai said it plans to release 1,000 ix35s by 2015, and 10,000 more shortly after. More importantly, here's why auto giants are pushing for hydrogen.
First, hydrogen is the most abundant element in the universe, so the use of it as a fuel eliminates our dependency on foreign oil. Second, FCVs can be refueled in minutes, and have a driving range similar to an ICE vehicle. More importantly, the price for fuel cells has decreased dramatically, thanks in no small part to their reduced use of platinum.
According to the NAS, "Detailed analyses of current costs and expected technology advances that are already under demonstration have resulted in a fuel cell system cost estimate of $39/kW for a high-volume FCEV commercial introduction in 2015."
Even better? By 2030, the Department of Energy, in conjunction with NAS, estimates that the price for an average FCV will be around $34,181, before government subsidies. That's in comparison to the price for a BEV, which in 2030 is $34,979 .
True, the FCV owner will have to pay for hydrogen, but the total ownership cost per mile is $0.358, just slightly above the $0.355 cost for battery-powered cars. More pointedly, when refueling, the greenhouse gas emissions from hydrogen produced from natural gas are estimated to be 45% to 60% of a gasoline-powered car by 2035 -- less overall than the GHG emissions from charging a BEV.
No, it's not the Hindenburg on wheels
When people think about hydrogen, they envision the Hindenburg disaster. Luckily, new reports show that the Hindenburg actually caught fire due to its gasbag's fabric being coated with iron oxide, cellulose acetate and aluminum powder, aka, a highly flammable propellant .
In actuality, hydrogen is no more dangerous than gas. According to the IEEE:
A key fact is that hydrogen is 14.4 times lighter than air, rises at 20 m/s (45 mph), and thus quickly dilutes and disperses. Thus it is difficult to contain hydrogen for a hazardous scenario. Hydrogen has a diffusivity in air of 3.8 times faster and rises 6 times faster than natural gas, thus rapidly escapes upwards if accidentally released. Hydrogen combustion produces water vapor and this, together with the absence of carbon, means that a tenth of the radiant heat is produced compared to a hydrocarbon fire, thus the risk of secondary fires is greatly reduced.
In other words, hydrogen is safe for use as a fuel.
What to watch
FCVs are coming, and really, the only significant barrier to entry is the current lack of refueling infrastructure. However, countries like Europe and Asia are building the necessary equipment -- as is California. More importantly, that same lack of infrastructure also applies to BEVs. In addition, FCVs have significant advantages over BEVs.
Right now, Honda, Toyota, and Hyundai are getting ready to release their FCVs in Europe, in the next few years. And they're not the only car manufactures with a FCV in the pipeline: Almost every major car manufacturer is working on a FCV. Why? Because they could very well be the car of the future -- bad news for Tesla, but great news for the environment and us. Consequently, if you're looking for your next great car stock, I'd go with any of the above that are betting on hydrogen.