Hydrogen-powered driving company Nikola makes green solutions look sexy

Pros and cons of hydrogen-powered vehicles, the “latest” solution to greening the transportation sector.

When it comes to transportation and other industries heavily dependent on fossil fuels, what does create a stronger emotional commitment than the image of a Huracán 5.2 V10? Perhaps nothing, as far as the vast majority of zero CO2 emission vehicles look like Fred Flintstone’s “car”.

However, Nikola’s founder Trevor Milton seems to have a different approach for low emissions vehicles. In 2016, he created Nikola, a US start up company constructing hydrogen-powered vehicles such as trucks, pick-ups and jet-skies, which make the Huracán 5.2 V10, especially in the orange version, looks like Fred Flintstone’s “car”.

The start-up company – which includes investors like ValueAct, Fidelity, and the Italian group that owns the Iveco truck brand CHN Industrial – merged with VectoIQ for the listing in the public market in July 2020, and it has reached a market capitalisation to almost $15bn between April and mid-August. Moreover, share prices of fuel cell manufacturers such as PowerCell of Sweden and Canada’s Ballard have doubled since the start of the year. Such an incredible support from investors, considering the fact that Nikola has not sold a vehicle worth a penny yet, shows that the market has high hopes for hydrogen-fuelled driving.

However, hydrogen fuel cell technology has more than a decade of false starts which tempts investors and policymakers to ignore the sector. South Korea’s Hyundai Motors, the market leader, sold just 4,800 of its Nexo passenger car last year. Toyota – which unveiled its prototype hydrogen-powered car Mirai, the Japanese word for future – started its development of the technology 28 years ago and sold only a couple of thousand last year as well.

Tesla boss, and Twitter addicted, Elon Musk is not a believer. He has called fuel cells “fool cells”. Nonetheless, hydrogen-powered vehicles are more trustworthy than its electric counterparts. They refuel in under five minutes, they have double the range of battery-powered cars and are emissions-free: the motor is fuelled by hydrogen and oxygen, with a by-product of nothing more than water vapour.

The problem is double fold. First of all,  a hydrogen car remains prohibitively expensive. It is made with many more parts than a petrol or battery-powered one. The key component is the fuel cell stack, where hydrogen is converted to energy, which accounts for more than half the cost. The Hyundai’s Nexo and Toyota’s Mirai both sell for around $60,000. Hydrogen as well is expensive. Second of all, hydrogen costs about $14 per kilogramme, which works out about three times the price of petrol for the equivalent mileage. $70bn in investment would be needed for prices to become competitive, says the Hydrogen Council. Refuelling stations need to be built too.

The pandemic has lent an unexpected hand to the fuel cell market. The surge in online shopping has accelerated logistics investment and added urgency to self-driving truck research.

Rising environmental standards mean heavy trucks — 98% of which currently run on diesel — need an alternative, and battery technology has limitations. Battery-powered vehicles require heavy battery to drive a big truck for a long distance. Fuel cells may be the better choice, and leased vehicles should make them more affordable and accessible.

The EU also has a partnership, a clean hydrogen alliance, to develop clean hydrogen fuel technologies, which can be vital for energy heavy sectors such as aviation, transport, and other parts of heavy industry, as environmental standards become stricter but such industries cannot afford to slow down their pace. The swift to a technology to produce the alternative fuel cleanly, through electrolysis of water, and in light of huge technological change and increasing geopolitical volatility, is spearheaded by the EU single market commissioner Thierry Breton. He, together with other policymakers, hopes leading companies such as Air Liquide of France – a gas group – and Bosch of Germany will be interested.

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