The cost of fuel cell vehicles has been falling dramatically for years. And it will continue to drop within the next decade and beyond.
In today’s article, we’ll share what factors are driving this price reduction. You’ll also learn what Ballard is doing to ensure fuel cell vehicles are cost-competitive with battery electric and diesel vehicles by 2030.
Why has the cost of hydrogen fuel cells dropped?
Even with limited production volume, the price of fuel cell vehicles—especially buses— has been reduced by 65% over the past 10 years.
What has driven this price reduction?
On the fuel cell itself, major gains to date have been driven by innovations in technology and product improvements. With decades of experience, Ballard has been able to deliver these gains in combination with industry leading durability and reliability.
An excellent example of this is Ballard’s eighth generation fuel cell power module. The recently launched FCmove™ reduced product total life cycle costs by 35% compared to the previous generation. In fact, with each new generation, we’ve consistently reduced the cost by more than a third.
Additionally, there are a number of other elements that have contributed to the overall cost reduction of fuel cell electric vehicles including:
- Reduced price of the hydrogen storage tank
- Reduced price and improved integration of the vehicle’s electric powertrain
- Fuel cell-battery hybridization of the vehicle—combining a smaller fuel cell with lithium batteries, whose price has also been falling
What about total ownership costs for a commercial fuel cell vehicle?
Today, in certain locations, fuel cell electric buses offer a total cost of ownership (TCO) on par with battery electric buses. The buses in the H2Bus Project in Europe are among those with the lowest TCO for zero-emission vehicles in a number of regions.
Additionally, the recently published Deloitte-Ballard report, Fueling the Future of Mobility and the McKinsey study published by the Hydrogen Council projected it will be less expensive to run a fuel cell vehicle than a battery or diesel vehicle within the next 10 years.
Looking at infrastructure costs, in the case of fuel cell electric buses, today’s higher vehicle purchase cost is offset by the lower cost of the refueling infrastructure at scale. For example, the infrastructure cost for fuel cell buses decreases as volume increases, as the hydrogen infrastructure can be shared by 100 buses or more at the same depot.
Conversely, as the number of deployed battery electric buses per depot increases, the cost of the infrastructure per vehicle also increases due to the need for more power.
Furthermore, the cost of hydrogen fuel is coming down. The production of low-cost renewable energy enables the production of green hydrogen at parity with the price of diesel in some regions.
Since 2010, the cost of electrolysis-produced hydrogen has fallen by 60%, from between USD $10-$15/kg of hydrogen to as low as USD $4-$6/kg today. Recent industry reports show that they will continue to fall; offshore wind-based electrolysis shows another 60% cost reduction from now until 2030.
How do production volumes play a role in fuel cell cost reduction?
According to the McKinsey Study, “a cost reduction of roughly 70-80% for fuel cell vehicles would be possible given an annual production volume of 150,000 vehicles".
Similar reductions could also be reached for the PEM stack and the fuel cell balance of plant. Manufacturers could capture significant fuel cell cost reductions of approximately 60-65% with even relatively small annual production volumes of 10,000 trucks per year.
This is in line with the Deloitte-Ballard report’s findings. We’re confident we can reduce the price of the fuel cell system to be competitive with diesel engines, and meet the US Department of Energy targets of less than $100/kW for annual production of over 150,000 systems/year.
Such cost reductions will be driven mainly by industrialization of the fuel cell system, because unlike batteries, fuel cells have a relatively low dependency on commodities. Instead, fuel cell systems are produced mainly from carbon, steel, and aluminum manufactured parts.
What is Ballard doing to further accelerate price reduction?
At Ballard, we plan to drive further fuel cell system cost reduction in four key ways:
1. Building strategic industrial partnerships to accelerate industrialization
There is enormous potential for cost reduction by industrializing fuel cell manufacturing.
Today, fuel cells are only made in the thousands. Compared to the hundreds of thousands of batteries, and millions of diesel engines being produced, fuel cell production is very low.
FCgen® –LCS Durable heavy duty fuel cell stack
This is one of the reasons why we partnered in 2018 with Weichai in China, a large industrial company that makes hundreds of thousands of diesel engines every year.
Part of Weichai’s role with Ballard is to help us accelerate the industrialization of our fuel cell products, so we can continue to reduce costs and deliver attractive total life cycle costs to vehicle operators.
2. Leveraging supply chain development to access diverse suppliers
At Ballard, we’re continuing to develop a fuel cell supply chain, particularly with our joint ventures in China. These partnerships will give us access to new suppliers and a very different supply chain, which will ensure we can reduce costs even further.
Furthermore, the automotive supply chain is now developing low cost reliable components for fuel cell powertrains. This includes key elements of the balance of plant, which will have a significant impact on the overall system cost.
3. Focusing on internal projects to reduce our fuel cell stack costs
Internally, Ballard is continuing to improve our processes and Membrane Electrode Assembly (MEA) and fuel cell stack designs. We’re also focusing on technology innovation to increase the power density and lower the precious metal catalyst loading of our fuel cell stacks.
Three key improvements we’ve made in these areas are:
- Choosing lower-cost carbon instead of metal for our bipolar plates (learn more in this blog)
- Automating our production lines to reduce labor costs and improve production capacity
- Implementing process design and throughput scale-up to improve production yields and support future growth
4. Refining our recycling and refurbishing processes
Our ability to recycle catalysts, re-use bipolar plates, and refurbish fuel cells is a real advantage for both Ballard and our customers. Doing so lowers the total lifecycle costs of our products, reduces environmental impact, and generates residual value for the vehicle.
As a result, the economics improve and it demonstrates that fuel cell technology is becoming bankable for vehicle financing.
(Read more in Benefits of Fuel Cells: Refurbishing Leads to Zero Waste.)
The cost of fuel cell electric vehicles is on a downward trend, and there is huge potential for further cost reduction as industrialization scales up.
Today, in some specific use cases, the total cost of ownership for a commercial fuel cell vehicle is comparable to a battery electric vehicle, and it will drop below the cost of both battery and diesel vehicles by 2030.
At Ballard, we’re committed to ambitious and achievable cost reduction through our focus on internal processes, technology innovation and strategic industrial partnerships.
We’re excited to move into this new decade, knowing that fuel cell technology will greatly impact the mobility sector, creating a more positive, cleaner, and more sustainable future for all.
Fueling the Future of Mobility: Hydrogen and Fuel Cell Solutions for Transportation
This report provides answers to the most pertinent questions surrounding hydrogen and fuel cell solutions for transportation:
How economically viable are fuel cell vehicles and what is their impact on the environment?