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China makes vigorous efforts for fast-track development of fuel cell vehicles

For the year of 2015 to 2019, China's annual fuel cell vehicle (FCV) sales stood at 10, 629, 1275, 1,527 and 2,737 units respectively, according to the China Association of Automobile Manufacturers (CAAM). Although the sales were precipitously growing in recent years, the absolute volume was rather pale in comparison with that of battery electric vehicles (BEVs) and plug-in hybrid vehicles (PHEVs).

For the first ten months of 2020, FCV sales slumped 50.4% year on year to only 658 units partly due to the impact of the coronavirus pandemic. However, affected by the same factor, BEV and PHEV sales only dropped 6.9% and 7.4% during the same period.

The most important factor that curbs FCV popularization may be the high TCO (total cost of ownership).

According to a white paper entitled themed “Hydrogen and fuel cell solutions for transportation” jointly issued by Ballard Power Systems and Deloitte China in Jan., in 2019, FCEVs are approximately 40% and 90% more expensive than BEVs and ICE vehicles, on a per 100km basis considering acquisition and operational costs together. From an acquisitions cost perspective, the higher cost is primarily due to high cost of the fuel cell system, as well as a markup on other components due to lower economies of scale. On the side of operational cost, the higher cost is primarily driven by the cost of hydrogen fuel.

The lengthy industrial chain of hydrogen and fuel cell involves a multitude of technical processes, including the production, transport, storage, refueling of hydrogen as well as hydrogen-powered electricity generation and supply of heat, said Peng Suping, an academician at the Chinese Academy of Engineering. He believes reducing cost will further bolster the industry development, while the cost should be mainly controlled on the sides of both hydrogen production and fuel cell manufacturing.

Mr. Peng's point of view coincides with one of the guidelines included in the Planning for the Development of the New Energy Vehicle (2021-2035) Industry issued by the State Council in early November. Under the Planning, China will endeavor to improve the economy of hydrogen production, storage and transport. To be specific, the government and the industry will carry out the application of industrial hydrogen by-product and technologies of producing hydrogen using renewable energy based on local conditions in different cities, and accelerate the industrialization of advanced hydrogen storage materials. To gradually lower the hydrogen storage cost, they will conduct pilot applications of the technologies for transporting hydrogen energy in various states such as high-pressure gas, cryogenic gas and low-temperature liquid & solid state.

Despite the relatively low sales, local governments are actively rolling out policies to support FCV industry development.

In November, Guangdong province, Beijing and Shanghai issued the plannings on the development of FCV industry, showing their resolution to popularize the clean energy-powered tool.

By 2023, Shanghai will plans for nearly 100 large hydrogenation stations, over 30 of which will go into operation, and put roughly 10,000 FCVs onto roads. Until then, the output value of the FCV industry will increase to about 100 billion yuan ($15.187 billion).

Under a five-year plan, Beijing will strive to popularize more than 10,000 hydrogen FCVs and see the industrial output value exceed 24 billion yuan ($3.645 billion) by 2025.

Guangdong is ambitious to launch the pilot operation of first fuel cell passenger vehicles (PVs) in 2022 and will subsidize the construction of hydrogen refueling stations.

Other regions like Tianjin and Shandong province are quickening the construction of hydrogen and fuel cell demonstration zone as well.

Some insiders consider that this phenomenon partly resulted from the adjustment over new energy vehicle (NEV) subsidy policy. A governmental document issued in late Sept. by agencies like the MIIT and the Ministry of Finance clearly states the central government will, by means of “replacing subsidies with rewards,” provide rewards for city clusters which are selected to carry out the demonstration of new FCV models and technologies based on their achievements.

Aside from those governmental endeavors, some enterprises decide to form partnership to speed up FCV development and divvy up the cost.

Toyota Motor on June 5 signed an agreement with five Chinese companies, namely China FAW Corporation Limited (FAW), Dongfeng Motor Corporation (Dongfeng), GAC Group, BAIC Group and Beijing SinoHytec Co., Ltd. (SinoHytec), for the establishment of a fuel cell system R&D joint venture in a bid to popularize fuel cell electric vehicles (FCEV) in China.

Through the joint venture, all participants intend to jointly promote the spread of FCVs and develop competitive fuel cell systems that comply with regulations in China. They will engage in discussions to hammer out product plans and a single streamlined structure to develop a series of technologies from components including FC stacks and FC system controls, to vehicle installation.

Shanghai Hydrogen Propulsion Technology Co., Ltd. (SHPT) and Weishi Energy Technology Co.,Ltd. (Weishi), the leading Chinese fuel cell-related product and technology developers under SAIC Motor and Great Wall Motor, on November 11 inked a frame agreement for the strategic cooperation on the R&D of core parts related to fuel cells.

In terms of companies' respective efforts, main automakers in China like SAIC Motor, GAC Group and Great Wall Motor also announced relevant development plans and the progress they have made in FCV area.

Li Jun, president of the China Society of Automotive Engineers (SAE-China), said the industrial participants should tightly seize the opportunity the government offers to vigorously support the pilot applications of FCVs. The governmental efforts are conducive for the industry to making breakthroughs in the R&D of core technologies and easing the technology bottlenecks, and to those companies that hold core technologies delivering scale effect.

OEMs also play a key role in promoting commercialization of FCVs, while many of them are moving faster in CV area than in the PV.

“In transport area, fuel cells are primarily used on CVs for the present. By the end of 2019, logistics cars and buses accounted for 60.5% and 39.4% of the FCVs connected to relevant operational platforms,” said Liu Xiaoshi, Deputy Secretary-general of China EV100.

FCVs can be popularized in CV field in the first place mainly because their advantages in range and energy-saving & emission-reduction performances accord with CV development demands, said Lu Bingbing, general manager of Shanghai Hydrogen Propulsion Technology Co., Ltd. (SHPT), a FCV tech developer under SAIC Motor. He added the relatively fixed running routes and lower demands over the volume of hydrogen refueling infrastructures than that of PVs also make FCVs promoted in CV area easier.

A slew of OEMs announced their FCV development planning and goals in recent months.

SAIC Motor launches its first “Hydrogen Strategy” on Sept. 13, saying it planned to roll out at least ten FCV models by 2025, which include the likes of heavy-/light-duty trucks and buses, and launch all-new fuel cell PVs at a proper moment.

At the same time, the Chinese biggest automaker unveiled its first fuel cell MPV, namely MAXUS EUNIQ 7.

According to Great Wall Motor's planning announced in mid-Sept, the Chinese largest SUV and pickup maker will see its first fuel cell SUV go into mass production in 2021.

In late July, GAC Group showcased at the 2020 Tech Day its first fuel cell PV model, the Aion LX Fuel Cell, which was set to be put into pilot operation this year.

Do these moves indicate that FCVs will be equally promoted between PVs and CVs?

Lin Qi, chairman and CEO of REFIRE, a Shanghai-based supplier of hydrogen fuel cell technologies, told a local media outlet the success in promoting FCVs in PV areas mainly rests upon whether the construction of hydrogen refueling stations and the cost reduction can befit the market demands over the next five to eight years.

Some industrial insiders consider FCVs will be primarily applied in taxi and car-hailing service areas first.