S£^907/y0 Strategic A1U Jfnehirc, a Maruo utel /title ISSN 1104-2621 Strategicalliances for the development of PUBLICERINGSDATUM/DATE PUBLISHED fuel cell vehicles December 1998 FORFATTARE/AUTHOR UTGTV ARE/PUBLISHER Kanehira Maruo, Goteborgs universitet KFB — Kommunikationsforsknings- SERIE/SERIES beredningen, Stockholm KFB-Rapport 1998:37 KFBs DNR 1998-269 ISBN 91-88371-11-5 ABSTRACT (Aim, Method, Results) Aim: The aim of this paper is to explore and describe the current stage of fuel cell vehicle development in the world. Method: Interviews and textual studies. Result: One can write three possible future scenarios — an optimistic, a realistic, and a pessimistic scenario: • The optimistic scenario — The Daimler/Ballard/Ford alliance continues to develop fuels cell stacks and fuel cell vehicle systems as eagerly as they have been doing in recent years. Daimler(/Chrysler)-Benz continues to present its Necar 4, Necar 5, and so on, as planned, and thus keeps Toyota and Honda under severe pressure. Toyota's and Honda's real motivation seems to be not to allow Daimler-Benz to be the first to market. Their investment in fuel cell technology will be very large. At the same time, governments and other stake-holders will quickly and in a timely fashion build up infrastructures. We will then see many fuel cell vehicles by 2004. A paradigm shift in automotive technology will have taken place. • Therealistic scenario — Fuel cell vehicles will reach the same level of development by 2004/2005 as pure electric vehicles were at in 1997/1998. This means that fuel cell vehicles will be produced at the rate of several hundred vehicles per year per manufacturer and cost about $40,000 or more, which is still considerably more expensive than ordinary gasoline cars. These fuel cell vehicles will have a performance similar to today's advanced electric vehicles, e.g., Toyota's RAV4/EV and Honda's EV Plus. To go further from this stage to the mass-production stage strong government incentives will be needed. • The pessimistic scenario — It turns out that fuel cells are not as pure or efficient as in theory and in laboratory experiments. Prices of gasoline and diesel gas continue to be very low. The Californian 10% ZEV Requirement that has been meant to be valid at least ten years from 2003 through 2012 will be suspended or greatly modified. Daimler-Benz, Toyota, and Honda slow down their fuel cell vehicle development activities. No one is interested in building up the infrastructure for fuel cells. The dominance of internal combustion engines will continue another 20 years. 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Images are produced from the best available original document. ^KFB KOMMUNIKATIONS FORSKNINGS BEREDNINGEN Strategic Alliances for the Development of Fuel Cell Vehicles Kanehira Maruo Strategic Alliances for the Development of Fuel Cell Vehicles By Kanehira Maruo 1 Section of Science and Technology Studies University of Gothenburg, Box 700, SE 405 30 Gothenburg, Sweden Tel +46 31 773 4924, Fax +46 31 773 4933, E-mail: [email protected] 1 This study is carried out within the Electric and Hybrid Vehicle Program financed by the Swedish Transport and Communication Research Board (KFB). I also thank to Mr Ben Lane at the Energy and Environment Research Unit, Faculty of Technology The Open University, Walton Hall, Milton Keynes, MK7 6AA, Great Britain for many hints and valuable informations about ZEVCO. Many thanks to chief engineers Eishi Ohta and Masao Kinoshita, Toyota Motor Corporation, chief engineer Mr Keiichi Mitobe, Honda Motor Co. Ltd., chief engineer Shogo Watanabe, Mazda Car Corporation, chief engineer Mr Sekio Higuchi, Nissan Motor Co. Ltd., vice president Yuichi Fujii, Panasonic EV Energy, Dr Kozo Kitoh, Kozo Kitoh Technology Office, vice director Ichiro Kasamatsu, LEVO and Mr Keisuke Kurihara, the Swedish Embassy in Tokyo for valuable discussions between November and December 1998 in Japan. Contents Executive Summery 1 Introduction - The Coming Era of Fuel Cell Vehicle 5 Technology Fuel Cells - Technical Descriptions 7 Why fuel cells? What is a fuel cell? Eight types of fuel cells How does a PEM fuel cell work? How is a fuel cell engine manufactured? Three fuel cell vehicle configurations Fuels for fuel cells Fuel production and distribution costs Fuel Cells — Important Players 2 2 Fuel Cell stack manufacturers Fuel Cell Component Developers/Suppliers Fuel reformer manufacturers Fuel cell vehicle manufacturers Strategic alliances for Fuel Cell Vehicles 41 Why are alliances needed? Seven types of alliances Important alliances for fuel cell vehicles Staying outside of the Alliance? Oil industry's changing attitude towards fuel cells Conclusions 5 0 Executive Summery A fuel cell reverses the process of electrolysis in which an electric current breaks down water into oxygen and hydrogen gas. Since the beginning of the 1990s several automobile manufacturers have begun launching intensive R & D activities around the fuel cell. Fuel cells are regarded as very attractive by those automobile manufacturers, because they believe that: • Fuel cells are much more efficient than internal combustion engines. They can greatly reduce greenhouse gas emissions from road vehicles. • They are extremely clean. With hydrogen-powered fuel cells or direct methanol fuel cells one can produce zero emission vehicles. • They have no moving parts, don't vibrate, and make no noise. • They don't suffer from drawbacks of battery-powered vehicles (e.g. short range, heaviness, short-lived batteries, emissions from electric power plants, and difficulties warming the vehicle coupe). • They are virtually maintenance free. • They are suitable for mass-production, and no expensive metals except for platinum are used. Because the use of platinum is to be minimized (soon the same amount of platinum will be required per vehicle as in the three-way catalyst in an internal combustion engine's exhaust system), fuel cell engines can be as cheap as today's gasoline engines. According to Daimler-Benz, fuel cell engines would reach this price level at a production rate of 250,000 per year. However many technical, economical and political obstacles remain to the drive to produce a fuel cell vehicle: • It is not entirely sure that the technology really "works". • Very few know whether or not fuel cell vehicles can be produced at commercially acceptable costs. • There is no general consensus about which fuel should be used. • There is as of yet no fuel distribution infrastructure. • It is supposed that emissions from fuel cell vehicles will be very clean and CO2 emissions will be halved compared to the gasoline engine, but these things must yet be proved in real-world driving tests. • Very few companies have the necessary expertise to fully develop a fuel cell vehicle in-house. As a result, some companies are choosing to co-operate 1 with others to pool their research and development programs. Collaborating companies will provide complimentary knowledge, skills, and resources to the development process. The most widely known alliance is that between Ballard, Daimler-Benz, and Ford (often called simply 'the Alliance'). The value of Ballard Power Systems has increased from 1997 to 1998 by 147%. Ballard's share in this alliance is Can$ 1,494 m, Daimler-Benz's share Can$720.5 m, and Ford's share Can$614.5 m. The total of Can$2,829 m is equal to US$1,980 m. (Ballard Automobile is not included in these figures.) Those auto manufacturers which do not join the Ballard/Daimler-Benz/Ford Alliance may have five options: A. Develop own fuel cell engine in-house or in partnerships with others. B. Those who want to develop own fuel cell engines can buy fuel cells from Ballard Power Systems. C. Those who want to purchase DBB fuel cell engines can do so from Ballard Automotive. D. Find another fuel cell manufacturer and work together with it. E. Not invest in the fuel cell technology. Option A is the most expensive and risky option. But, if a company's primary goal is, as Ballard, Daimler-Benz, Honda and Toyota have declared, to be first to market and set the standard for those that follow, this option is the one that must be chosen. Those who choose option B need to invest more heavily in the technology than those who choose option C, but they will be able to sell their products with greater added value. Option E is the least expensive option, but the potential risk to become a loser in the next century may be large. Toyota seems to have chosen option A, but it may consider option D, too. Honda, Nissan and GM/Opel are combining options A and B. Chrysler had been pursuing options A and B, but it has now chosen option E, but without risking becoming a loser because it has merged with Daimler-Benz. Ford had been pursuing options B and D, working with the fuel cell makers, Ballard, International Fuel Cells and Mechanical Technology Incorporated. Today, Ford is a partner in the Alliance. The Ballard/Daimler-Benz/Ford Alliance, GM/Opel, Toyota, and Honda doubtlessly have capacities to commercialize fuel cell vehicles by 2004/5. Their investment cost will be moderate, $2 to $3 billion each during the coming three to four years. The greatest barrier to the successful introduction of fuel cell vehicles seems to be the fuel supply problem.