Germany hedges bets with €250 million investment to support fuel cell vehicle development

December 16, 2016

According to an article in Die Welt, Germany's Transport Ministry is investing €250 million by 2019 to support the development of hydrogen fuel cell vehicles (FCVs). Although demand for electric vehicles (EVs) remains stubbornly low, the government remains optimistic about the future of alternative fuels and is keen to have a diverse approach instead of focusing solely on EVs. 

The funding is intended for the research and development of FCVs, to make them competitive, and to expand the hydrogen refueling infrastructure. Transport minister Alexander Dobrindt says: ‘With e-mobility and autonomous and connected driving, we are on the brink of the biggest revolution in mobility since the invention of the car. The fuel cell is a key technology in this development.’ 

Since 2006, approximately €1.4 million have been invested in the development and distribution of FCVs, which has established technology standards, reduced costs and improved the technology. Nevertheless, the penetration of FCVs is so negligible that their share of the German car parc cannot even be reported in meaningful percentage terms. Similar to the problem faced by EVs, fuel cell technology is expensive and without the necessary economies of scale, the higher purchase price of FCVs puts off most consumers. However, FCVs do not suffer from the range and recharging issues which also plague EVs as they can be refueled as quickly as petrol or diesel-powered cars and cover comparable distances on a full tank of fuel. 

FCVs face other issues though. First, hydrogen is highly inflammable and so safety measures are necessary to avoid the risk of fire in a car, especially in the case of an accident. Second, hydrogen is naturally abundant but preparing it for industrial consumption requires a lot of energy and, if this is not done in an environmentally friendly way, it defeats the object of zero-emission transport. 

Aside from having a mixed alternative fuel strategy, a key factor in the German government's decision to invest in FCVs is undoubtedly to ensure that the domestic car industry does not run the risk of being left behind if FCVs do take off. Japanese OEMs are already ahead of German OEMs in this respect. Toyota launched the first mass-produced FCV, the Mirai, back in June 2014 for example. However, the Mirai remains even more expensive than comparable EVs in Germany, which has a hydrogen refueling network consisting of just 34 stations. Toyota has changed its strategy that previously focused on hybrids and FCVs to include EVs. It therefore remains to be seen how effective the planned investment will be and what role FCVs will ultimately play in the car market but the German government is certainly hedging its bets for the time being.

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