Hydrogen was first perceived as a potential alternative fuel in the 1970s. Back then, the idea was to use hydrogen in internal combustion engines (ICE). As the ineffectiveness of the approach became clear, the fuel cell technology was transferred from aerospace to the automotive industry to leverage hydrogen in fuel cell electric vehicles (FCEV). However, the technical complexity and the struggles to build a practical and operational infrastructure prevented a market launch for passenger cars.
Yet, the OEMs have always been (slightly) optimistic and developed series-ready prototypes despite the vehicle’s internal and external issues (e.g. Mercedes Benz F-Cell, Toyota Mirai). Now, BMW and Toyota have started another trial. BMW announced the start of its iX5 Hydrogen in 2028. Toyota will deliver critical fuel cell parts. The upsides of FCEV have been widely discussed in the past, especially in comparison to battery-electric vehicles (BEV) as alternatives to ICE: Refueling experience similar to ICEs, emission-free consumption, long range, smaller batteries (less weight and critical resource dependency). However, BEVs took the lead as the alternative on a global scale, pushed by China and its automotive industry. Electricity has been part of the infrastructure in many countries for a long time and hydrogen comes with heavy energy conversion losses. Therefore, it requires more primary energy to drive FCEV than BEV.
In the face of this status quo, the strategic rationale of the OEMs remains unclear. BMW states that risk diversification is needed instead of relying on BEV alone. However, the current dynamics don’t let us expect that an operational hydrogen infrastructure for private cars will be in place in 2028 or the years after. The projects have been popping up for years but the practical usage is missing. PwC Strategy&, the strategy consultancy, points to economic (producers, re-seller, drivers), regulatory, and supply chain hurdles (see here). Hence, the decisive strategic question will be how the infrastructure providers for hydrogen production, distribution, storing, and refueling stations act. If the first drivers will be available to find suitable refueling stations in the first years, the bet is on.
Before its quality problems, BMW was winning with its strategy to maintain a focus on ICEs because the BEV uptake beyond China was slow. From today’s perspective, this new move has a low (~5%-10%) probability of success. The likelihood increases if the announcement encourages other players to act.
Find Der Spiegel’s article to BMW’s announcement here.
