Economic & Commercial Viability ofHydrogen Fuel Cell Vehicles from an

Automotive Manufacturer Perspective

ICAT-2008 Summary Presentation

Greg FrenetteZEV Vehicle Programs Chief Engineer

Research & Advanced Engineering, Ford Motor Company

Topics• Background

– Reasons to Work Towards Hydrogen– Ford Motor Company Experience– Current Status of Technology

• Significant Industry Challenges – Infrastructure– Remaining Technical Issues– Cost

• The Way Forward– Time to implementation– Government contribution

Ford’s Environmental Vision

“In today’s world, solving environmental problems is an investment, not an expense.”

William Clay Ford, Jr.Executive Chairman, Ford Motor Company

Reasons to Work Toward Hydrogen

• Climate Change– Eliminate CO2 emissions if H2 is derived from renewable

resources

• Air Quality– Reduce or eliminate regulated tailpipe emissions

(HC, CO, NOx)

• Sustainability– Potential sources of H2 virtually unlimited (e.g. solar, wind,

geothermal, hydroelectric)

• Security– Reduce dependence on imported oil

Ford Experience

• 1999 Ford addressed the question:– Can a hydrogen fuel cell be used as a primary

propulsion source?• Challenges at the time included:

– Could a fuel cell demonstrate reliability, durability?– Could an onboard system provide an adequate fuel

mixture in real time?– Could the fuel be stored on board in a practical manner?

Ford Experience

• The response was P2000– Developed in 1999– Five passenger sedan– Achievements:

• 21 hour/1,390 mile continuous issue free operation

• Demonstrated on road usage was technically feasible

Next Step• Ford Focus Fuel Cell Vehicle

(FCV)– Produced in 2003– Deployed as a limited production fleet in

2005– Advancements over P2000:

• Hybridized fuel cell vehicle• Improved stack life• Vehicle starts at temperatures as low as 5°

C

Critical Lessons Learned• Need for hybridization (first of its kind)

– Slow stack response to load changes cause noticeably “sluggish” vehicle performance

– Parallel hybridization with a high voltage battery successfully mitigates the response to load changes

– Improves fuel economy and vehicle range– Now a proven industry standard approach in FCV design

• Low Temperature Operation– Demonstrated Ability to start after cold soaks to 5°C with no

negative impact on stack life

• Stack life– Designed to meet 3 years or 36,000 miles– Actual Stacks have as much as 4 years and over 50,000 miles

Critical Lessons Learned

• Service– Established intercontinental service organization including:

• Documentation• Data tracking and analysis• Trained Service technicians

– Vehicle demonstrated high reliability• Fleet operates with a greater than 92% up time

• Infrastructure– Collaboration with energy provider BP

• Demonstrated feasibility of fueling– Requires no more than “ordinary efforts”– Implemented 350 bar (5000 psi storage)

Continuing Development

• Ford Explorer– Designed around hydrogen

• Delivered full passenger/Cargo area

• Incorporated Customer comforts– Dual zone climate control– Folding rear seats– Luxury options such as

» Moon roof» Navigation System

• Improved vehicle range

• First true full featured consumer FCV

Stretching Propulsion System Architecture Boundaries

• HySeries Edge; Introduced in 2007

• Drivable “plug-in” series hybrid FCV– Included Li-ion battery with

20 mile battery only range– Fuel cell range extender

APU delivering true zero-emissions capability

– Delivered >200 mile range continuous drive capability

– Power fade and other vehicle challenges

Challenging the Limits of Stack Performance

• The Hydrogen 999; Introduced in 2007

• Fuel Cell only propulsion system– Achieved 207 mph

making it the fasted fuel cell vehicle

– Demonstrated non-hybrid fuel cell power delivery

Significant Industry Challenges

Hydrogen Fuel: Sources• Fossil Fuel

– Steam Reformation of Methane– Coal Gasification– Petroleum Cracking

• Nuclear– Steam Reformation– Electrolysis– Thermochemical Water Splitting

• Renewable– Electrolysis using renewable energy– Hydroelectric, solar, wind, geothermal– Biomass– Thermochemical Water Splitting

CO2 Sequestration

for zero Greenhouse

Gases

Where we are today

Where we need to be

Infrastructure Challenges• Hydrogen Availability

– Ford estimates that 33% of the fuel stations would need to supply hydrogen prior to commercial viability

• In North America this means 57,000 stations versus today’s 50

• Hydrogen Delivery– Presently there is no agreement on a

standard delivery method• Delivered hydrogen

– Codes and methods for transport and fuel transfer must be developed

• Pipelines– Must address opposition from

populated areas– Must develop reliable hydrogen

compressors (all weather conditions) in order to deliver hydrogen at proper pressures.

Hydrogen Infrastructure Challenge

Industry needs to address fueling to:

• develop hardware standards

• develop communication standards

Technical Issues

• Vehicle FCV platform development– Design around hydrogen offers most efficient

vehicle architecture but drive new, purpose-built platforms

– Investment decisions will ultimately be driven by expected returns

• $1 billion investment required to develop new, dedicated platform(s)

Commercial Viability

• Commercial fleet use may offer an opportunity for early introduction– Advantages

• Allows for collection of operational data to facilitate optimal vehicle design

• Can allow centralized fueling thereby reducing the early infrastructure requirements

– Disadvantages• Fleet managers may experience high initial fuel cost

due to low production capability

Cost

Vehicle Cost

• Electric Drive Motors– High efficiency motors require strong magnets

that use rare earth elements• These elements are expensive to mine• Current forecast indicate that demand may exceed

supply– Between 1997 – 2001 demand grew by 21%

• All factors point to a negative impact on system cost

Vehicle Cost

• Fuel Cell Stack– Performance gap (effect on consumer value)

• Stack life must be 2X – 3X present life to match gasoline vehicle expectations.

• Stacks must improve beyond their present -15° C low temperature point to -40° C

– This requires breakthrough development of the proton exchange membrane

• Meeting these gap requirements results in “no-compromise” vehicle offerings in the showroom

Vehicle Cost• Fuel Cell Stack

– Material Cost• Presently Platinum accounts for approximately

40% of the stack cost– State of the art stacks require approximately 0.7 g/kW– Stacks would be affordable at present material cost with

0.2 g/kW [breakthrough required]– Material forecast indicate insufficient supply of Platinum

for high volume vehicle production

• Plalladium is the most promising substitute catalyst– Material forecast indicate similar supply issues

Supplier Base and Cost

• Presently there is no large scale production capability for critical components– Many components will require large scale

production to drive lower cost – Suppliers need an adequate business

justification prior to investment in high volume manufacturing

The Way Forward

Time to Transition to Hydrogen

• Competing Technologies may increase time to transition– While Hydrogen offers the best long term solution

other technologies may allow an extended transition• Electric Vehicles

– Advances in battery technology have made these vehicles more attractive

• Alternative fuels – Bio-fuels and clean diesels have shown promise

• Plug-in Hybrids – Can provide full function vehicles – When combined with alternative fuels further improvements are

achieved.

Time to Transition to Hydrogen• Challenges and alternative

technologies make it unlikely that FCVs will occupy a significant percentage of total industry volume within the next 20 years– Near term development will continue– Fleet applications remain promising– Reference time required for Toyota Prius to

reach 1M units/year volume and no major infrastructure required.

Government Action

• U.S. Department of Energy analysis estimated industry cash flow under three scenarios and two separate policy cases– Policy Case 1 – no governmental policy

[100% private capitol]– Policy Case 2 – Government and industry

incremental cost share [50/50]

US DOE Analysis

– Scenario 1 • Thousands of vehicles in 2012 – tens of thousands

by 2018 and 2.0 million by 2025

– Scenario 2• Thousands of vehicles in 2012 – tens of thousands

by 2015 – hundreds of thousands by 2018 and 5.0 million by 2025

– Scenario 3• Thousands of vehicles in 2012 – millions by 2021

and 10.0 million by 2025

Results of Analysis

• Total investment projected - $28 Billion (USD)– 50/50 Cost share reduces industry contribution to

approx. $15 Billion• Scenarios 1 and 2 failed to show positive

industry cash flow through 2025 (always negative cash flow)

• Scenario 3 showed negative cash flow through 2023

• Extremely long break-even, high cost of financing, and risk of stranded investment are Industry concerns

Investment and Payback

Simulated Auto Industry Cash Flow From Sale of Hydrogen Fuel Cell Vehicles, No Policy Case

-$5

-$4

-$3

-$2

-$1

$0

$1

$2

$3

2010 2015 2020 2025

Bill

ions

of D

olla

rs

Scenario3

Scenario2

Scenario1

Simulated Auto Industry Cash Flow From Sale of Hydrogen Fuel Cell Vehicles, Policy Case 1

-$3

-$2

-$1

$0

$1

$2

$3

2010 2015 2020 2025

Bil

lio

ns

of

Do

llar

s

Scenario3

Scenario2

Scenario1

Case 1 – no governmental policy Case 2 – 50/50 Cost share

Government Influence• Government fleet purchases

– Presently challenging due to complicated purchasing requirements

• For example the US Government has 30,000 separate fleet accounts

– Purchase volume cannot support multiple high-volume suppliers

– Could serve as initial step in promoting FCV technology

Government Influence

• Subsidies and Incentives– Required to supplement market forces

• The market will likely not drive this technology in the near or mid-term

– Government can rationalize additional value of national energy independence

• Calculate value to retail customers?

– Government can encourage the simultaneous introduction of vehicles and the supporting infrastructure

• Doing so will reduce investment risk, speed implementation, and increase consumer confidence

Summary• Hydrogen fuel cell vehicles have been demonstrated to be versatile

good performance vehicles

• These vehicles still do not currently meet the life and performance expectations of today’s gasoline vehicles

• Based of the performance, material cost challenges and the availability of near term alternatives it is difficult to envision high volume, economically viable fuel cell vehicle market penetration before 2030

• Ford Motor Company experience to date clearly shows that the technology is feasible in automotive applications.

• Ford’s limited production fleets have been highly successful and well received.

Conclusions• Ford Motor Company believes that long-term

perspective and commitment to fuel cell technology is necessary

• Government support is required to accelerate the development and introduction of this technology– The effort must begin with a long-term cross industry

plan– This effort may require a multinational approach