Photo: Shell
Those who see hydrogen as the fuel of the future are betting on a dead horse. Amid canceled hydrogen projects and skyrocketing hydrogen prices, people who bought an FCEV vehicle like a Hyundai Nexo or Toyota Mirai are in for a rude awakening.
Although battery-electric vehicles have proved they are the best to replace ICE vehicles, many people still expect a miracle fuel to save the combustion engine. For many, this miracle fuel is hydrogen, a gas that promises to burn with zero carbon emissions. Hydrogen is also the most abundant element on Earth, so it looked like the perfect solution for decarbonization. Well, things didn't pan out the way hydrogen proponents have imagined.
Hydrogen vehicles are still an exotic appearance due to their sky-high prices, whereas hydrogen proved a nightmare to produce, transport, and store. This is why hydrogen refueling stations are confined to small areas, like California in the US, and clean fuel prices are too high to make sense economically. Still, this didn't prevent car companies like Toyota from pouring billions into hydrogen vehicle development. Today, most hydrogen FCEV vehicles in California are Toyota Mirai, which is owed chiefly to Toyota heavily subsidizing the hydrogen refueling costs.
Shell, the biggest oil company in the world and one significant supplier of hydrogen fuel for both heavy-duty and passenger vehicles, started a year ago to close its car-focused hydrogen filling stations across the globe. The move culminated in August when Shell announced closing all its car-focused filling stations in California while only keeping three heavy-duty stations. These stations were located in San Francisco (two), Sacramento, Berkeley, and Citrus Heights.
Building a hydrogen filling station costs about $2 million, as estimated by the California-based trade body Hydrogen Fuel Cell Partnership. Since only 17,000 hydrogen-fueled cars have ever been sold or leased in the state, recouping the investment looks unlikely. This has forced operators to jack up the hydrogen prices, making it more expensive to operate an FCEV vehicle in the state.
California's largest hydrogen retailer, True Zero, which owns 37 of the 53 filling stations in the state, recently raised the price of hydrogen to $36 per kilogram. This represents a massive 20% hike over the previous price of $30. In April 2021, the same stations charged their customers only $13 per kilogram of hydrogen. At these rates, owning an FCEV vehicle is painful despite the big incentives carmakers like Toyota use to lure buyers.
Toyota offered buyers of the Mirai free hydrogen fuel up to the value of $15,000, paid via a fuel card. This has been a significant selling point, as it promised to make the Mirai substantially cheaper to operate compared to electric vehicles. Considering the increased hydrogen pricing, the card only covers the fuel for 30,000 miles or about two years. After that point, operating a Mirai would be 14 times as expensive compared to an electric car like the Tesla Model 3.
The Tesla is even cheaper to operate if charged overnight with more affordable electricity. Those with solar panels can recharge almost free of charge at home, which makes owning an electric vehicle a no-brainer. Not to mention that most hydrogen sold to consumers is made from fossil fuels. This makes some people consider that the hydrogen price hikes are caused by the rise of natural gas prices. This is not true, as gas procurement prices in California have actually fallen dramatically from the record highs in January.
The rising prices of hydrogen and companies scrapping plans to build new stations show exactly what to expect as the world abandons fossil fuels. With more and more electric vehicles, the price of refueling ICE vehicles will increase dramatically. Oil companies already feel the heat, and that's why they talk so warmly about hydrogen as the perfect replacement for fuel and natural gas. Some, like Shell, are even smarter and skip hydrogen while investing heavily in EV charging stations.
Hydrogen vehicles are still an exotic appearance due to their sky-high prices, whereas hydrogen proved a nightmare to produce, transport, and store. This is why hydrogen refueling stations are confined to small areas, like California in the US, and clean fuel prices are too high to make sense economically. Still, this didn't prevent car companies like Toyota from pouring billions into hydrogen vehicle development. Today, most hydrogen FCEV vehicles in California are Toyota Mirai, which is owed chiefly to Toyota heavily subsidizing the hydrogen refueling costs.
Shell, the biggest oil company in the world and one significant supplier of hydrogen fuel for both heavy-duty and passenger vehicles, started a year ago to close its car-focused hydrogen filling stations across the globe. The move culminated in August when Shell announced closing all its car-focused filling stations in California while only keeping three heavy-duty stations. These stations were located in San Francisco (two), Sacramento, Berkeley, and Citrus Heights.
Shell scraps plans for new hydrogen filling stations
Shell went a step further and scrapped plans to build 48 new hydrogen filling stations in California for which it had been awarded a $41 million grant. No money has changed hands yet, and the oil giant formally rejected the funding in July, citing "political and economic uncertainty." At this stage, Shell has no plans to build and operate additional light-duty vehicle fueling stations in California. Considering that Shell closed all its hydrogen stations in the UK last year, we can safely assume the trend is here to stay.Building a hydrogen filling station costs about $2 million, as estimated by the California-based trade body Hydrogen Fuel Cell Partnership. Since only 17,000 hydrogen-fueled cars have ever been sold or leased in the state, recouping the investment looks unlikely. This has forced operators to jack up the hydrogen prices, making it more expensive to operate an FCEV vehicle in the state.
California's largest hydrogen retailer, True Zero, which owns 37 of the 53 filling stations in the state, recently raised the price of hydrogen to $36 per kilogram. This represents a massive 20% hike over the previous price of $30. In April 2021, the same stations charged their customers only $13 per kilogram of hydrogen. At these rates, owning an FCEV vehicle is painful despite the big incentives carmakers like Toyota use to lure buyers.
Toyota offered buyers of the Mirai free hydrogen fuel up to the value of $15,000, paid via a fuel card. This has been a significant selling point, as it promised to make the Mirai substantially cheaper to operate compared to electric vehicles. Considering the increased hydrogen pricing, the card only covers the fuel for 30,000 miles or about two years. After that point, operating a Mirai would be 14 times as expensive compared to an electric car like the Tesla Model 3.
A hydrogen car is 14 times more expensive to operate than an EV
The calculations are based on Toyota Mirai's hydrogen tank capacity of 5.6 kilograms, which costs $202 to fill up. Considering the Mirai's claimed driving range of about 400 miles (647 km), this represents about $0.50 per mile traveled. By comparison, a Tesla Model 3 RWD has a 60-kWh battery capacity, which costs $12 to fully charge at California's average electricity prices. With the official range of 333 miles on a full battery, the Model 3 costs $0.036 per mile.The Tesla is even cheaper to operate if charged overnight with more affordable electricity. Those with solar panels can recharge almost free of charge at home, which makes owning an electric vehicle a no-brainer. Not to mention that most hydrogen sold to consumers is made from fossil fuels. This makes some people consider that the hydrogen price hikes are caused by the rise of natural gas prices. This is not true, as gas procurement prices in California have actually fallen dramatically from the record highs in January.
The rising prices of hydrogen and companies scrapping plans to build new stations show exactly what to expect as the world abandons fossil fuels. With more and more electric vehicles, the price of refueling ICE vehicles will increase dramatically. Oil companies already feel the heat, and that's why they talk so warmly about hydrogen as the perfect replacement for fuel and natural gas. Some, like Shell, are even smarter and skip hydrogen while investing heavily in EV charging stations.
Google News