Hydrogen costs could fall quickly for heavy-duty trucks

Nikola semi with Anheuser-Busch trailer

The cost of hydrogen for heavy-duty trucks could reach parity with low-carbon sources like battery electrics and even diesel fuel in some markets sooner than expected, according to a new report by the Hydrogen Council.

As hydrogen production and distribution grow and equipment and component manufacturing reach scale, the cost is projected to decrease by up to 50% by 2030, according to the report released Monday at the World Economic Forum in Davos, Switzerland.

“A clean energy future with hydrogen is closer than we think because the industry has been working hard on addressing key technology challenges,” said Benoît Potier, chairman and CEO of Air Liquide, a French supplier of industrial gases to medical, chemical and electronic manufacturers.

Potier is co-chair of the Hydrogen Council, a CEO-led group formed three years ago to accelerate deployment of hydrogen solutions around the world. 

The faster timeline would require favorable government policies and $70 billion in investment globally by 2030, according to McKinsey & Co., which collected and analyzed data from 30 companies in the U.S., Europe, Japan/Korea and China for the report. 

“While this figure is sizable, it accounts for less than 5% of annual global spending on energy,” the report said. “For comparison, support provided to renewables in Germany totaled roughly $30 billion in 2019.”

An independent advisory group of hydrogen and energy transition experts reviewed the study.

Gaining attention

Hydrogen-powered fuel cells for tractors are gaining attention. At the North American Commercial Vehicle show in October, Nikola Motor, Hyundai Motor Co. (OTC: HYMTF) and Cummins Inc. (NYSE: CMI) displayed Class 8 fuel cell prototypes. 

Toyota Motor Corp. (NYSE: TM)  and Kenworth Truck Co., a Paccar Inc. (NASDAQ: PCAR) brand, are also working on 10 demonstration fuel cell trucks. Industry leader Daimler AG (OTC: DDAIF) expects to have fuel cell-powered trucks on the road by the end of the decade as part of its commitment to carbon neutrality in key markets by 2039.

Phoenix, Arizona-based startup Nikola is an early leader. It conducted a test run of beer deliveries for Anheuser-Busch in November. The beverage company has ordered up to 800 of the Nikola Two models that are on target for production in late 2022.

Cost reductions

In addition to trucking, the report identified significant cost reductions for 21 of 35 at-scale applications, including the steel industry and heating for existing buildings. In nine use cases, including trucking and rail, it can beat fossil-based solutions at scale, said McKinsey senior partner Bernd Heid.

An analysis of medium- and heavy-duty fuel cell trucks suggests they are the lowest-cost way to eliminate climate-warming emissions. Battery electric vehicles are less attractive for long-haul trucking because they weigh more, reduce cargo space because of onboard battery packs and take longer to recharge than a hydrogen refill.

Fleet operators focused on total cost of ownership (TCO) consider refueling time, available payload, operation under different climate conditions and local regulations in purchase decisions.

“Fuel cell trucks may break even with conventional technology before 2030 in some regions given a hydrogen cost at the pump between $4 and $5 per kilogram,” the report said. FCEVs have the added benefit of recovering energy when braking or driving down hill, to some extent compensating for the higher cost of fuel.”