When former California Gov. Arnold Schwarzenegger pumped hydrogen into his fuel cell Hummer 14 years ago, the publicity stunt was said to foreshadow a massive transportation technology shift.
Hydrogen, easy to pump and energy dense, was on the cusp of replacing fossil fuels. It never happened.
Gasoline and diesel remain the preferred fuels for passenger cars and commercial vehicles respectively. All the fear of “peak oil” limiting supply and causing prices to soar proved false. Now when the price of oil rises above crosses $50 a barrel, petroleum companies in the U.S. and Canada turn on the spigots.
However, last week’s order of 800 Nikola Motor fuel cell heavy-duty trucks by Anheuser-Busch is a sign that the U.S. is finally headed for the on-ramp to the hydrogen highway. Hurdles are still to come, but the move by a company that ships more beer than anyone in the U.S. is an important market signal.
This is a real business deal, valued at up to $720 million. The brewer will take delivery of some test vehicles in late 2019 and then will put Nikola trucks into full service the following year. Anheuser-Busch and Nikola have identified 28 locations along the brewer’s main shipping routes to install hydrogen filling stations. The cost of building out a specific infrastructure for Anheuser-Busch is included in the innovative lease contract.
Nikola is pursuing similar deals with large motor carriers such as U.S. Xpress. It’s using these deals to transform key shipping lanes into hydrogen highways. Other customers will likely follow, knowing their trucks will have adequate refueling stops.
To be sure, even this milestone cannot erase healthy skepticism. Nikola has no trucks on the road yet. It’s attracting investment money, but there’s no guidance on its cash burn rate. It’s talked about thousands of non-binding orders. That shows interest but is no substitute for firm contracts. Nikola could run into manufacturing problems of the sort Tesla is facing as it ramps up vehicle production.
Even environmental groups — organizations that are rooting for Nikola’s success and eagerly watching Tesla’s attempt to disrupt trucking with its take on an electric semi-tractor — are still cautious.
The Nikola deal “clearly demonstrates that fleets are continuing to look for ways to lower their costs and stay ahead of the competition, and they see opportunities with zero-emission trucks,” Don Anair, deputy director of the clean vehicles program with the Union of Concerned Scientists, told Trucks.com.
“The proof is in the pudding, and fleets are tough customers, so Nikola and Tesla have their work cut out for them over the next couple of years,” Anair said.
Other analysts also are watchful and wary.
Anheuser-Busch is an ideal launch customer for the technology because it is essentially using a planned fueling network to create a long-haul closed loop, just as UPS and others have successfully deployed natural gas semi-tractors.
“The question is whether it can go past these little proofs of concept,” said Mike Ramsey, research director for automotive and smart mobility at Gartner Inc.
Anheuser-Busch, U.S. Xpress and others clearly believe that hydrogen will become a major fuel, even though diesel is inexpensive and the Trump administration is committed to fossil fuel energy sources.
The brewer knows presidents come and go. It has committed to lowering its carbon footprint in the U.S. by 25 percent by 2025. Converting its fleet of diesel trucks to fuel cell trucks while using renewable energy to make the hydrogen would give the company a true zero-emissions fleet, said Ingrid De Ryck, vice president of sustainability and procurement for Anheuser-Busch.
There are other indicators that this is the start of the hydrogen transport age. Those skeptical of Nikola should watch Toyota, one of the world’s largest and most sophisticated industrial enterprises.
The automaker is testing a hydrogen fuel cell heavy-duty truck in Southern California and is expanding fuel cell research globally. It’s proving out a modular approach where the fuel stack in Toyota’s Mirai sedan can be used in various configurations for vehicles ranging from a forklift to a pickup truck to a big rig. It’s also building a fleet of fuel cell buses for use in Tokyo.
“Toyota believes in the viability and scalability of hydrogen fuel cell electric technology,” Doug Murtha, the company’s U.S. group vice president of corporate strategy and planning, told Trucks.com. “The Nikola and Anheuser-Busch announcement reaffirms that viability. We are encouraged that others recognize the great promise of hydrogen as a greenhouse gas-free solution in heavy trucking.”
There are other factors to watch.
While a limited number of truck builders are experimenting with hydrogen fuel cell vehicles, just about all are developing battery-electric trucks. Electric truck technology is improving rapidly, and there is a growing consensus that it will share a future with hydrogen fuel cell vehicles. Each will be used where their technology makes the best use case, probably electric for use in urban areas as well as delivery and local freight, and hydrogen for long-haul shipping.
These companies know their investments won’t be wasted. A fuel cell truck is basically an electric truck that gets its power from a different source. Hydrogen is used for a chemical reaction to create electricity, which powers motors to propel the vehicle. There’s no heavy battery — like in other electric vehicles — and the only exhaust is water vapor.
The Anheuser-Busch order, however, dwarfs what’s happening in the electric semi-tractor market. Tesla made a splash with its announcement last year that it will sell electric semi-trucks. And it has gained some notable customers, including UPS and Anheuser-Busch. But the brewer’s Tesla order amounts to just 40 trucks, or 5 percent of what it is getting from Nikola.
The Anheuser-Busch order also is significant when compared to the sales of fuel cell passenger cars by Toyota, Honda and Hyundai, the three automakers that have offerings. Toyota leads the pack. It has leased 3,400 Mirai fuel cell sedans through March of this year. Honda says it leased its 1,000th Clarity Fuel Cell sedan last month. Hyundai has leased less than 200 of its Tucson Fuel Cell model crossovers. This adds up to maybe 5,000 passenger vehicles after several years of sales.
Commercial fleets, however, purchase trucks by the thousands. Nikola says it has 9,000 non-binding orders.
Watch for the following to see if the U.S. can actually move from the on-ramp onto the hydrogen highway.
• Nikola has to land other big public contracts. This demonstrates its viability and will allow it to tap the capital markets to raise the cash it needs to succeed. These orders need to be hundreds at a time — enough to continue to support the build out of more fueling stations.
• Toyota must play a bigger role, increasing testing from a single fuel cell truck to many. That will provide a needed endorsement by a mature company for the concept of hydrogen trucking.
• Finally, the state agencies, light vehicle makers and others that are working to deploy fuel cell trucks, buses and passenger cars need to join with Nikola to build out the fueling infrastructure, identifying both urban locations and sites along major truck lanes for stations. Once the fueling infrastructure is in place, watch the economic and environmental benefits power a rapid adoption of fuel cell technology.