Hyundai bets on hydrogen for green cars

By Kim Da-ye

While the media hype foretells electric vehicles (EVs) are the future of the auto industry, the world’s fourth-largest automaker hasn’t determined which is to be the ultimate green car: an EV or rather a hydrogen fuel cell vehicle.

“We don’t know yet where the future of eco-friendly cars is heading. For now, we are working on both,” a Hyundai Motor Group official said.

And Hyundai’s continued efforts that began with a fuel cell version of the Santa Fe sports utility vehicle (SUV) in 2000 have placed it in a good position in the fledgling market.

The Aug. 9 report by U.S. green technology market research firm Pike Research ranked Hyundai-Kia fourth among 10 original equipment manufacturers (OEMs) after Daimler, Honda and Toyota.

The report evaluated 10 OEMs working on fuel cell vehicles (FCVs) and rated them on 12 criteria including go-to-market strategy, product portfolio, partnerships and pricing.

As various overseas news reports say that some automakers dropped out of the FCV developing race and some, including Toyota, remain pessimistic over their commercialization, Hyundai’s bet on FCVs means it will claim an advantageous position if the technology takes off.

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A hydrogen fuel cell produces electricity from the reaction between hydrogen and oxygen.

Key components of fuel cell vehicles are the fuel cell, the motor, the hydrogen storage and the oxygen provider. Hyundai’s FCVs are, at the end of the day, electric vehicles using an alternative energy source.

According to the Korean government’s 2007 blueprint on the hydrogen energy industry, it aims to have 10 hydrogen stations, 500 FCVs and 20 fuel cell buses by 2012. Between 2013 and 2020, it hopes to form a market with 500 stations and 50,000 FCVs.

Hyundai Motor and Kia Motors are working within the timeline, aiming to distribute FCVs or testing in 2012 and to begin mass production in 2015.

The automakers are test-driving 100 FCVs until the end of 2011 — 65 Kia Mohaves and 48 of the Hyundai Tucson ix — and Seoulites can occasionally spot the SUVs with a blue logo printed on the side.

Hyundai’s latest Tucson ix fuel cell electric vehicle (FCEV) is a third-generation FCV equipped with a 100-kilowatt fuel cell and two hydrogen tanks that can carry 5.6 kilograms of hydrogen. Hyundai claims it can run 650 kilometers on one charge.

“Fuel efficiency has improved 15 percent and the mileage has gone up 55 percent from those of the previous generation model,” Hyundai said in a statement last December.

The Tucson ix FCEV can also drive up to 160 kilometers per hour and accelerate to 100 in 12.8 seconds.

The unseen strength of the model is that 95 percent of the key components are locally produced.

According to Pike Research, major automakers plan to introduce their first commercial FCVs in 2014 and 2015.

“In order to meet this target, the OEMs must continue to test and refine their fuel cell systems as well as vehicle integration and optimization. They will also be focused on driving down vehicle costs,” Pike Research said.

“Since hydrogen fueling must be readily available before FCVs are offered for sale, some automakers are working with infrastructure companies and government to support infrastructure rollout.”

Going abroad

The FCV market is expected to remain small. Selling 10,000 a year, which would take place in a few decades, won’t yield much profit, considering the development costs of FCVs. So going abroad to achieve economies of scale will be crucial. Hyundai-Kia has begun setting up a global network.

In May, Hyundai test-drove its FCEVs in the capitals of four Scandinavian countries — Norway, Sweden, Denmark and Iceland.

In Denmark, the Tucson ix crossed from east to west — about 340 kilometers— on one charge in cooperation with local hydrogen station operator H2 Logic. Prior to the test drive, Hyundai signed a partnership with H2 Logic and FCV distributor Hydrogen Link.

In February, it decided to join Germany’s Clean Energy Partnership. Germany, as part of the National Innovation Program, is researching and testing FCVs and the relevant infrastructure with an investment plan of 1.4 billion euro (about 2.1 trillion won) between 2007 and 2016.

Hurdles

Like electric vehicles, FCVs face many challenges in commercialization including the lack of infrastructure and high price tags.

Kim Pil-soo, professor of Daelim University and auto expert, said that the biggest hurdle involves how to produce hydrogen because it cannot be naturally extracted from the earth like fossil fuels.

Unlike the popular idea that hydrogen can be obtained easily by manipulating water, most of it is produced from natural gas. The manufacturing process involves greenhouse gas emissions.

Kim also pointed at the high cost of fuel cells, which contributes to the high price of an FCV.

According to a 2008 presentation by Hyundai-Kia, a fuel cell costs $80 per kilowatt that same year but expected to go down to $30 by 2015.

“An EV is about 1.5 times as expensive as its gasoline-powered counterpart,” Kim said. An FVC is roughly five times as expensive as a gasoline vehicle.

Building a network of hydrogen stations is another problem. Although FCVs can cover a longer distance than EVs and charging hydrogen should take little time, hydrogen’s highly explosive nature could scare residents from living around the stations.

While some automakers do not see a future in FVCs for various reasons, Kim of Daelim University said that leading FCV development could be rewarding for Korea.

“In terms of FCV technology, we are very much advanced... We can lead in this sector, considering that Hyundai developed its own hybrid vehicles despite having started late and having difficult times, avoiding existing patents,” Kim said.

“Regulations regarding the environment are getting tougher, and exporting vehicles could become challenging. We should prepare for it well.”