Vehicles with hydrogen fuel cells will become a major player in China’s commercial truck market, predicts JPMorgan’s Elaine Wu.
“Currently, fuel cell vehicles account for less than 5% of the commercial truck market in China and this could grow to about a third of the total market share by 2050,” said Wu, head of the ex-Japan of ESG and public service research in Asia. the firm said on Monday on CNBC’s “Squawk Box Asia.”
Fuel cell electric vehicles run on hydrogen-powered electricity, which can be used to store and supply energy derived from other sources. Hydrogen is a clean fuel and, when consumed in a fuel cell, only produces water.
One of the reasons fuel-powered vehicles are a “very good choice” for the commercial truck market is because of their refueling time of only 10 to 15 minutes, Wu said. They also have a distance of about 800 kilometers, approximately 50% to 100% above electric vehicles with a lithium battery.
Major car manufacturers such as Toyota, Honda and BMW are taking advantage of the hydrogen fuel cell market.
According to the JPMorgan analyst, China is already pushing for the promotion of fuel cell vehicles.
“The file [Chinese] the government is promoting something, what we call “city clusters,” so there may be demonstrative cities that tell successful stories of how fuel cell vehicles are deployed in various parts of the country, ”Wu said.
“This is also a policy we saw implemented about a decade ago, when the central government was trying to produce lithium-battery electric vehicles. And we saw the success it had.”
Beijing has said it would like 20% of new cars sold to be new energy vehicles by 2025. Competition is fierce in the domestic electric vehicle space, with Tesla competing against in-house players like Nio and Xpeng.
China’s climate goals
With China’s commitment to becoming carbon neutral by 2060, hydrogen will likely play a role in heavy industry as a source of clean energy, according to Wu.
“For this heavy industrial sector, a high heat content is required and therefore renewable energy is not a good option to power the heavy industrial sector, but hydrogen is,” he said.
The analyst said China leads the world in hydrogen production and accounts for a third of world production.
“In the future, the production of green hydrogen could be promoted through which renewable energy will be used to produce hydrogen,” Wu added.
Currently, hydrogen is produced from coal and the shift to organic production will only be possible if renewable energy costs continue to decline, he added.
“What we have seen in the last ten years is that the cost of solar energy production has dropped by 80% in China. The cost of wind power production has dropped by 40%,” he said. “If this trend continues (and we believe it will be due to technological advancement), it means that green hydrogen will be possible in the future when these things come into play.”
– CNBC’s Anmar Frangoul and Evelyn Cheng contributed to this report.