Is the future for cars EV or FCEV?

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Australian prime minister Scott Morrison announced funding for the federal government’s Future Fuels and Vehicles Strategy earlier this month at what carsales understands was a hastily organised visit to Toyota Australia’s Hydrogen Centre in Altona (Vic).

If the location and tone of the announcement are anything to go by, the federal government is championing the idea of hydrogen fuel-cell electric vehicles (FCEVs), even if the rest of the world has moved on to battery-electric vehicles (BEVs).

That could be a problem for Australian drivers. While hundreds of different BEV models roam the world’s roads, only three production FCEV passenger cars exist. And only one of them is available to the Australian public – and even then only on a limited, conditional subscription basis.

Car companies continue to invest in FCEV research, but only three (Toyota, Honda and Hyundai) have taken the leap into passenger car production and stayed there.

Every other car-maker has moved most of their research and development chips in on BEVs, and the numbers don’t lie about that.

But the PM also made the claim that there had been “massive change in the technology” in electric and fuel-cell vehicles to justify a $250m (over 10 years) policy change since 2019.

The scantily detailed policy includes $178m to build 1000 public charging stations, 400 more in businesses and in 50,000 private homes in the hope of EVs making up 30 per cent of Australian new vehicle sales by 2030.

There is also no binding commitment to end the sale of combustion-powered cars in Australia, as there is in the EU (2035), with The Netherlands, Austria, Belgium, Denmark, Greece, Malta, Ireland, Lithuania and Luxembourg leading the push. Norway has gone its own way, with the planned end of combustion-powered sales set for mid-2022!

The only trouble the “massive change in the technology” claims behind Morrison’s switch from mocking EV targets to pushing them is this: no car-maker we spoke to could identify what this “massive change in the technology” was.

BMW insists it is: “Looking at an incremental evolution – not a massive leap,” according to the company’s head of communications for innovation, while a Toyota spokesman responded with: “Not that we know about”.

Daimler, Audi, Volkswagen, Porsche, Peugeot and Hyundai representatives all insisted they were proceeding incrementally with their long-term plans, all while evolving lithium-ion batteries and either synchronous or non-synchronous electric motors, with slightly more or fewer rare-earth metals.

The federal government has been criticised for mocking the EV policy taken by former Labor leader Bill Shorten to the last federal election.

That policy would have set a target of a a 50 per cent EV sales mix by 2030, added charging infrastructure to commonwealth buildings, given an immediate 20 per cent tax rebate on EVs in private hands and incorporated charging infrastructure on all federally funded road upgrades.

The 2019 Labor policy went further than the 2021 Coalition EV plan (and, no, it didn’t mandate an EV percentage or fuel-tax hikes).

The prime minister made his electrification announcement at a hydrogen plant, with clear hydrogen sponsorship (which was also used as a backdrop in Glasgow’s COP26 summit), making it clear his government was tilting towards hydrogen fuel-cell tech.

So would Australia be backing a winner by leaning into FCEVs rather than BEVs?

EV versus FCEV: Where are we now?

There are more than 300 battery-electric models on sale in China today and at last count 189 in Europe (though this figure grows almost every week).

The EVs available in Australia top out at about 20, which is actually a remarkable sign of consumer demand in a country with no federal EV incentive scheme.

The cheapest is the MG ZS, which has become Australia’s second biggest selling EV thanks in part to a $44,990 drive-away price point.

Yet, compared to their combustion and hybrid counterparts, the sales of BEVs in Australia are paltry.

To the end of October, Australians had bought 1296 passenger BEVs (compared to 158,511 petrol- and 6116 diesel-powered cars), 2690 electric SUVs (versus 319,823 petrol and 91,105 diesel versions) and just 43 light commercial BEVs.

Those numbers don’t quite end the BEV conversation, though. Tesla, which sells us its Model 3, S and X variants, is not a member of the body (the Federal Chamber of Automotive Industries) that keeps score and does not officially report its sales figures.

In 2021, carsales sources have Tesla adding 7600 BEVs to Australian roads to the end of August this year, almost all of them Model 3s.

EVs make up less than one per cent of the Australian new-vehicle market, compared to 10 per cent across Europe and more than 50 per cent in Norway.

However, the only three FCEV models in the world today are the Honda Clarity, the Hyundai Nexo and the Toyota Mirai, and none of them are unconditionally available here.

Mercedes-Benz and the Volkswagen Group (including Audi, Bentley, Porsche, Skoda, Seat, Cupra and Lamborghini) have ruled out FCEV passenger cars in the near future, and the French car-makers have done the same thing.

And there are almost 1200 articles on carsales.com.au about BEVs, and just 45 on FCEVs.

One of the issues for the fuel-cell powertrain has been that if the BEV charging infrastructure in Australia is poor, the hydrogen-charging infrastructure is downright starving.

FCEV is predicted to have a greater impact in back-to-base commercial vehicle operations than in passenger cars, especially in commercial vans and short-haul trucks.

“The commercial sector is what will pull the infrastructure at first, because they are large users and can make the operating cost of a station economically viable and reduce cost of H2 [hydrogen] from scale,” a Toyota Europe spokesman said.

“Cars are interesting because they, in turn, thanks to their bigger volume [cars sell in greater numbers than commercial trucks and buses], can help reduce cost and reduce size of fuel-cell systems from standardisation and economies of scale in manufacturing.”

According to SNE Research, only 11,200 FCEVs were sold in the world in the first half of this year – while China alone registered two million BEVs to the end of October this year.

On the numbers alone, there are few reasons for car-makers to strain against the starting gates to sign on to the government’s preferred kind of electric driving.

The exception is, as it has often been, Toyota, which is moving forward with FCEVs. A late arrival in the BEV game, Toyota’s luxury division Lexus is about to launch its first BEV in Australia (the UX 300e small SUV) and will launch the Toyota-branded BZ4X late next year, but its long-term goals keep FCEVs firmly in mind.

“If you talk about the notion of fuel economy for the driver, both [FCEV and BEV] are similar,” a Toyota Europe spokesman said.

“H2 is still more expensive than electricity, but H2 will ultimately come down and be cheap enough to be competitive.

“Electricity is likely to rise in price once it is more in demand and the cost of quick charging is factored in [not to mention the taxation that will be applied to make up for the shortfall on petroleum taxes]...

“Consumption-wise, the H2 FCEV is good, around 5kg for 500-600km on a Mirai for instance.”

The clear advantages for FCEVs are refueling times and range, especially for heavier vehicles.

That said, BEV ranges for larger cars and SUVs are realistically in the ballpark of petrol-powered cars, and some of the increases in range often come from software upgrades to existing models rather than switching out batteries.

That said, Chinese car-makers are still releasing and selling BEVs with a fast-charging technology the rest of the world has rejected – battery swaps.

Meanwhile, federal incentives or not, the calls for BEVs are becoming too loud for local distributors to ignore.

European emissions regulations (EU7, in particular) effectively mandate a percentage of BEVs in every car-maker’s range with the threat of tens of millions of euros in punitive fines.

Naturally, car-makers saw this coming a decade ago, and have all rolled out new BEV models to meet the rule change.

While they cost more to build, both in cash and in embedded CO2 emissions, the added benefit in EU7-driven BEVs is that they can be sold into China’s ridiculously large NEV (New Energy Vehicle) market.

BEVs have moved well out of the niche now and are becoming mainstream, with Norway’s car market up to 50 per cent BEV. Inevitably, some Australians will trudge down this same path and others will sprint towards it.

From about 20 models today, car-makers have committed to more than doubling that number this year (as EU7-compliant cars ramp up and semiconductors become more broadly available for them). They expect to cross the 100-model threshold in time for the EU’s next big emissions-rule step in 2025.

Utes, SUVs and light trucks dominate the local market and that represents one major short-term headache here. There aren’t many of them on sale even in Europe or China yet.

But they are coming, too, and their packaging allows for larger battery packs and clever ideas, like the Ford F-150 Lightning that can channel its electrical charge to power a house for three days.

Polestar is coming with new EVs, Kia will soon launch the EV6, BMW has its iX and i4 on boats already and the new Hyundai IONIQ 5 has just been named carsales Car of the Year for 2021.

Will another internal-combustion car ever win COTY again? With the preponderance of investment and development weight moving to BEVs, that seems as unlikely as it is undesirable.