Hydrogen vs. Battery

[anticitizen13.7]

It does appear that Elon and JB genuinely cannot understand why any car company is devoting resources into FCVs. It makes no sense at all.

My opinion is that the heads of a few major car companies years ago got suckered into the promise of FCVs by engineers who thought it would be fun to explore the idea and now that they have put so much money into their programs they are afraid to stop the development.

I can tell you exactly why the big automakers favor FCEVs: because they cannot see beyond the paradigm of liquid fueling stations. They make product that sells under this model and wish to continue doing so out of psychological comfort.

The public at large is used to fueling up a car with liquid fuel at a store, and not at home. FCEVs in theory would operate the same way: drive to your corner station, take 5 mins to fuel up with liquid energy storage medium, and repeat every so often.

In every BEV debate I've had with friends, family, and others, I've noticed that many people are unsure or uncomfortable with the idea of leaving the gas station behind, or not being able to fuel in 5 minutes. The Supercharger network does help a lot with curing this discomfort, but the real way to get people onboard is to analogize with a smart phone. Most people I know have a smart phone that they plug in at night. Tell them that a BEV works similarly and they start to understand. This also gives people reassurance because smart phone charging is something with which they are already familiar.

 

[JRP3]

Unless they are the type always running out of charge for their phone :wink:

 

[TD1]

It does appear that Elon and JB genuinely cannot understand why any car company is devoting resources into FCVs. It makes no sense at all.

And they did not take the opportunity to say that FCVs are just a way to get ZEV credits. They are either too polite to say that in public, or they simply cannot believe anyone could be so stupid as to take that path.

My theory is that the bigOil has very well placed Boardmembers in these companies like Toyota and Daimler.
Its important to understand that the business model of the bigOil companies changed in the recent decades, most Oil sources became government owned.
That means that companies like Exxon, Shell, BP, ARAL etc. are no focused on distribution.

So that means these companies have tons of real estate in traffic heavy areas and an excellent distribution network.
Now they also see that Petrol is comming to an end, and there has to be a substitute for that.
BEVs are their nightmare, those cut out their whole Business model.

Hydrogen makes use of their business model and they can keep their Business. Hydrogen supply will always stay centralized.
It makes sense for them to lobby for that technology and push the car companies in that direction.
Maybe they are even funding big parts of the research trough all kinds of trusts.


Second:
I could imagine that Focus groups and user surveys, have glowing response to "would you like to drive a Hydrogen car"
Sad thing is that many people think "Hydrogen" is just Tapwater <-- YES its ridiculous, or think its not tapwater but should be easyly made from water (almost for free)

 

[ggr]

I'm not quite sure how to tell this story, since the details of my experience are still highly confidential. I'll try to cast it in terms of the Hydrogen Fuel Cell situation, and see how it goes.

Basically the company had invested about $1B in building fabs, first to test, then small production, then planning for a big market push, for the new technology. The boss of the division kept producing slides that said it would all work.

"Yes, it's perfectly clean: produces only water" and "Yes, it's affordable: we can make H2 anywhere for $0.xx/kg".

Of course the slides left out the footnotes:
"* If we don't crack natural gas", and "* If we do crack natural gas", respectively

The slides also left out the infrastructure costs, and the one about production costs was creative about the yield rates. They invented a totally new yield measurement that showed (in effect), yield of Fuel Cells once installed in a car and shipped was about 90%, ignoring that 70% of the cells were thrown out before getting into a car, and 50% of those that were delivered were returned defective within a month. Many slides and graphs showing improvement in costs and yields over time and with increased volume, but restricted to these weird familiar-sounding but unrelated to reality metrics.

The reason behind this was simple, the entire division's existence depended on staying on the roadmap no matter what. Mr Toyoda should get an independent staff Scientist or an external consultant who knows this stuff to go look into the presentations he's getting from the FCV division.

 

[CliffG]

I can tell you exactly why the big automakers favor FCEVs: because they cannot see beyond the paradigm of liquid fueling stations. They make product that sells under this model and wish to continue doing so out of psychological comfort.

(Note: I'm certain many of you will feel I may need to be fitted with a tin-foil cap...)

Do you make your own razor blades? Isn't the money in selling blades?
Do you make your own print toner? Isn't the money in selling toner & ink cartridges?
Do you make|provide your own gasoline? Isn't the money in selling oil, gasoline, spare parts and repairs?

I think many of us get it on a gut level that the money is in the consumables and Teslas (and hopefully other BEVs) don't support that model. It's all about the money.

Follow the money...

 

[CalDreamin]

My theory is that the bigOil has very well placed Boardmembers in these companies like Toyota and Daimler.
Its important to understand that the business model of the bigOil companies changed in the recent decades, most Oil sources became government owned.
That means that companies like Exxon, Shell, BP, ARAL etc. are no focused on distribution.

While it's true that most global oil reserves are now government owned, the business model of the supermajor oil companies is still heavily centered around oil and natural gas exploration and production -- "upstream" in oil business jargon. A large majority of their annual earnings comes from oil and natural gas exploration and production. A large majority of the capital expenditures of the supermajor oil companies is sunk into oil and natural gas exploration and production.

Distribution and retail are relatively small parts of the portfolio of the supermajor oil companies, and is less than it once was because (at least in the US) the big oil companies have been divesting their distribution and retail assets. Those Exxon and Shell gas stations you see (at least in the US) are now independently-owned franchises. Also, the big oil companies have been selling their pipelines to invest in higher ROI upstream projects. In any event, most of the supermajors' distribution networks would be useless for transporting hydrogen to FCEV H2 fueling stations.

I don't see a rationale for the big oil companies favoring FCEVs over BEVs. Both BEVs and FCEVs threaten the major assets of the big oil companies, so if anything they have an incentive to oppose both FCEVs and BEVs. Their oil reserves, crude oil & finished oil product distribution networks (ships, terminals, pipelines), and oil refineries would become low valued and potentially stranded assets if BEVs or FCEVs displaced gasoline/diesel ICE. Their natural gas production and distribution assets would still be valuable whether BEVs or FCEVs win -- BEVs using electricity produced from natural gas or FCEVs using hydrogen produced from natural gas.

 

[Johan]

While it's true that most global oil reserves are now government owned, the business model of the supermajor oil companies is still heavily centered around oil and natural gas exploration and production -- "upstream" in oil business jargon. A large majority of their annual earnings comes from oil and natural gas exploration and production. A large majority of the capital expenditures of the supermajor oil companies is sunk into oil and natural gas exploration and production.

Distribution and retail are relatively small parts of the portfolio of the supermajor oil companies, and is less than it once was because (at least in the US) the big oil companies have been divesting their distribution and retail assets. Those Exxon and Shell gas stations you see (at least in the US) are now independently-owned franchises. Also, the big oil companies have been selling their pipelines to invest in higher ROI upstream projects. In any event, most of the supermajors' distribution networks would be useless for transporting hydrogen to FCEV H2 fueling stations.

I don't see a rationale for the big oil companies favoring FCEVs over BEVs. Both BEVs and FCEVs threaten the major assets of the big oil companies, so if anything they have an incentive to oppose both FCEVs and BEVs. Their oil reserves, crude oil & finished oil product distribution networks (ships, terminals, pipelines), and oil refineries would become low valued and potentially stranded assets if BEVs or FCEVs displaced gasoline/diesel ICE. Their natural gas production and distribution assets would still be valuable whether BEVs or FCEVs win -- BEVs using electricity produced from natural gas or FCEVs using hydrogen produced from natural gas.

But by backing FCV technology and pushing it as a constant competitor against BEVs may slow down the gradual take-over from BEVs that is inevitable. I think there as smart enough scientists and engineers employed by/consulted by Big Oil to have figured this one equation out 5-10 years ago and that's when they made their game plan. Basically they know FCVs are a dead end but they push it as a diversion/resistance tactic against BEVs on all levels (consumer, political, public perception, car manufacturers etc).

 

[CalDreamin]

But by backing FCV technology and pushing it as a constant competitor against BEVs may slow down the gradual take-over from BEVs that is inevitable. I think there as smart enough scientists and engineers employed by/consulted by Big Oil to have figured this one equation out 5-10 years ago and that's when they made their game plan. Basically they know FCVs are a dead end but they push it as a diversion/resistance tactic against BEVs on all levels (consumer, political, public perception, car manufacturers etc).

I disagree, I don't think the oil companies "know FCVs are a dead end." The oil companies follow what the automakers are saying and doing, and Toyota, Hyundai, Honda, Mercedes-Benz, BMW, Nissan, Ford, and most of the other big automakers are investing a lot in H2 FCEVs. Besides VW and Tesla, which leader among automakers has said that FCEVs don't make sense? I might be wrong, but my impression is that there's more automaker R&D being spent on H2 FCEVs than on BEVs. I don't think H2 fuel cell vehicles make sense for reasons stated in other threads, but obviously many leaders of the automakers believe I'm wrong, and the oil companies follow what the automakers are saying.

 

[TD1]

my tin foil hat instinct tells me that its exactly the opposite.

The Oil companies tell the automakers what to do.
Some publicly known examples:

Quatar Holding had/has 17%/15,6% stake in Volkswagen
United Arab Emirates owns 9,1% of Diamler Benz

That are only the examples that I know about, I guess there are more.

As CliffG mentioned the money is in the consumables and therefore it would make sense to push the automakers towards FCV instead of BEV.

 

[dmckinstry]

I disagree, I don't think the oil companies "know FCVs are a dead end." The oil companies follow what the automakers are saying and doing, and Toyota, Hyundai, Honda, Mercedes-Benz, BMW, Nissan, Ford, and most of the other big automakers are investing a lot in H2 FCEVs. Besides VW and Tesla, which leader among automakers has said that FCEVs don't make sense? I might be wrong, but my impression is that there's more automaker R&D being spent on H2 FCEVs than on BEVs. I don't think H2 fuel cell vehicles make sense for reasons stated in other threads, but obviously many leaders of the automakers believe I'm wrong, and the oil companies follow what the automakers are saying.

While I can't prove that oil companies "know FCVs are a dead end", they do know that if they succeed in pushing the sale of FCVs they can continue to sell natural gas and the other fossil fuels needed to turn natural gas into hydrogen.

 

[Johan]

Spot on TD1. Big Oil is vastly more powerful than Big Auto. Big Oil's profits have always vastly exceeded those of Big Auto, both in absolute terms and in terms if margins (Big Auto: 10% gross margin? Big Oil: 200-500% gross margin historically).

Also the dead end statement is perhaps a bit sharp, for now, but looking just a few decades in to the future it is not an overstatement at all. It's a fact of physics and engineering realities.

 

[CalDreamin]

While I can't prove that oil companies "know FCVs are a dead end", they do know that if they succeed in pushing the sale of FCVs they can continue to sell natural gas and the other fossil fuels needed to turn natural gas into hydrogen.

The oil companies can continue to sell natural gas to the utilities that burn NG to generate electricity. They are doing a massive amount of that already. They can sell their natural gas either way.

- - - Updated - - -

my tin foil hat instinct tells me that its exactly the opposite.

The Oil companies tell the automakers what to do.
Some publicly known examples:

Quatar Holding had/has 17%/15,6% stake in Volkswagen
United Arab Emirates owns 9,1% of Diamler Benz

Your examples don't support your premise. The CEO of VW Group apparently didn't get the memo, because he said in a press conference that fuel cell vehicles aren't viable.

Daimler apparently also missed the memo from Big Oil, because they saved Tesla from bankruptcy in 2009.

If the automakers were taking orders from the oil companies, they would cease all development of FCEVs, BEVs, and PHEVs. The oil companies will lose the vast majority of their assets and earnings if demand for oil products substantially decreases.

- - - Updated - - -

Spot on TD1. Big Oil is vastly more powerful than Big Auto. Big Oil's profits have always vastly exceeded those of Big Auto, both in absolute terms and in terms if margins (Big Auto: 10% gross margin? Big Oil: 200-500% gross margin historically).

The largest and most profitable of the Big Oil companies is Exxon Mobil, who had a gross margin last year of 27.6%. Shell had a gross margin last year of 15.4% while BP had a gross margin of 14.0%. Toyota's gross margin was 19.0% in their most recent fiscal year, while VW's was 18.5%.

 

[JRP3]

The oil companies can continue to sell natural gas to the utilities that burn NG to generate electricity. They are doing a massive amount of that already. They can sell their natural gas either way.

True but at what profit margin and for how long? NG for power plants has to compete with other sources of energy, including the renewables most of us expect to eventually dominate the grid. If they can push a technology dependent on pulling up to a fuel pump to get a product most economically produced from NG the profit point should be higher for them.

 

[anticitizen13.7]

(Note: I'm certain many of you will feel I may need to be fitted with a tin-foil cap...)

Do you make your own razor blades? Isn't the money in selling blades?
Do you make your own print toner? Isn't the money in selling toner & ink cartridges?
Do you make|provide your own gasoline? Isn't the money in selling oil, gasoline, spare parts and repairs?

I think many of us get it on a gut level that the money is in the consumables and Teslas (and hopefully other BEVs) don't support that model. It's all about the money.

Follow the money...

my tin foil hat instinct tells me that its exactly the opposite.

The Oil companies tell the automakers what to do.
Some publicly known examples:

Quatar Holding had/has 17%/15,6% stake in Volkswagen
United Arab Emirates owns 9,1% of Diamler Benz

That are only the examples that I know about, I guess there are more.

As CliffG mentioned the money is in the consumables and therefore it would make sense to push the automakers towards FCV instead of BEV.

The printer consumables model is a possibility, but one that depends, as pointed out, on oil/energy companies actually owning either substantial or controlling stakes in the major automakers.

I looked at the biggest shareholders from GM, Toyota, and Volkswagen Auto Group:

Toyota: http://www.toyota-global.com/investors/stock_information_ratings/outline.html

Japan Trustee Services Bank, Ltd. 331,408
Toyota Industries Corporation 223,515
The Master Trust Bank of Japan, Ltd. 181,754
State Street Bank and Trust Company
(standing proxy: Settlement & Clearing Services Division, Mizuho Bank, Ltd.) 128,118
Nippon Life Insurance Company 122,323
The Bank of New York Mellon as Depositary Bank for Depositary Receipt Holders 83,412
Trust & Custody Services Bank, Ltd. 70,824
DENSO CORPORATION 69,533
Mitsui Sumitomo Insurance Company, Limited. 66,063
State Street Bank and Trust Company
(standing proxy: The Hongkong and Shanghai Banking
Croporation Limited, Tokyo Branch)

General Motors: http://finance.yahoo.com/q/mh?s=GM+Major+Holders

Harris Associates L.P. 63,541,243 3.96 2,187,089,584 Mar 31, 2014
Vanguard Group, Inc. (The) 60,929,440 3.80 2,097,191,324 Mar 31, 2014
JP Morgan Chase & Company 52,167,433 3.25 1,795,603,043 Mar 31, 2014
State Street Corporation 51,498,006 3.21 1,772,561,366 Mar 31, 2014
Capital Research Global Investors 49,563,717 3.09 1,705,983,139 Mar 31, 2014
BlackRock Institutional Trust Company, N.A. 35,488,962 2.21 1,221,530,072 Mar 31, 2014
Capital World Investors 30,076,192 1.87 1,035,222,528 Mar 31, 2014
Berkshire Hathaway, Inc 30,000,000 1.87 1,032,600,000 Mar 31, 2014
Invesco Ltd. 28,487,046 1.78 980,524,123 Mar 31, 2014
Price (T.Rowe) Associates Inc


VAG: http://www.volkswagenag.com/content...or_relations/share/Shareholder_Structure.html

50.73% 20.00% 17.00% 12.30%

Porsche Automobil Holding SE, Stuttgart State of Lower Saxony, Hanover Qatar Holding Others

While it is true that Qatar holds a 17% stake in VAG, Toyota ownership is dominated by Japanese banks and insurance companies, and GM ownership is similarly dominated by prominent American financial houses. I don't see how sovereign wealth funds of oil states, or companies like Exxon Mobile or Royal Dutch Shell, could exert enough shareholder power to effectively control the automotive industry.

Based on my conversations with people, I believe that it really is the case that most of the actors in the automotive industry just cannot wrap their minds around a paradigm that doesn't involve a refill station. This isn't the first time we've seen this kind of paradigm shift completely blindside an industry. Remember Napster 15 years ago? And then iTunes? Few people if anyone at record companies thought that people would want to download individual songs on the Internet rather than buy entire disc albums at a store. The recording industry found itself turned upside down, and the RIAA fought the downloaders in what ultimately proved to be a futile battle. They are now playing second fiddle to the likes of Apple, Amazon, and streaming companies like Spotify.

 

[William13]

I believe that it is basically diversionary and multifactorial. People look to what they think is in their best interest usually rather than the best interest of the world. Several years ago everyone thought that BEVs were/are not viable. Now BEVs have been shown to work. To confuse the public and slow down acceptance (ala FUD against anthropomorphic global warming) of BEVs both big oil and many global automakers are promoting FCV. Of course CARB credits, avoiding paying Tesla for credits, and entrenched research and development interests also contribute. Usually Occam's razor of the simplest explanation is best. In this case multiple factors are likeliest. It is seldom that one thing (conspiracy theory) is the prime mover. This desire to find an underlying single cause is the main cause for the popularity of conspiracy theories.

 

[CalDreamin]

Based on my conversations with people, I believe that it really is the case that most of the actors in the automotive industry just cannot wrap their minds around a paradigm that doesn't involve a refill station. This isn't the first time we've seen this kind of paradigm shift completely blindside an industry. Remember Napster 15 years ago? And then iTunes? Few people if anyone at record companies thought that people would want to download individual songs on the Internet rather than buy entire disc albums at a store. The recording industry found itself turned upside down, and the RIAA fought the downloaders in what ultimately proved to be a futile battle. They are now playing second fiddle to the likes of Apple, Amazon, and streaming companies like Spotify.

I agree completely. I think most of the automakers cannot envision a paradigm shift away from personal vehicle refueling that isn't entirely dependent on filling stations. Those of us who own BEVs argue in vain trying to explain the convenience of waking up each morning to a "full tank" and rarely having to visit a refueling station (aka Superchargers or public chargers).

Also, the culture in any large corporation will stress leveraging core strengths, and Toyota's top tier core strength in hybrid technology is leveraged in fuel cell vehicles, but not with BEVs. I don't see any sinister plot here, just a predictable result of corporate culture that is blocking their ability to see where BEV developments are heading.

I think Carlos Ghosn (Nissan/Renault) is a rare leader among the major automakers in seeing where BEVs are heading. Most of the rest cannot see the coming paradigm shift.

Likewise, I don't think the oil companies envision the timeline of the coming paradigm shift away from oil. Some of them know it's coming, but they seem to think it's farther in the future than I think it will be. For me personally, this is a pity, because I would like to be able to receive a pension from my Big Oil employer for a good 40 years or so. I'm not convinced that my employer will outlast me.

 

[Larry93428]

Reduce it to absurdity: Would one want a fuel cell lawnmower, weed whacker or any other small portable?
No, that is just silly; all that complicated chemistry to rotate a shaft.
Fuel cells are just a diversion. BEV will prevail.

 

[CalDreamin]

True but at what profit margin and for how long? NG for power plants has to compete with other sources of energy, including the renewables most of us expect to eventually dominate the grid. If they can push a technology dependent on pulling up to a fuel pump to get a product most economically produced from NG the profit point should be higher for them.

I agree that renewables (+ storage) will eventually dominate the grid, because of economic advantages. I think most of the oil and gas companies don't think very far into the future, and those that do don't understand how quickly the transition to renewables will happen after cost parity is reached. If they did, they would be leveraging their massive capital into renewables instead of oil sands, oil in unstable regions of the world, fracking, offshore oil and offshore NG, LNG, etc.

 

[ecarfan]

Carlos Ghosn (Nissan/Renault) is a rare leader among the major automakers in seeing where BEVs are heading. Most of the rest cannot see the coming paradigm shift.

Unfortunately Ghosn seems to lack the boldness that Elon regularly displays. The Leaf has been sold for close to four years and all that time it has only had one battery size, making it strictly a city commuter car. Few people consider it suitable as a primary vehicle. In addition the DC charging rate is not fast enough to make it useful for longer rates. Hence the relatively low sales. I remain amazed that it is taking Nissan so long to offer a longer range Leaf with a faster charging rate.

 

[CalDreamin]

Unfortunately Ghosn seems to lack the boldness that Elon regularly displays. The Leaf has been sold for close to four years and all that time it has only had one battery size, making it strictly a city commuter car. Few people consider it suitable as a primary vehicle. In addition the DC charging rate is not fast enough to make it useful for longer rates. Hence the relatively low sales. I remain amazed that it is taking Nissan so long to offer a longer range Leaf with a faster charging rate.

Perhaps Ghosn bought into the widespread claim that drivers only average 40 miles/day so an 80 mile range Leaf is absolutely fine for most car buyers. One still hears that claim, even though most buyers have voted with their wallets for more range. Nissan will increase their BEV range, while Musk works toward a more affordable long-range Tesla. They are solving the problem from different angles. It's all good.