Is China Switching to Fuel Cell Cars? (Spoiler: Yes, a bit)

We at ChinaBriefs want to let you know when we see interesting developments going on in China. And that is the case right now with NEVs - New Energy Vehicles. 

So far, China has put a lot of effort into becoming the world leader when it comes to electric cars: every motor scooter is already electric for nearly 10 years, buses and taxis are being replaced at an amazing speed and there are hundreds of startups working hard to become the electric version of Volkswagen or GM. Just last week, Business Week had an interesting cover story about how China strategically turns whole cities into manufacturing hubs for EVs by pouring billions into the development of the necessary ecosystems.

So far the focus clearly has been on BEVs (battery electric vehicles), but that is where we see a change right now: subsides for BEVs are being cut and there are more and more reports in Chinese media or social media about the advantages of hydrogen / fuel cell powered cars over those with lithium-ion batteries. According to some media reports the change in thinking came after China’s premier Premier Li Keqiang visited a Toyota factory in Hokkaido Japan last year, where accompanied by the Japanese prime minister they inspected the hydrogen powered Toyota Mirai - another report about the visit form CCTV in Chinese (Flash needed).

Whatever he saw there, seems to have left quite an impression and apparently caused the Chinese government to consider fuel cell powered cars now as an alternative to BEVs. So when the Japanese premier Abe visited China shortly thereafter in October 2018, the two countries signed a cooperation agreementwhich contained also the set-up of a hydrogen charging station network. Five months later in March 2019 the word “hydrogen power” was mentioned in the Annual Work Report 2019 of the Central Government for the first time ever. On March 26 several Central Government ministries and commissions jointly released a notice announcing severe cuts to NEVs - especially BEVs, with the surprising exception for fuel cell vehicles and commercial (non-passenger) NEVs. For those two variants new government regulations are in the pipeline. In the same document, the local governments were specifically instructed to use the savings on efforts to build out a better charging infrastructure for hydrogen powered cars.

All this at a time when most Western car brands have finally decided to focus more or less 100% on battery technology and BEVs - in some case despite the decades of research effort some of them already have put into fuel cell technology, but obviously to no avail so far.

Right now there are still very few car companies in China using fuel cell technology. One example is Grove Automotive based in Wuhan.

Key Take away:

Make no mistake: China surely won’t give up the competitive advantage with BEVs in favor of hydrogen powered cars. But they are smart enough not to put all their eggs into one Lithium-powered basket. Going forward China will probably develop fuel cell powered cars with the same tenacity as BEVs so far - as a second option to see how things play out in the future… maybe the smartest move anyone can do at this point.