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Posted on  

June 5, 2001

Commercial Success for Fuel Cell-Powered Vehicles Rests On Solutions to Numerous Challenges, Says New Roland Berger Study

If fuel cell vehicles are to have significant long-term impact in the auto industry, automakers and suppliers must successfully address 12 commercialization challenges that loom over the auto fuel cell industry, according to a new study by Roland Berger Strategy Consultants.

The most difficult among the 12 challenges are low-cost infrastructure, range and power density. Other challenges include cost reduction, component integration complexity and safety issues, to name a few.

These and other findings of the Roland Berger study "The State of the Overall Fuel Cell Industry and the Challenges for the Automotive Fuel Cells," are based on interviews with senior executives from automakers and fuel cell developers from various industries around the world and extensive secondary research. The study assessed the current state of the fuel cell industry and identified key trends and challenges. It also offers insights regarding critical strategic issues for future success in the fuel cell industry.

The opportunity is alluring. Fuel cells (FC) offer a virtually pollution- free source of power, which has generated significant interest by a number of companies hoping to benefit from this opportunity. These companies are developing products for three broad markets: portable communications (e.g., laptop computers, cell phones); stationary (e.g., residential back-up, electric utility grid support, hospitals); and transportation (e.g., fork lift trucks, passenger vehicles, buses).

"We will see the launch of fuel cell products in all three major markets during the next four years," said Michael Heidingsfelder, Managing Partner of Roland Berger in North America. "However, fuel cell products will succeed only if they have a value proposition greater than their competing technologies in any given market."

Developers of these products fall into two major categories: newer, smaller dedicated fuel cell developers who have raised substantial funding through capital markets; and older, larger companies, for whom fuel cells are an "insurance policy," and who are internally funding their research.

"To get there, companies should develop a clear commercialization roadmap and form strategic relationships to overcome these challenges," said Mahesh Lunani, Project Manager of Roland Berger's Automotive Competence Center. "They also need to leverage their experience across markets. To do all of this, they need continued support from capital markets."

In the automotive realm, vehicle makers' commitment is strong. According to the study, automakers and others will invest as much as $5.2 billion in research by 2004 to develop and try to commercialize workable, low-cost fuel cell technology. Despite uncertainties concerning government regulations, technology implementation and customer acceptance, automakers remain steadfast in their pursuit of commercially viable fuel cell vehicles.

Suppliers will be key. Successful suppliers of FC technology and systems for the auto industry must have a proven track record in related technology, a willingness to share development costs and be able to work closely with automakers to develop product requirements and understand the mindset of automakers and their industry as a whole.

"While the next few years will be an exciting time in FC vehicle development, there is certainly no guarantee for success," says Heidingsfelder. "The winner in the automotive fuel cell industry will be one who can build a fuel cell vehicle very close to the sticker price of a comparable internal combustion engine vehicle."  

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