Is it time for the rise of hydrogen energy vehicles due to the rapid rise of lithium electricity?

On October 26, a "battery price increase contact letter" came out, BYD decided to increase the unit price of battery products, an increase of not less than 20%. Byd is not the first lithium battery company to raise prices, before this, Guoxuan High-tech, Luhua Electronics, Tianneng lithium, Penghui Energy and other lithium battery companies have issued price adjustment letters.

In the case of positive materials and electrolyte prices continue to rise, and the supply of negative materials is tight, lithium battery companies are justified in the downward transmission of cost pressure in the way of price increases, but this has triggered the imagination of hydrogen energy replacement theory.

As far as energy itself is concerned, it is mainly affected by two factors. One is environmental protection. Under the general trend of carbon neutrality, the proportion of traditional energy types will continue to decline. The second issue is cost, and the market is bound to prefer cheaper types of energy for the same purpose.

From the point of view of environmental protection, there is no doubt that electric vehicles and hydrogen vehicles are in line with the requirements. But now that the cost of lithium batteries continues to rise, government subsidies are gradually declining, and the cost performance ratio of electric vehicles has dropped significantly, then whether hydrogen energy vehicles have the opportunity to replace electric vehicles? How close are we to hydrogen cars?

01 The battle of hydrogen energy vehicles

Before discussing the replacement of hydrogen energy vehicles for electric vehicles, first of all, let's figure out what hydrogen energy vehicles are.

From the literal meaning is not difficult to understand, hydrogen energy vehicles are cars that use hydrogen as the main power source. But in fact, there are two branches of hydrogen energy vehicles, hydrogen fuel cells and hydrogen internal combustion engines, and there are essential differences between them.

Hydrogen internal combustion engines are similar to conventional fuel engines, but the fuel is replaced by hydrogen instead of oil and natural gas. The principle is also through the hydrogen combustion to release heat, and by the expansion of the gas to drive the engine work.

Because hydrogen itself is flammable and explosive, so pure hydrogen fuel internal combustion engine vehicles have a certain risk, in daily applications often do not choose pure hydrogen as a fuel, but choose mixed fuel doped with traditional energy, and there is no environmental advantage. In addition, the working mode of heat release has a very low energy efficiency value.

Although we cannot say that the hydrogen internal combustion engine route is a failure, at this stage, this route still has a long way to go from the final commercial landing, and is not the focus of the capital market.

Although the hydrogen fuel cell system has the word "fuel", it does not actually convert energy through combustion, but the chemical reaction of hydrogen in the fuel cell stack, converting chemical energy into electrical energy, and then the process of converting kinetic energy through the motor. This power system seems complex, but it has the advantages of clean environmental protection and high energy conversion.

Source: China Business Industry Research Institute

Source: China Business Industry Research Institute

Similar to electric vehicles, the biggest change in hydrogen fuel cells is the fuel cell stack and auxiliary system (referred to as BOP), which is also the highest proportion of the cost, accounting for more than 60% of the total cost of the vehicle, of which the stack accounts for 60% of the cost of the BOP system.

Due to the high energy conversion rate of hydrogen fuel cells, while the safety factor is also high, it is regarded as a potential track in the market, and is also regarded as the most powerful competitor of electric vehicles.

From the installed capacity analysis, China's fuel cell system is only in the early stage of development, and has not yet entered the dividend release period. In 2019, the national installed fuel cell capacity was 126.4MW, and in 2020 under the epidemic, this data dropped 36% year-on-year to 80.4MW, showing strong volatility.

Compared with the market pattern in 2019 and 2020, it is not difficult to find that this industry is still in a state of domination, and there has not yet been a unified leading company. In addition to the relatively stable market share of Yihuatong, the market rankings of other companies have shown great fluctuations.

Remodeling shares ranked first with a market share of 29% in 2019, but its performance declined sharply in 2020, and it was terminated by the Shanghai Stock Exchange for IPO review; Qingneng shares ranked second in 2019 with a 16% market share, but fell out of the top five in 2020. The Shanghai electric drive acquired by Ocean Electric also did not enter the top five in 2020.

On the other hand, Edelman, which just got 100 million yuan of A round of financing, rushed to the top of the sales list in 2020, and Guohong, which is also a market recruit, ranked third in the market with a 12% share, which means that Jiangshan generation has talents.

For such a loose market pattern, there are opportunities and risks. Each participant in the industry has the opportunity, if the development is smooth then it is likely to become the market leader, but if the development encountered obstacles then there is even a risk of withdrawal from the market.

As early as 1839, British scientist Grove proposed the principle of fuel cells. In fact, both the hydrogen internal combustion engine route and the hydrogen fuel cell route are not new technologies, and even have a history of hundreds of years.

From a technical point of view, hydrogen fuel cells are already relatively mature and have commercial prospects. From the perspective of environmental protection, hydrogen energy batteries, which are also environmentally friendly, have the potential to replace electric vehicles.

02 The yoke of reality

Although hydrogen fuel cell vehicles have the potential to replace electric vehicles, the practical shackles still delay the landing process of this technology.

As I said at the beginning, there are two key factors for energy technology, one is environmental protection, and the other, but more important, is cost. The core reason for the delay in large-scale promotion of hydrogen fuel cell vehicles is the cost.

There are three main costs here: the cost of a hydrogen fuel cell vehicle; Second, hydrogenation station cost; The third is the cost of hydrogen production.

First of all, the current vehicle cost of hydrogen fuel cell vehicles is still high, and there is a lot of room for decline.

As mentioned above, the BOP system is the highest proportion of hydrogen fuel cell vehicle cost factors, of which the fuel cell stack is the highest proportion of BOP system. Therefore, the price of BOP system and fuel cell stack directly determines the cost of the vehicle.

From the perspective of application alone, the use of hydrogen fuel cells in automobiles is no longer a problem, but due to the lack of scale advantages, the iteration speed of related technologies is very slow, which directly causes the price of BOP system to fall.

For example, hydrogen needs to use a catalyst in the reaction process of fuel cell stacks, and traditional catalysts need to use a lot of precious metal platinum (Pt), but in fact metal platinum is not the only choice, by reducing the content of platinum or finding alternatives, it can still play a catalytic role.

Similar technological improvements can appear in almost every branch of the BOP system, from a cost perspective, hydrogen combustion battery cars are still far from "perfect".

According to DOE forecasts, with the U.S. Department of Energy's 2017 state-of-the-art standard, when the annual production of fuel cell systems is 1,000 sets, the projected cost of the system is $216 /kw; When the annual production scale is expanded to 10,000 units, this figure drops to $103 /kw; When the annual scale was expanded to 500,000 units, the cost was cut in half again to $53 /kw.

It can be seen that the cost of hydrogen fuel cell vehicles is directly related to the size of the vehicle, and when the industry scale is expanded, the cost of hydrogen fuel cell vehicles is also expected to decrease significantly.

Secondly, the shortage of hydrogen refueling stations is also one of the important reasons restricting the development of hydrogen fuel cell vehicles.

Hydrogen is the core fuel for hydrogen fuel cell vehicles, but hydrogen is not readily available, and the number of refueling stations is rare compared to the gas stations that are everywhere. Even now, the unit price of hydrogen fuel cell vehicles has dropped to a very low, but if there is no hydrogen station around to provide fuel, then there will be no consumers to buy it.

Just how scarce are our hydrogen refueling stations? By the end of 2020, China has built a total of 118 hydrogen refueling stations, of which 101 have been officially put into operation and 167 are still under assumption. The number of hydrogen refueling stations, just over 100, means that for ordinary people, hydrogen fuel cell vehicles are hardly practical.

So can hydrogen stations be replicated quickly? More difficult!

At present, the cost of building a hydrogen refueling station in China is about 15 million yuan, which does not include the subsequent operation and maintenance costs. But the good thing is that the core products of our hydrogen refueling stations have almost all been independently developed.

From the cost side, the highest cost of hydrogenation station is the compressor, accounting for about 30% of the total cost of the entire hydrogenation station. If a large number of hydrogen refueling stations are popularized, then compressor manufacturers will be the first to benefit, such as Snowman shares, ice wheel environment and so on.

Looking back on the development of electric vehicles, it cannot be found that the rapid rise of electric vehicles is inseparable from the rapid popularity of charging piles. Given the high cost of hydrogen refueling stations, coupled with the certain danger of hydrogen, this means that he is doomed to be unable to roll out as quickly as charging piles, and can only go to the centralized delivery model of gas stations.

In addition, the price of hydrogen directly affects the cost of terminal use.

At present, China's hydrogen sources mainly rely on coal, industrial by-products and natural gas. Although these hydrogen production methods can reduce costs as much as possible, they are not really "new energy" because the process of hydrogen production also involves carbon emissions.

In the industry, hydrogen obtained by "electrolytic water" is called "green hydrogen", and it is also recognized by the market as the best answer to hydrogen energy. The principle of hydrogen production by electrolytic water is to pass direct current into an electrolytic cell filled with electrolyte, and the water molecules undergo an electrochemical reaction on the electrode to decompose into hydrogen and oxygen.

At present, the electrolytic water technology that has achieved industrial scale is mainly alkaline electrolytic water, and proton exchange membrane electrolysis water and solid oxide electrolysis water are still in the development stage. The advantage of alkaline electrolytic water is that the technology is mature and the supporting cost is low, but the disadvantage is that it is too power consuming, and it may be replaced by other routes in the future.

Because a large amount of electricity is required in the production of hydrogen by electrolysis, the final price of hydrogen is directly and highly related to the price of electricity. According to estimates, if the electricity price can be lower than 0.3 yuan, the cost of hydrogen production by electrolytic water can be equal to other hydrogen production methods.

Given the demand for electricity from electrolysis of water to produce hydrogen, photovoltaic and wind power are excellent means of supply. On the one hand, the cost of power generation in some areas is close to the standard line of 0.3 yuan; On the other hand, hydrogen production by electrolysis of water can convert excess electricity from electric troughs into hydrogen energy, thus realizing disguised phase energy storage.

Although low-cost "green hydrogen" production is already feasible in some regions, it is not enough to meet the application of hydrogen combustion battery vehicles. If hydrogen combustion battery vehicles want to be successfully popularized, then the cost of hydrogen preparation is bound to be further reduced.

The triple cost pressure forces hydrogen combustion battery cars to still be unable to replace electric vehicles in the short term.

03 "lithium hydrogen" complementary

In capital markets, there are not only "yes" and "no" answers.

Although hydrogen fuel cell vehicles cannot replace electric vehicles in a short period of time, they can complement lithium battery vehicles in some scenarios and further achieve carbon neutrality.

"11" holiday, electric vehicles become "electric daddy", the mileage is short, charging time is too long, resulting in the original several hours of road to a full two days. From the perspective of replenishment mode and driving range, hydrogen fuel cell vehicles are closer to traditional cars, and these shortcomings can almost be perfectly solved in front of hydrogen fuel cell vehicles.

Comparing vehicle parameters of different energy types can be found. Hydrogen fuel cell vehicles have the advantages of short recharge time, high energy efficiency and long pollution-free life. Considering the characteristics of hydrogen fuel cell vehicles, it is actually very suitable for long-distance transportation scenarios.

Electric vehicles are a good alternative to the application scenarios of traditional cars in cities, but in long-distance transportation scenarios, the shortcomings of pure electric vehicles are infinitely amplified, with short driving range, many times of replenishing energy, and greatly reducing operational efficiency.

Hydrogen energy has the advantages of high volume conversion efficiency and complete pollution-free, and only need to build hydrogen refueling stations along the highway, can solve the problem of insufficient coverage of hydrogen refueling stations, so hydrogen energy vehicles are most suitable for operation vehicles at this stage.

Based on this, we believe that the relationship between hydrogen fuel cell vehicles and lithium battery electric vehicles is not a replacement, but more complementary.

Focusing on the industrial chain, the starting difficulty of hydrogen fuel cell vehicles is significantly higher than that of lithium battery electric vehicles, but lithium battery electric vehicles and hydrogen fuel cell vehicles are the direction of the development of China's automotive industry.

Although the current lithium battery electric vehicles start faster, but I believe that with the improvement of the entire hydrogen energy industry chain, the development of hydrogen fuel cell vehicles will gradually accelerate. Only "lithium and hydrogen" complement each other, people's ideal "carbon neutral road" will be realized.