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Hydrogen: a step to a greener future in a constantly changing ecosystem

The use of hydrogen as a fuel is not a recent phenomenon. Major OEMs were investing in this technology back in the 1990s but it remained an enticing mirage, never quite within reach. Now, however, it could become a major factor in the fight to slow down climate change.

Hydrogen is at the forefront of environmental discussions about how we meet increasingly tough climate goals – and, in particular, the emissions targets in the transportation sector.

Undoubtedly there are many challenges ahead, but with many key milestones achieved, hydrogen as fuel has become a reality that OEMs, and their networks, will need to adapt to.

Momentum is gathering, with a rapid expansion of new policies and projects happening around the world on an almost daily basis. Recent announcements over the last few weeks include:

  • Porsche’s hydrogen prototype engine outperforming its 8-cylinder gasoline engine
  • MG Motor unveiling its hydrogen fuel cell powered EUNIQ 7 MPV at Auto Expo
  • Toyota seeking to make its hydrogen vehicles commercially viable - with liquid hydrogen cars to be tested in endurance this year
  • JCB investing £100million in a project to produce super-efficient hydrogen
  • First Hydrogen’s ongoing track tests at Mira’s grounds in the UK. Testing on the company’s first zero emission light commercial vehicles fleet has also commenced
  • With this market projected to reach $786.5 billion by 2030, this could really whet appetite and encourage adoption
  • SK Energy (a major South Korean oil refiner) and KHNP (state-run electric power supplier) joining hands to build “energy super stations” across the country
  • Air Liquide’s first hydrogen fuel cell truck demonstration at Port of Houston

Even with these important milestones achieved, hydrogen is still facing challenges. Further advancements are needed within the financial, regulatory, technical, commercial, and technological areas.

These will include areas such as:

  • Supply chain maturity
  • Focus on spare parts storage and availability
  • Handling difficulties due to high pressures
  • Supplier availability
  • Improvement of fuel retailing and quality assurance
  • Reducing cost of production to allow green hydrogen to compete with blue and, especially, grey hydrogen
  • Grid balancing
  • Supporting infrastructure
  • Customer experience refinement in terms of billing payment methods and user friendliness of fuel stations
  • Compelling business cases with concrete TCO savings
  • Choosing partners who can deliver maximum value and who understand OEM processes

Leveraging the lessons learnt from electric vehicles (EVs) will be key, helping to shorten ‘go to’ market lead times and ensuring that the correct steps are implemented for successful delivery.

The next 12 months will also be crucial as green hydrogen is set to become a large-scale reality as a wave of government tax credits and subsidy schemes guarantee the profitability of renewable H2 projects.

This an exciting time for the automotive industry, which is already reacting to market trends such as the green economy, mobility, and servitization – as well as new regulations, and innovative technology.

The race to bring the latest systems and features to market is now under way. OEMs are having to transform in order to gain market share and defend themselves against competition, which includes new players. Tech giants and startups are all looking to find their place in this exciting new ecosystem – changing the traditional value chain. And market share is under threat more than ever.

The impact on the end-to-end value chain will cascade down to networks and fleets, which will need to adapt to survive as the buying experience changes and becomes part of a new normality.

Operations will have to adapt, developing the flexibility to support these constant changes in process. They will also need to manage regional localization in response to changes in technical infrastructure, legislations, and consumer preferences. EFESO can help you with this transformation by enabling you to make deeper connections with your partners and networks – enabling you to develop consumer centric models that best serve your customers and fleets.

We have been helping OEMs work through transformations for the last 25 years – and we have a solid understanding of both the industry and the road ahead. Our teams can help you anticipate the solutions needed in an industry that is changing rapidly.

There are no set answers, which is why the solutions we provide are always bespoke. We are passionate, curious, and take a hands-on adaptive approach.

By challenging and supporting your end-to-end business, we will reduce your risk to launch – and accelerate your transition towards this new ecosystem.

We have global experts working on value chains and ecosystems in all continents, so if you are looking to accelerate your route to market, with value creation throughout the journey, let’s start a conversation.

The author

Jennifer Tonin

Jennifer Tonin
Principal, EFESO Management Consultants