Hydrogen will make gains in China’s long-haul trucking sector in the long run as fleet operators turn to fuel-cell electric vehicles (FCEVs) to complement their battery-electric counterparts in colder regions and for heavy-loading applications.

FCEV sales in China are forecast to double from 3,000 units this year to 7,000 next year, before doubling again to 14,000 in 2024 and reaching 80,000 in 2030, according to recent projections from domestic trade association the China Hydrogen Alliance and Swiss bank Credit Suisse.

There will be two main drivers for the uptake of heavy-duty FCEVs: cheaper hydrogen at the pump as the cost of producing green hydrogen declines and the efficiency of refuelling stations improves; and the falling costs of fuel cell system components.

China aims to have 50,000 FCEVs in use by 2025, while building more refuelling stations with supply capacity of at least 1t/d, according to the country’s first-ever long-term national hydrogen strategy, released in March. An earlier energy-saving and new energy vehicle technology roadmap, released by the industry body the China Society of Automotive Engineers at the end of 2020, mentioned a sales target of 1mn FCEVs by 2035 served by 2,000 refuelling stations.

50,000 – 2025 FCEV target for China

In the short term, China’s adoption of heavy-duty FCEVs capable of operating over long distances will be concentrated on city buses due to pilot schemes by local governments to incentivise hydrogen use in transport. Buses—which are easier to regulate and deploy on a large scale—made up 56pc of China’s FCEV market last year, with trucks accounting for the remainder.

The popularity of buses for use of the technology was demonstrated at the Winter Olympics near Beijing in February, when 815 out of the 1,100 FCEVs in operation were shuttle buses. But trucks are regarded by hydrogen industry experts in China as the most promising long-term use case for FCEVs and are expected to play an important role in urban utilities, ports, mines and steel mills as well as other applications.

Shanghai’s government aims to put 1,000 FCEVs on the city’s roads this year, of which 79pc will be heavy- and medium-duty trucks and the remainder government vehicles and city buses. In the long term, heavy-duty FCEVs could penetrate mainstream applications on rising cost-competitiveness as Credit Suisse forecasts them to reach cost parity with diesel-powered heavy-duty trucks by 2028.

Cold-weather credentials

The main attraction of FCEVs in long-haul transport is their ability to perform well in cold weather compared with electric vehicles (EVs), which can struggle when low temperatures reduce their battery capacity. The driving range of battery EVs falls by 38pc when temperatures drop from 23°C to -7°C, according to a review in January by testing agency the China Automotive Technology and Research Center.

This weaker cold-weather performance means EVs are not well-suited for China’s western, northwestern and northeastern provinces, which accounted for c.10pc of total vehicle sales last year. The penetration rate of EVs in China’s coldest provinces—including Heilongjiang, Tibet and Inner Mongolia—ranged from 0.6-3pc in 2021, which was well below the national average of c.11pc.

China’s national hydrogen strategy, released in March, indicates authorities are focused on boosting supply of renewables-based hydrogen to ensure it becomes an economically viable option in the country’s energy transition as soon as possible. The plan calls for China’s green hydrogen output to reach 100,000-200,000t/yr by 2025 compared with virtually zero at present.

The massive production growth is expected to drive down China’s green hydrogen prices dramatically, which will benefit long-haul FCEVs. Prices could decline from c.RMB60/kg ($8.97/kg) this year to RMB35/kg by 2025 and RMB20/kg by 2030.

Other important drivers are lower production costs resulting from falling renewable electricity prices for electrolysis, cheaper distribution due to greater use of refuelling stations, and reduced transportation costs as high-pressure hydrogen storage technology matures.

These savings could cut fuel costs for heavy-duty FCEVs from RMB780 per 100km this year to RMB450 in 2025 and RMB280 in 2030—by which time they would be cheaper than diesel trucks.

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Author: Shi Weijun