Fuel cell vehicles set to advance in China’s truck market

Hydrogen fuel cell vehicles are expected to become a major player in the Chinese commercial truck market, predicts Elaine Wu of JPMorgan.

“Currently, fuel cell vehicles represent less than 5% of the commercial truck market in China and could reach around a third of the total market share by 2050,” Wu, head of ESG research and utilities for the Asia excluding Japan at the company, CNBC’s “Squawk Box Asia” told CNBC on Monday.

Fuel cell electric vehicles run on electricity powered by hydrogen, which can be used to store and deliver energy derived from other sources. Hydrogen is a clean fuel and when consumed in a fuel cell it only produces water.

One of the reasons fuel cell vehicles are a “very good option” for the commercial truck market is due to their refueling time of around 10 to 15 minutes, Wu said. They also have range. about 800 kilometers, or about 50% to 100% above lithium battery electric vehicles.

Major automakers such as Toyota, Honda and BMW are entering the hydrogen fuel cell market.

China is already pushing for the promotion of fuel cell vehicles, according to the JPMorgan analyst.

“The [Chinese] the government is promoting something, what we call ‘city clusters’ so that there can be demonstration cities telling success stories about how fuel cell vehicles are being implemented in various parts of the country ” Wu said.

“It’s also a policy that we saw implemented about a decade ago, when the central government was trying to produce lithium battery electric vehicles. And we saw how successful it was.”

Beijing has said it would like 20% of new cars sold to be new energy vehicles by 2025. Competition is fierce in the home electric vehicle arena, with Tesla vying with local players such as Nio and Xpeng.

With China’s commitment to become carbon neutral by 2060, hydrogen is likely to play a role in heavy industry as a clean energy source, according to Wu.

“For this heavy industry sector, a high calorific content is required and therefore renewable energy is not a good option to power the heavy industry sector – but hydrogen is”, a- she declared.

The analyst said China is the world leader in hydrogen production and accounts for a third of global production.

“In the future, there could be a promotion of green hydrogen production, through which renewable energy will be used to produce hydrogen,” Wu added.

Hydrogen is currently produced from coal, and a shift to green production will only be possible if renewable energy costs continue to fall, she added.

“What we have seen over the past 10 years is that the cost of producing solar power has fallen by 80% in China. The cost of producing wind power has fallen by 40%,” she declared. “If this trend continues – and we believe it will be due to technological advancements – it means that green hydrogen will be possible in the future when these elements come into play.”

– CNBC’s Anmar Frangoul and Evelyn Cheng contributed to this report.