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Fuel-cell vehicles are set for significant gains in China's commercial truck market, JPMorgan says

Fuel-cell vehicles are set for significant gains in China's truck market

August 26, 2021: -Hydrogen fuel cell vehicles are set to become a significant player in China’s commercial truck market, predicts JPMorgan’s Elaine Wu.

“Currently, the fuel cell vehicles account for lesser 5% of the commercial truck market in China, and that could increase to about one-third of total market share in 2050,” Wu, head of Asia ex-Japan ESG and utility research at the firm, told CNBC on Monday.

Fuel cell electric vehicles work on electricity powered by hydrogen, storing and delivering energy derived from different sources. Hydrogen is a pure fuel and, when consumed in a fuel cell, releases only water.

Wu said that fuel cell vehicles are a “perfect option” for the commercial truck market because of their refueling time of around 10 to 15 minutes. They also have a travel range of approximately 800 kilometers, about 50% to 100% above lithium battery electric vehicles.

Major automakers like Toyota, Honda, and BMW are tapping into the hydrogen fuel cell market.

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

“The government of China is promoting something we call ‘city clusters’ so that there could be demonstrative cities telling success stories of how fuel cell vehicles are implemented in various parts of the country,” Wu said.

“This is a policy that we saw implemented about before a decade when the central government was trying to produce lithium battery electric vehicles. And we saw how successful it was.”

Beijing has said it would be 20% of new cars to be new energy vehicles by 2025. Competition is fierce in the domestic electric vehicle space, with Tesla competing against homegrown players such as Nio and Xpeng.

According to Wu, with China’s pledge to become carbon neutral by 2060, hydrogen will likely play a role in heavy industry as a clean energy source.

“For this heavy industrial sector, high heat content is required, and renewable power, therefore, is not a good option to fuel heavy industrial sector, but hydrogen is,” she said.

The analyst says that China leads the world in hydrogen production and accounts for a third of global output.

“In the future, there could be the promotion of green hydrogen production whereby renewable power is going to be used to produce hydrogen,” Wu added.

Hydrogen is produced from coal, and shift to green production will only be possible if renewable power costs continue to decline, she added.

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