Hydrogen is grabbing headlines as the global mobility industry drives toward a lower-carbon future. Our advisory board member Werner Tillmetz is a world-renowned expert on this next-generation molecule—our investment director Philipp Hasler sat down with him recently to review key takeaways from his recent book, Hydrogen on the Road to Electromobility (link in German). Check out our transcript of the interview below, which has been edited for length and clarity.
We hear a lot about hydrogen’s potential in areas like passenger cars, trucks, aviation, marine vessels and trains—do you think there’s a specific sector where it will take off and then trickle into others?
I think we have to look at all applications. When you look at companies like Toyota or Hyundai, or Chinese companies, they do exactly this. They go into all applications.
Interestingly, this was the case 100 years ago, when Daimler started with their combustion engines. The three-pointed star on the Mercedes brand actually means “on the ground, in the air and on the sea”—so every feasible application. You do that because high volumes bring down the cost of these innovations. Then you have cheap products that can be successful in various areas and compete with traditional technologies. This is what is happening today.
At this stage, it seems like the sweet spot of hydrogen fuel cell vehicles is in public transportation and mobility within closed environments or over long distances. What’s your take?
I would say this is a starting application. Public transportation is, from an infrastructure point of view, very easy to establish. When 36 fuel cell buses went into operation in Europe in 2003, they were hugely successful—they were highly reliable and customers were happy. The operators wanted to expand the program and pushed the bus manufacturers to make more. But the manufacturers were really hesitant to put in all the development effort needed to get commercial products out in the world.
Today, however, it is the perfect starting point for this kind of application. When China first got into clean mobility, they decided that public transportation was the place to begin. Within a few years, they had 300,000 battery-powered city buses in operation—today it’s more like 600,000 or 700,000. Now, however, they’re switching to hydrogen because they realized that for many applications, batteries are not good enough.
This is because of the duration of the operation? A bus typically operates 15 to 18 hours a day.
Yes. It is range combined with the need to heat the bus in winter.
You mention that in 2003, manufacturers were hesitant to scale up—why was that?
In the beginning, the focus was on passenger cars and activity was driven by legislation. This is one of the key messages for me: in a highly regulated market like the transportation industry, regulation is everything. In 1990, California—a key market for passenger vehicles—established zero-emissions regulations for vehicles to limit particulate pollution. They were pushing for alternative drivetrains for the automobiles and hydrogen was at the front. And as soon as the rest of the automotive world saw that you can make an attractive fuel cell car, the global industry spent many, many billions to develop them.
The key question is, why didn’t they continue? Well, these two massive industries—oil and vehicles—immediately realized that alternative drivetrains would be a threat to their business. And their existing businesses made money like crazy, so why change? They ended up watering down all the legislation—in California it became so weak that there was no more need for alternative drivetrains. In combination with 9/11 and all the economic issues around then, companies worldwide scaled back their activities in alternative drivetrains.
In the last two or three years, however, we’ve seen tougher legislation come out in Europe, California and Asian countries, for example. Now car companies have to pay huge fines if they don’t meet strict emissions targets. This catalyzed rapid change in the industry, which is why you’re seeing huge interest in batteries and EVs.
As investors looking for emerging leaders in industrial technology—including hydrogen—what areas do you think are worth exploring?
This kind of disruptive innovation generates completely new business sectors all around the world. The technologies that we need for this transition are all available. They are mature, the fuel cells are mature. There are no fundamental barriers to introducing these technologies: it’s just a question of converting them into businesses, which is mainly driven by cost reduction.
We can again compare this to engine technology from 100 years ago. How many incremental innovations fell into place to make the combustion engine we have today? Incremental innovations are an area that startups should look at—advanced catalysts, membranes for gas separation and whatnot. You just have to carefully analyze how big the hurdles are to introducing the technologies into existing production lines for fuel cell engines or whatever application you’re looking at.