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| Hyundai Motor's Nexo fuel cell electric vehicle / Courtesy of Hyundai Motor |
Automaker plans to introduce FCEVs under Genesis brand
By Nam Hyun-woo
Hyundai Motor is betting high on the hydrogen fuel cell electric vehicle (FCEV) as its next-generation, eco-friendly car, despite its huge development and research costs, according to the head of the firm's eco-tech research division.
Korea's largest automaker's first FCEV, the Nexo, which has been on sale since March, has been attracting keen attention from industry analysts and motorists for its "superior" powertrain, compared to those of conventional electric vehicles (EVs).
"Millions of won in losses are incurred when we manufacture one Nexo, due to its huge overhead expenses and development costs compared to its small production volume," said Hyundai Motor Senior Vice President Lee Ki-sang who is heading Hyundai Motor's Eco-Technology Development Center. "Our financial division even calls it a money pit."
Despite being costly, Hyundai Motor is pinning big hopes on the Nexo, according to Lee who is better known as "the father of the Nexo," because the company has a strong belief that FCEVs will be one of two main pillars of automobile powertrains in the near future and eventually be the means of "optimal mobility" not long after that.
"To be honest, we were hesitating in developing the Nexo, because of its high consumer price and huge costs," Lee said during an interview with The Korea Times on Aug. 14. "But top management said 'why are you worrying about the cost?' and 'think of the Nexo as the least we can do for the public who have brought us to our current status' and now there is the Nexo."
Though styled in a fancy cause, Hyundai's description of FCEV as "gratitude to the future generation" is based on its recognition that the FCEV powertrain will be the most efficient way of moving an eco-friendly car in the currently available technological base.
Carmakers categorize eco-friendly cars into four segments _ hybrid, plug-in hybrid, EV and FCEV. While hybrid and plug-in hybrid vehicles are mainly powered by gasoline engines and supported by electric motors, EV and FCEV are powered only by electric motors and are distinguished by where the electricity comes from.
EVs obtain electricity from external sources _ charging stations _ and put them into rechargeable batteries. On the other hand, FCEV generates electricity on its own with fuel cells using oxygen from the air and compressed hydrogen supplied from charging stations.
Since FCEV uses compressed hydrogen, charging times are similar to that of fueling internal-combustion cars, which is a huge advantage compared to EVs, which can take as much as 30 minutes in rapid charging mode or multiple hours for slow charging.
Another advantage of FCEV is its long traveling range. For example, the Nexo can travel 600 kilometers on a single charge, while that of the Hyundai Kona Electric is closer to 400 kilometers. This is largely because of the weight of the battery stack in an EV, with that of the Kona Electric reaching 600 kilograms.
Due to such advantages Hyundai Motor has been making efforts to lead the FCEV market in the infant stage of the technology and released the ix35 FCEV in 2015 and the Nexo in March of this year. Lee said Hyundai Motor is thinking of expanding its FCEV portfolio to its Genesis brand, without providing a detailed timeline.
Despite FCEVs having advantages over EVs, FCEVs are not as popular as EVs because FCEVs are "more technically challenging" then making EVs, and they require costlier key materials including platinum and palladium.
Due to these costs, FCEVs are more expensive than vehicles of a similar size. The Nexo is priced between 68.9 million won ($61,000) to 72.2 million won depending on its trim levels, while the price of the Hyundai Tucson is between 23.51 million won and 31.61 million won. When the central and municipal governments' subsidies for eco-friendly cars are taken into account, the price for the Nexo drops to the 40 million won level.
"This is why we don't expect many sales out of the government's subsidy quota," Lee said. "Would you pay 70 million won for a car when you can purchase one for 40 million won?"
Since the government's subsidies are directly affecting actual purchases, the carmaker builds about 2,000 FCEVs for a year after counting global sales, which will end up creating a loss to Hyundai which must idle the production line capable of manufacturing tens of thousands of vehicles a year and take care of other expenses just to manufacture the Nexo.
Also, the charging networks for FCEVs have not been expanded, while it has become common to see EV charging stations downtown. Currently there are only eight FCEV charging station in Korea.
"This is why I believe FCEV and EV will be the two main powertrains for a while, but ultimately, FCEV will prevail," Lee said. "And this is because I sometimes feel doubt about EVs, especially about its worn-out batteries, even though I'm leading Hyundai's eco-friendly segments including EVs."
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| Hyundai Motor Senior Vice President Lee Ki-sang introduces the cross section of the Nexo fuel cell electric vehicle during an interview with The Korea Times at the company's headquarters in Seocho-gu, Seoul, Aug. 14. / Courtesy of Hyundai Motor |
Is EV eco-friendly?
Widely known materials for EV batteries include anode and cathode materials, while less known to the public is electrolyte, which is toxic, explosive and non-reusable.
"Let's say China raises its EV rate to over 50 percent in 2030 as it plans. We can assume that at least hundreds of millions of EVs will be on the road, meaning a massive volume of batteries will become litter. How can we take care of those batteries? I think it is a luxury to think about the source of electricity," he said.
"If there's a visible way of recycling or safe disposal of those batteries, I would dedicate myself to it. To be honest, however, I don't see any feasible way."
Currently, Hyundai Motor is the only company which manufactures four categories of eco-friendly vehicles. Toyota, which is leading the FCEV market along with Hyundai, has many battery-related technologies and patents, but will refrain from tapping into the EV market until 2020, which Lee said is based on its belief that "the current battery technology is not clear of doubts on EVs as the future mobility we should pursue."
While being a latecomer in the EV market, Toyota and its home, Japan, are fully embracing the era of hydrogen-powered vehicles. While Korea has only eight fuel-cell charging stations, Japan has 92 as of March and plans to double the count by fiscal 2021.
"When you look at Japan's policy roadmap for a fuel-cell society, it clearly shows hydrogen's role as a future energy and has detailed steps toward such a society," Lee said. "However, the Korean government still looks lost on what it will rely on as a future energy source and has a vague plan for that."
The government plans to increase the number of FCEVs to 16,000 by 2022 by expanding its subsidies, but has ended up securing funds for about 750 FCEVs this year.
And Lee said this is why Hyundai Motor is shouldering losses, overhead expenses and signing an FCEV partnership with Audi in June, because increasing the volume of FCEVs is "the absolute prerequisite" for lowering the costs and turning the segment profitable as soon as possible.
"The reason why Toyota is enduring losses and investing into charging infrastructure is because it is convinced that the ultimate winner of this game will be FCEV," Lee said. "The reason why we decided to share our technology and parts with Audi is because expanding the entire market will be the way we can become profitable."
