Fuel Cells and/or Batteries for Transportation: The Next Generation

SUMMARY

INTRODUCTION

STUDY GOAL AND OBJECTIVES

This business opportunity report focuses on the next generation of transportation that uses fuel cells and battery technologies for powering theindustry in the United States. The report looks at the structure of the automotive industry, the companies involved in advanced power technologies,the current and projected power initiatives, and the projected markets for such technologies. Identified as a practical solution to many of thetechnological problems associated with zero-emission vehicles is the hybrid electric vehicle (HEV), which is defined as a combination internalcombustion engine (ICE) with alternative battery power.

On the horizon is the fuel cell vehicle with some battery combination for "start up" or "power assist" conditions. An importantobjective of this study is to identify what is the most likely and appropriate technology for various classes of vehicles. Also identified in the nextgeneration transportation arena is the substantial niche occupied by the small specialty electric vehicles, even though the all-electric passenger caris for practical purposes gone from the market.

REASONS FOR DOING THE STUDY

This study analyzes advanced technologies that offer the promise of performance equal to the internal combustion engine for transportation, theinternal combustion engine's economy, and the possibility of zero or near-zero emission pollutant vehicles. The study identifies the opportunities andtechnological requirements of the zero-emission vehicle.

The all-battery-powered vehicle is a reality, but only in the category of the small specialty vehicles. Questions to be answered include analyzingwhen the fuel cell-powered vehicle will be a commercial reality, what type of battery will assist it, and how hydrogen fuel will be supplied to thefuel cell. Steps in next generation alternatives to the hydrocarbon powered internal combustion engine include satisfactory economics, the inevitableconsolidation of the industry, and the increasingly successful introduction of hybrids. Other factors will be discussed in the Overview section.

CONTRIBUTION OF THE STUDY AND FOR WHOM

This study reveals the depth and scope of the battery and fuel cell-powered vehicle market. Hundreds of companies are playing a variety of roles.This study aims to provide essential knowledge to persons interested in investment, acquisition, or expansion into the diversity of batteries and fuelcells for transportation. The technologies and competitive factors to make informed decisions are addressed. Those who want to stay abreast of thestate of the art will find this study worthwhile. The appraisal of the best technology or the most likely infrastructure for zero-emission vehicles isa notable contribution.

This technical/marketing report is designed to be as comprehensive as possible. The document is created for a broad audience of business, technical,investment, and regulatory professionals. This document is an information source for an emerging industry as well as a reference on a developingtechnology. It presents analysis and forward-thinking evaluations that will be of advantage to manufacturers, material suppliers, and to local, state,and federal government entities. Corporate planners will benefit from the report's evaluation of the demands for large-scale fuel cell applicationsand the companies involved in their development and manufacture. Others may well find the broad discussions of energy policy and the structure of theelectrical power industry in the U.S. of considerable value in understanding the opportunities and problems facing the fuel cell industry over thenext decade.

SCOPE AND FORMAT

Zero emission or ultra low emission vehicles are at an embryonic but emerging stage in the United States. There are, however, notable examples ofthese fuel cell and battery-powered vehicles in the rest of the world; the transportation industry is a global industry. This BCC, Inc. businessopportunity study examines the market and technology for large vehicles such as buses, the light vehicle market and the small device market along withsome other markets that fuel cells might be powering in the future. The report is a guide to the present and near-term (2007) zero or ultra lowemission transportation markets and identifies the companies competing for their share of this inevitable technological advance.

The automotive business has become an intertwined international industry that redefines globalization. This report recognizes the compellingrelationship amongst international corporate entities, but its central. Analysis is for the United States market.

METHODOLOGY AND INFORMATION SOURCES

An in-depth analysis of technical and business literature, a review of the history of the technologies involved, and interviews with industryexperts, company representatives, federal government researchers, and university scientists provided an assessment of the outlook for the nextgeneration of power for the transportation industry. Other sources of information included product literature from suppliers, scientific references,conferences, patent searches, and BCC, Inc.'s monthly newsletters, Fuel Cell Technology News, Battery & EV Technology, and Membrane &Separation Technology News.

The report makes projections for market sectors in terms of constant dollars representing real growth. Historical values are presented for the givenyear. The market analyzed is for the United States, but attention is given to the global aspects of the transportation industry.

DISCLAIMER

This publication provides informative material of a professional nature. It does not constitute managerial, legal or accounting advice, and shouldnot serve as a policy guide or an endorsement of any given product or company. The information and analysis is intended to be as accurate as possibleat the time it was written. The authors assume no responsibility for any losses or damages that might result because of reliance on this material.

TABLE OF CONTENTS

INTRODUCTION

SUMMARY

OVERVIEW

ADVANCED BATTERY TECHNOLOGY FOR NEXT GENERATION TRANSPORTATION

FUEL CELL TECHNOLOGY FORNEXT-GENERATION TRANSPORTATION

FUELING INFRASTRUCTURE

NEXT-GENERATION TRANSPORTATION OUTLOOK

APPENDIX

LIST OF Tables

Summary

Table: VALUE OF NEXT GENERATION TRANSPORTATION IN THE U.S., THROUGH 2007 ($ MILLION)

Table 1 U.S. ENERGY CONSUMPTION BY END USE SECTOR, THROUGH 2007 (QUADRILLION BTU)

Table 2 U.S. MOTOR VEHICLE TRAVEL BY TYPE OF VEHICLE, 1995-2007 (BILLIONS OF VEHICLE MILES TRAVELED)

Table 3 MAJOR FACTORS IMPACTING EFFORTS TO REPLACE THE ICE

Table 4 VALUE OF MARYLAND INCENTIVES A

Table 5 VALUE OF MARYLAND INCENTIVES B

Table 6 U.S. MOTOR VEHICLE REGISTRATIONS, THROUGH 2007 (THOUSANDS)

Table 7 ON-ROAD ALTERNATIVE-FUELED VEHICLES IN USE BY FEDERAL AGENCIES, BY FUEL AND VEHICLE TYPE, 1999 (UNITS)

Table 8 ALTERNATIVE FUELED VEHICLES IN U.S. BY FUEL TYPE, THROUGH 2007 (THOUSANDS OF VEHICLES)

Table 9 U.S. HYBRID VEHICLES BY TYPE, THROUGH 2007 (Units)

Table 10 SPECIFICATIONS OF U.S. HYBRID VEHICLES, 2003

Table 11 COST AND ENERGY COMPARISONS FOR TRANSPORTATION BATTERIES

Table 12 PARAMETERS OF SOME ADVANCED BATTERIES

Table 13 VALUE LEAD-ACID BATTERIES FOR NEXT-GENERATION TRANSPORTATION, THROUGH 2007 ($ MILLIONS)

Table 14 CHARACTERISTICS OF NIMH BATTERIES FOR EVS AND HEVS

Table 15 VALUE NICKEL METAL HYDRIDE BATTERIES FOR NEXT-GENERATION TRANSPORTATION, 1998-2007 ($ MILLION)

Table 16 LI-ION BATTERIES FOR HYBRID VEHICLES AND 42V AUTOMOTIVE SYSTEMS

Table 17 SPECIFICATIONS FOR THE AVESTOR SE 48S70 LITHIUM-POLYMER BATTERY

Table 18 VALUE LITHIUM CHEMISTRY BATTERIES FOR NEXT-GENERATION TRANSPORTATION, 1998-2007 ($ MILLION)

Table 19 SUMMARY VALUE BATTERIES FOR NEXT-GENERATION TRANSPORTATION, THROUGH 2007 ($ MILLION)

Table 20 COSTS VS. NUMBER OF UNITS PRODUCED ANNUALLY ($ THOUSANDS)

Table 21 VALUE OF PEM FUEL CELLS FOR NEXT-GENERATION TRANSPORTATION, 1998-2007 ($ MILLION)

Table 22 VALUE FUEL CELL STACKS IN TRANSPORTATION, THROUGH 2007 ($ MILLIONS)

Table 23 INFRASTRUCTURE CHALLENGES

Table 24 HYDROGEN PRICES ($)

Table 25 VOLKSWAGEN'S HYDROGEN STORAGE ALTERNATIVES

Table 26 VEHICLE FUEL TANKS FOR FUEL CELL COMMERCIAL VEHICLES BY TYPE, THROUGH 2007 (MILLIONS OF UNITS)

Table 27 BASELINE PNGV VEHICLE SPECIFICATIONS (MID-1990S VEHICLE)

Table 28 SUPERCAR PNGV GOALS SPECIFICATIONS

Table 29 SPECIFIC ASSUMPTIONS OF THE 80-MPG FUEL EFFICIENCY GOAL

Table 30 COMPARABLE FAMILY SEDAN VEHICLE DEFINITIONS

Table 31 STRATEGIC APPROACHES FOR FREEDOMCAR

Table 32 TECHNOLOGY-SPECIFIC 2010 FREEDOMCAR GOALS

Table 33 MODIFICATIONS TO CALIFORNIA ZEV REGULATIONS

Table 34 AMENDMENTS TO CALIFORNIA CODE OF REGULATIONS, SECTION 1962, TITLE 13

Table 35 MINIMUM CALIFORNIA ZEV REQUIREMENTS BY YEAR

Table 36 U.S. LIGHT VEHICLE MARKET, 1998-2007 (UNITS MILLIONS)

Table 37 FUEL CELL VEHICLES BY TYPE, THROUGH 2007 (UNITS)

Table 38 VALUE OF FUEL CELL VEHICLES BY TYPE, THROUGH 2007 ($ MILLION)

Table 39 FORD FOCUS FCV

Table 40 MAIN MODES OF PRIUS OPERATION

Table 41 ADDITIONAL AMERICAN PRIUS SPECIFICATIONS

Table 42 ADDITIONAL JAPANESE PRIUS SPECIFICATIONS

Table 43 DETAILS OF THE HONDA INSIGHT

Table 44 SELECTED FEATURES, 2003 CIVIC HYBRID

Table 45 VALUE OF HYBRID VEHICLES BY TYPE, THROUGH 2007 ($ MILLION)

Table 46 SALES OF LIGHT VEHICLE EVS IN U.S., THROUGH 2007 (UNITS)

Table 47 VALUE OF IN SERVICE LIGHT VEHICLE EVS IN U.S., THROUGH 2007 ($ MILLION)

Table 48 VALUE OF LIGHT VEHICLE EVS, THROUGH 2007 ($ MILLION)

Table 49 ELECTRIC NEVS/GOLF CARTS IN U.S., THROUGH 2007 (UNITS)

Table 50 VALUE OF ELECTRIC NEVS/GOLF CARTS IN U.S., THROUGH 2007 ($ MILLION)

Table 51 SALES OF ELECTRIC MATERIALS HANDLING EQUIPMENT IN U.S., THROUGH 2007 (UNITS)

Table 52 VALUE ELECTRIC MATERIALS HANDLING EQUIPMENT, THROUGH 2007 ($MILLION)

Table 53 SUMMARY VALUE OF ELECTRIC VEHICLES BY TYPE, THROUGH 2007 ($MILLION)

Table 54 VALUE OF NEXT-GENERATION TRANSPORTATION BY TYPE, THROUGH 2007 ($MILLION) 

LIST OF Figures

Summary

Figure: VALUE OF NEXT GENERATION TRANSPORTATION IN THE U.S., 1998-2007 ($ MILLION)

Figure 1 U.S. ENERGY CONSUMPTION BY END USE SECTOR, 1999-2007 (QUADRILLION BTU)

Figure 2 U.S. MOTOR VEHICLE TRAVEL BY TYPE OF VEHICLE, 1995-2007 (BILLIONS OF VEHICLE MILES TRAVELED)

Figure 3 NATIONAL AIR TOXICS EMISSIONS (%)

Figure 4 ALTERNATIVE FUELED VEHICLES IN U.S., 1998-2007 (THOUSANDS OF VEHICLES)

Figure 5 U.S. HYBRID VEHICLES, 1998-2007 (UNITS)

Figure 6 VALUE FUEL CELL STACKS IN TRANSPORTATION, 1998-2007 ($ MILLIONS)

Figure 7 U.S. MARKET SHARE OF MAJOR AUTOMAKERS ($)

Figure 8 GM AND FOREIGN AUTOMAKER RELATIONSHIPS