Fuel Cell Powertrain Market

Global Industry Analysis (2017 – 2020), Growth Trends and Market Forecast (2021 – 2025)


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Alternative fuels that are cleaner, cheaper, and better are expected to reduce the dependence on fossil fuels. Environmental and economic benefits aided by advancements in technologies are influencing the passé perception of developing vehicles that rely on conventional fuels. As a result, many automakers and auto ancillaries are focusing on diversification of their product portfolio. This effort is thus translating into development of alternative powertrains propelled by fuel.

Long-term growth of fuel cell powertrains is likely to be significant as environmental policies tilt in their favour. Driven by the common cause to combat the climate changes, the Paris Summit agreement has all nations united on a single front. The adoption of Paris Summit agreement, in many direct and indirect ways, has been crucial in driving the fuel cell powertrain market.

Electric energy utilization for powering diverse modes of transportation has evolved considerably over the last couple of decades. Commercialization and adoption of fuel cell electric vehicle (FCEV) has thus gained momentum in the recent past.

A paradigm shift in the mobility and energy solutions has clarified that the automotive industry is on the verge of a revolution. Globally, automakers are observing a growth in demand for electric vehicles with the growing strengthening perception amongst end users about their advantages. Analysts anticipate that the growth prospects of fuel cell powertrains will rely on the promising vehicle electrification trend.

FCEV to Lead as Sustainable Transportation Solutions Gain Prominence

Mounting pollution level is building pressure on automotive manufacturers to develop sustainable transportation solutions. Gasoline and diesel-powered vehicles are trailing in their appeal and are being pinned down for detrimental emissions, resulting in high cost of ownership. On the contrary, alternative fuel-powered vehicles that discharge negligible pollutants and have low maintenance are evolving briskly. As a result, ICE vehicles are encountering competition from FCEV. The competition is sterner in the developed nations with better regulatory framework and infrastructures in place.

Alternative powertrain is expected to reduce emissions, minimize oil dependency, and lead to a potential to reduction of oil prices, thereby bringing in control over oil price volatility. According to EIA, the energy density is nearly 63 miles per gallon for FCEV compared to 29 miles per gallon of an ICE vehicle.  Furthermore, hydrogen is three time more energy dense than diesel and gasoline. These factors are thus pushing automakers to develop alternate fuel-powered vehicles to cater for the futuristic needs of transportation.

Changing Emission Norms Sets the Ball Rolling for Fuel Cell Powertrains

With the urge to meet air quality standards to minimize health concerns and greenhouse gas emissions (GHG), California deployed the Zero Emission Vehicle (ZEV) program. The program is a measure by California Air Resources Board (CARB)’s advanced clean car package under different coordinated standards.

ZEV has created a market floor, which is observing a demand surge for alternate fuel vehicles with countries and states likely to follow suit. In recent past, transition towards sterner emission norms in countries such as China, India, Europe, and Japan has pushed automakers to emphasize on achieving higher fuel efficacy with low carbon footprints.

New emission norms such as BS6 and Euro6 along with reduction in consumption tax have benefitted the fuel cell powertrain market in recent years. Automakers such as Honda, Hyundai, and Toyota are leading the path while rest of the players are likely to follow suit with similar plans. All these parameters are likely to propel the market demand in the foreseeable future.

COVID-19 Coupled with High Production Cost Creates Hurdles for Fuel Cell Powertrain Market

Penetration of alternate powertrain vehicles in the market is likely to meet different challenges. Amid numerous other encounters, the regulatory policies, incentive schemes, and charging infrastructure network shall be critical for regional market proliferation. Additionally, some of the structural factors shall play an critical role in reviving the vehicle sales due to COVID-19 impact. Waning consumer sentiment, drop new vehicle purchases, and decline in commute due to virtual schools and offices  due to the pandemic have caused a turmoil.

The market is also expected to be hindered by high cost of FCEVs due to high fuel cell cost attributed to the bulkier hydrogen tank. Additionally, most of the vehicle models lack FCEV as buying option over battery electric vehicles (BEV) and hybrid electric vehicles (HEV) powertrain option. As a result, the demand inclination towards these has been dampening the overall FCEV growth.

Unlike batteries, the cost of fuel cells is also on higher side. However, their limited production is primary reason for high cost. In the coming years, mass production of fuel cells shall enable in bringing down higher production cost and the ability to cater to influx of orders.

LCVs Gear Up as Automakers Add Vans to the Segment

The light commercial vehicle (LCV) segment is expected to observe a substantial demand over the forecast period. LCVs are commonly utilized for goods transportation; however, few automakers are designing LCVs as minibuses for passengers in the 3.5–7-ton range. Renault is leading the development of the fuel cell powertrain in the LCV range. It has deployed fuel cell powertrain in some of its vehicles like Master and Kangoo. In light of these reasons, the global fuel cell powertrain market is expected to be led by LCV segment.

Asia Pacific Leaps Ahead as Major Manufacturers Reap Benefits of Affordable Labour

By 2040, report predicts, nearly 45% of the car sales are likely to be powered by alternative powertrains. Asia is one of the significant drivers of the fuel cell industry growth. Japan’s energy policy encourages hydrogen and fuel cells to be the main pillars of the automotive industry. Japan and Korea were recognized to be strong supporters until China wakened to the fuel cell industry. In 2016, China gained momentum in the transport sector. As a result, the vehicle manufacturing and fuel cell industry in China has expanded at a faster pace. Backed with Western technologies and local subsidies, the Chinese manufacturers is catering to the budding fuel cell bus market.

Asia Pacific is home to some of the leading automakers and component suppliers like Honda Motor Co., Ltd., Hyundai Motor Company, Doosan Corporation, TOYOTA MOTOR CORPORATION, and DENSO CORPORATION. Hence, it is likely to be at the forefront of the race in the fuel cell powertrain market. Cheaper labour overheads across Asian countries are expected to lure in more companies in the near future.

Global Fuel Cell Powertrain Market: Competitive Landscape 

Remarkable improvement has been witnessed in the analysis, design, and development of FCEVs through considerable R&D investments. The market is seemingly fragmented with major key players forming alliances to achieve technological synergy. Nonetheless, the market is likely to expand during the forecast tenure with probable new entrants and existent players practising vertical integration.

Manufacturers are focussing on developing cost-effective and sustainable solutions. Globally, manufacturers are embracing different strategies vis-à-vis joint ventures and mergers & acquisitions. Key manufacturers have collaborated with technology companies to design better powertrain architectures and gain an upper hand in the fuel cell technology.

Hyundai Motor Company and Cummins Inc., in 2019, collaborated on the technology front for the development of electric and fuel cell powertrains. While Nikola Corporation and Robert Bosch GmbH ventured in as a partnership, thereby sharing cost of emerging technologies. Their partnership is aimed towards working on the development of fuel cell powertrain for hydrogen electric truck. Development of the powertrain is aimed at sustaining their business in the European region.

Ballard Power Systems, Cummins Inc., Hypowa Ltd., Ceres, DENSO CORPORATION, Hyundai Motor Company, FCP FUEL CELL POWERTRAIN GMBH, Robert Bosch GmbH, and FEV Group GmbH are some of the key players driving the growth of the global fuel cell powertrain market.

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