Hyundai gets the hint, focuses on battery-powered electric cars, not fuel cells

August 17, 2017

Today, you'd be hard pressed to find an major automaker that's still in denial about electrification. Even vocal skeptics like Volkswagen and Mazda have come around to the idea that tomorrow's cars, trucks, vans, and SUVs will run on electricity, not gasoline or diesel.

But the electrification issue is larger and more complicated than that. Here in America, when we think about electric cars, we tend to think of those that rely on batteries for power. In other parts of the world--mostly Asia--the notion of fuel cell vehicles have become popular. 

In a major shift, however, one fuel-cell fan is jumping ship: Hyundai has said that it's planning to refocus its electrification efforts on battery electric vehicles. 

The arguments for and against fuel cells

On the one hand, fuel cells appear to make a lot of sense. For starters, they tend to run on hydrogen, an abundant element on earth and in space. As you probably remember from chemistry class, it's a key component in water, which can be harvested for hydrogen production (though not always efficiently).

Also, fuel cell vehicles can be filled up like regular gas or diesel vehicles. The process is quick and familiar to consumers, unlike battery charging, which can take significantly longer. And like battery electric vehicles, fuel cells emit no pollutants. 

On other hand, fuel cell vehicles create a lot of complexity. They require infrastructure dedicated to manufacturing and dispensing hydrogen--infrastructure that's essentially non-existent today.

Making hydrogen on a massive scale isn't a cheap or easy process, and once it's done, you have to have the means to distribute it. Building hydrogen stations costs more than $1 million a pop.

Battery electric vehicles, on the other hand, can plug into the existing electrical grid. 

Last but not least, there are public concerns. Automakers can repeat the fact that hydrogen is safe until they're blue in the face, but when some people hear the phrase "hydrogen-powered vehicle," they immediately think of the Hindenburg.

Why and how Hyundai switched

At first, hydrogen seemed to make a lot of sense for Hyundai--at least in its homeland of South Korea. Like Japan, where hydrogen fuel cell vehicles are also popular, South Korea is relatively small, making it easier and cheaper to develop a hydrogen infrastructure. 

But as robust as South Korea's economy might be, there are much, much bigger markets--notably, those of China and the U.S. 

Both China and the U.S. are physically bigger, which makes creating a hydrogen infrastructure a costly, risky bet. That risk is doubled by the fact that in China, the government has put a lot of energy into promoting battery electric vehicles, and in the U.S. (and elsewhere, too), battery-powered cars from Tesla are turning plenty of heads. 

And so, Hyundai is shifting its electrification strategy. 

The company isn't giving up on hydrogen fuel cells entirely. It will continue producing fuel cell cars and SUVs for certain markets, but in places like the U.S., sales will mostly be limited to areas with a reasonably strong hydrogen infrastructure, like California. 

Much of Hyundai's research and development work, however, will now be dedicated to battery electric vehicles. By 2020, Hyundai and its sibling, Kia, say that they'll have at least 31 electrified models in showrooms. 

Of that number, most will run on battery power. At least eight will be fully electric, two will run on fuel cells, and the remainder will be hybrids. 

One year later, in 2021, Hyundai plans to debut a fully electric sedan in its luxury Genesis lineup. Though it's still in development, Hyundai estimates that it will have a range of roughly 310 miles per charge. 

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