WASHINGTON, DC – APRIL 22: Electric vehicles are demonstrated before a press conference with the White House… [+] Climate Advisor Gina McCarthy and US Secretary of Transportation Pete Buttigieg discuss the US work plan and highlight electric vehicles at Union Station near Capitol Hill on April 22, 2021 in Washington, DC. The Biden administration has proposed spending more than $170 billion to boost production of zero-emission buses and cars and increase EV charging stations. (Photo by Drew Anger/Getty Images)
The anti-inflation law will drive the development of electric vehicles. But it will do the same for hydrogen fuel cell cars, although EVs are now just a few steps ahead. However, automakers have chips in both camps.
The European Union is phasing out the internal combustion engine by 2040, while the Biden administration wants half of all vehicles sold by the US to be electric by 2030. If electricity could replace petrol, it would help countries meet their climate targets.
To that end, the Inflation Mitigation Act provides a $7,500 electric vehicle tax credit beginning in 2023 that will last a decade — a gain that would previously have been had the automaker sold more than 200,000 vehicles. Meanwhile, buyers don’t have to wait to file their taxes to get a refund. You will receive it at the time of sale. However, the credit is only valid for cheaper electric vehicles.
“Tax credits for manufacturing and grant funding will help accelerate the transformation of the domestic industrial base that is taking place. Unfortunately, the EV tax credit requirements would immediately render most vehicles uneligible for the incentive. It would also jeopardize our collective goal of 40-50 percent EV sales by 2030, says John Bozzella, chief executive officer of the Alliance for Automotive Innovation.
General Motors GM and Ford Motor F Company in the United States support the initiative. In Europe, policymakers are offering a $3.5 billion grant to move away from fossil fuels as part of the European Battery Innovation Project, which includes rare earth development. Funded companies include Fiat Chrysler, BMW and Tesla TSLA, as well as Arkema, Borealis, Enel X, Solvay and Sunlight Systems.
Electric vehicles make up 2% of the global car market. The US Energy Information Administration says hybrids running on electricity and gas will make up 34% of cars in developed countries and 28% in emerging markets by 2050.
Consulting firm Wood McKenzie says electric batteries will reach a tipping point in 2027 — a place where economies of scale lie at a point where price and quality are getting better faster. The rollout of electric vehicles would then be unstoppable.
High hopes for hydrogen
Federal Minister of Economics Peter Altmaier praises the hydrogen-powered Mercedes F-Cell… [+] Before a press conference to present the federal government’s hydrogen strategy on June 10, 2020 in Berlin. – A huge German stimulus package includes €7 billion earmarked for a “hydrogen strategy” to help the country’s economy recover faster from the deep recession sparked by the coronavirus pandemic. Technology can help wean the country off fossil fuels. (Photo by John McDougall/AFP) (Photo by John McDougall/AFP via Getty Images)
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The Inflation Mitigation Act also provides a tax credit for clean hydrogen production — up to $3 per kilogram. That means everything from renewable electrolysis to carbon capture to methane pyrolysis is eligible — a provision that won the heart of West Virginia Senator Joe Manchin and would eventually allow the bill to pass in the US Congress. In addition, it also offers a $7,500 tax credit for hydrogen fuel cell cars.
In addition to electric vehicles, BMW is also developing vehicles with fuel cell drives in order to avoid using fossil fuels. But his discovery of hydrogen could be the most momentous of all time. The goal is mass production of hydrogen fuel cell cars by 2030.
Hyundai and Toyota are making similar moves. Hydrogen can power everything from vehicles to factories to power plants. In the case of cars, it’s safer than gasoline, lighter than air, and easier to maintain. And a hydrogen station can supply 400 cars per day with a 10-minute refueling.
“Regardless of the time of year and the outside temperature, the hydrogen fuel cell drive unites the best of both drive worlds: the locally emission-free mobility of an electric vehicle and unrestricted suitability for everyday use, including short refueling stops. We all know models with combustion engines,” says Jürgen Güldner, Head of BMW Group Hydrogen Fuel Cell Technology.
Hydrogen powered cars have some advantages over electric cars. They can run up to 300 miles and take 10 minutes to refuel. Electric vehicles can travel up to 200 miles and take 45 minutes to fill up. Electric vehicles have a reduced range in cold weather. But not hydrogen cars. Most importantly, the gas exiting a hydrogen engine is pure water vapor. This means it is emission-free.
Pure hydrogen is stored in a tank before being sent to a fuel cell to generate clean electricity. To bring it into the mainstream by 2030, prices need to come down. Its center is the electrolyser – the device that generates an electric current to separate hydrogen and oxygen from the water where it is found. That cost would need to drop from $840 per kWh to $420 per kWh.
In addition, hydrogen loses 70% of its energy content during production and transport. According to BMW, this is half the overall efficiency of a battery-powered vehicle.
That’s a big deal
However, when electricity comes from wind and sun in abundance, it may not matter how inefficient hydrogen production is. Fuel cell maker Plug Power Plug says it is on track to produce 70 tons of green hydrogen per day by the third quarter of this year. Word is that clean hydrogen prices will continue to fall and it will eventually become the cheapest fuel for transportation – made possible by the dramatically falling costs of wind and solar power.
“It’s big,” Tony Pan, CEO of Modern Electron, said in an interview. “The hydrogen production credit in particular is technology agnostic, meaning all forms of low-carbon hydrogen production will be scaled up.”
President Biden wanted to cut carbon emissions by 50% by 2030 from the 2005 baseline. The Anti-Inflation Act is a key catalyst that is bringing the country to the 40% threshold. Incentives for electric vehicles and hydrogen cars are an important part of the solution. Each technology is moving in the fast lane, even as automakers plan to diversify their portfolios.