In the face of the COVID-19 pandemic and the daunting challenges of reviving the North American auto industry, it’s understandable that the industry’s focus isn’t on clean energy and slowing global warming. Some 26 million Americans losing their jobs creates more urgent economic problems than cheap gasoline eroding already-limited demand for zero-emission vehicles.
If anything, one predictable outcome of this sudden and deep economic downturn is that legacy automakers will have less money available for costly undertakings with little or no short-term returns. But be careful not to misread the signs.
Mercedes-Benz last week said it is halting development of hydrogen fuel cell passenger vehicles. This might look like a retreat, but it’s more of a regrouping. Because at the same time, parent company Daimler merged its fuel cell programs into a joint venture with Volvo Group to develop big rigs.
Daimler’s shift represents the evolution of hydrogen strategy as the prospects for plug-in battery-electric vehicles have improved: Fuel cells won’t necessarily be the technology that succeeds BEVs; it’s more likely that they will coexist in the market. Plug-in EVs may be best for smaller cars and crossovers while hydrogen fuel cells — which produce electricity on board — are better for larger vehicles such as buses and heavy-duty, long-haul trucks.
More narrowly, the pairing is interesting because it provides yet another tie between Chinese billionaire Li Shufu and Daimler. Li’s holding company owns Geely and Volvo Cars and is an investor in the separate truckmaker Volvo Group. He’s also the largest investor in Daimler.
Daimler’s truck boss Martin Daum said Li “had nothing to do with” the deal, which doesn’t sound like Li. In any case, he continues to gain a bigger presence in Europe through the still-revered Mercedes-Benz brand.
More broadly, the joint venture reinforces the need for collaboration on these massively expensive projects.
Some were quick to call it a corona-compelled combination, although it was clearly in the works before the pandemic. Still, it does show that the trend toward shared technology investments doesn’t stop with the outbreak.
“The coronavirus convinced us even more,” said Volvo Group CEO Martin Lundstedt, according to Reuters.
Finally, the deal highlights that the road to the hydrogen future remains a long one. The JV aims to produce a heavy truck in the second half of the decade.
There isn’t a screaming market for these vehicles right now, in no small part because of the lack of fueling stations and other hurdles in the clean production and efficient distribution of liquid hydrogen.
But the technology holds tremendous promise. And while Asia and Europe continue to push ahead, it’s important that the U.S. isn’t left behind.