A Tag-Team Effort: Battery & Hydrogen Fuel Cell EVs Both Needed to Reduce Emissions

The Intergovernmental Panel on Climate Change (IPCC) says that the relationship between human activities and rising greenhouse gas (GHG) emissions and temperatures is clear.

The Intergovernmental Panel on Climate Change (IPCC) says that the relationship between human activities and rising greenhouse gas (GHG) emissions and temperatures is clear. Notably, the transportation sector accounts for the second-largest share of global GHG emissions caused by human activities, behind power generation.

The key to reducing emissions from transportation is the widespread adoption of electric vehicles. This includes both battery electric vehicles and hydrogen fuel cell electric vehicles. These technologies have the potential to transform transportation across all segments. In this report, we compare these EV technologies and explore their investment implications as the energy transition gathers momentum.

Key Takeaways

  • The continued adoption of EVs, particularly zero-emission BEV and FCEV models, will be the primary way to reduce emissions within the transportation sector. By 2030, industry forecasts have EVs reaching a 36% penetration rate, representing a $1.4 trillion opportunity.
  • We expect that battery electric vehicles (BEVs) will drive adoption in the passenger EV market and continue to take share from traditional internal combustion engine (ICE) vehicles. These market share gains can entail significant investments throughout the battery EV value chain, including lithium mining and battery production.
  • Hydrogen-powered fuel cell electric vehicles (FCEVs) offer a promising alternative for long-haul trucking and heavy industry vehicles, given that they are significantly lighter and have much shorter refueling times.

Market Share of Electric Vehicles

The number of electric vehicles (EVs) sold is increasing as the government and corporations work together to reduce emissions. In 2021, 6.5 million EVs were sold, making up 9% of all car sales. This number is significantly higher than the 3.3 million EVs sold in 2020 and the 2.3 million sold in 2019.

The EV momentum continued into January 2022, particularly in major markets. EV sales increased by 122% in China and 94% in the United States compared to January 2021. This growth can largely be attributed to the increasing availability of models as well as government initiatives to promote electric vehicles.

Industry forecasts say that by 2030, 36% of all cars will be electric. That's a lot of electric cars! This is good news because it means that the government is supporting the idea of electric cars and is making it easier for people to buy them. Over 135 countries have economy-wide net-zero emissions targets, with many aiming for 2050 or earlier. This means that the government wants all the emissions from the country to be zero. 20 countries have 100% electrification sales targets for cars over the next two decades. This means that in these countries, by 2030, all new car sales will be electric cars. Norway aims to reach 100% zero-emissions vehicles sales by 2025, which is more ambitious than any other country has done so far. Many countries have established support mechanisms and allocated funding to encourage EV adoption and the expansion of supporting EV charging infrastructure. This means that they are helping people buy electric cars and also building places where people can charge their cars when they're not driving them.

At the 2021 United Nations Climate Change Conference, COP26, 15 countries signed the first-ever global agreement for net-zero emission trucks and buses. This includes countries such as Turkey, Denmark, Chile, Canada, and the United Kingdom. Additionally, a handful of sub-national governments and manufacturers such as Scania and DHL have also agreed to this target. The Global Memorandum of Understanding for Zero-Emission Medium- and Heavy-Duty Vehicles establishes a goal for 100% zero-emission new truck and bus sales by 2040, with an interim goal for 30% zero-emission sales by 2030 for its signatories.

Original equipment manufacturers (OEMs) are also working on electrifying their fleets and transforming the sector from majority ICE vehicles to EVs. In March 2022, Ford announced that it is restructuring to separate its EV and ICE businesses. Under its new EV unit, called Ford Model e, the company plans to produce 2 million EVs annually by 2026.15 General Motors, Kia Corporation, Jaguar Land Rover, Mercedes-Benz, Volvo, and Volkswagen are also among the large list of OEMs that plan to spend billions on EVs to hit electrification sales targets.

Best Path for GHG Emissions Reductions

Efforts by governments to reduce climate change, as well as commitments by carmakers to electrify their fleets, has led to a growing number of different types of electric vehicles. There are two types of EVs in terms of their greenhouse gas emissions:

  • Zero-emission vehicles are electric cars that do not produce exhaust or emissions from the car.
  • Low-emission vehicles are powered by electric motors and ICE or gasoline generators. They have lower emissions than traditional ICE vehicles.

Governments, companies, and consumers are focused on vehicles that produce zero emissions. There are two types of zero-emission vehicles: battery electric vehicles (BEVs) and hydrogen fuel cell electric vehicles (FCEVs). While BEVs and FCEVs don't have technologies that allow them to go further than other electric vehicles (hybrid EVs), they both offer a range of up to 500 miles.19,20 FCEVs also have the added benefit of a short refuelling time.

Battery Electric Vehicles Set to Dominate

BEVs are the best type of electric car for people. In 2021, 71% of electric cars sold were BEVs. However, hybrids (electric and gasoline cars) made up about 28% of sales. FCEVs (electric cars with a fuel cell) only made up 1% of sales. We think that BEVs will keep being the most popular type of electric car and they will take away market share from ICE (internal combustion engine) cars over the coming years. As of March 2022, there are hundreds of BEV models for sale globally. But there are only a handful of FCEV models. Additionally, many car companies plan to make more BEV models in the next decade than they have FCEV models right now.

For example, in March 2022, Kia Corporation announced that it will launch at least two BEVs per year starting in 2023.25 The company’s goal is to have a line-up of 14 BEVs by 2027, including three passenger, eight SUV, and three pick-up/commercial models.26 Also in March, Hyundai announced plans to introduce 17 new BEV models by 2030.27 In contrast, OEMs plan to introduce about 12 new FCEV models over the next decade or so.

BEVs have the potential to save you money on scheduled maintenance because they have fewer parts than ICE vehicles. They can also save you money on fuel. The United States has a limited number of hydrogen fuelling stations, but there are many more public EV charging stations. The government plans to install 500,000 charging stations by 2030.

Hydrogen refuelling stations are becoming more common in Europe. There are now 152 of them, and this number is expected to grow to over 2 million by 2030. In Asia, China and Japan have more hydrogen refuelling stations than anywhere else. However, there are still far fewer charging stations in these countries than there are in Europe.

As BEV (electric vehicle) growth continues, we predict that there will be significant opportunities for growth throughout the entire BEV supply chain. This includes areas such as EV lithium-ion battery production and lithium mining. The global EV battery manufacturing capacity is expected to grow significantly over the next decade, from 631GWh in 2020 to 2,913GWh in 2030. In Europe, this growth is especially rapid outside of China.

The region's battery cell production pipeline capacity could increase to more than 789GWh by 2030. That would be enough to produce 15 million BEVs each year.37 However, the lithium market faces a large shortage in 2022, due to delays in new mining projects from the COVID-19 pandemic.38 Lithium mining needs to ramp up even more quickly over the coming years than currently planned to avoid a long-term deficit, higher EV costs, and weakened EV demand.

Hydrogen FCEVs a Promising Option

FCEV technology has several benefits over BEVs that make it an attractive zero-carbon emission option for long-haul and heavy industrial vehicles.

  • Hydrogen fuel cells hold more energy-per-unit mass than lithium-ion batteries or diesel fuel. This means that the hydrogen tank can be larger without significantly increasing the weight of the vehicle. For example, for a 500-mile range truck, the hydrogen fuel cell powertrain can be 2 tonnes lighter than the battery electric powertrain.
  • Hydrogen fuelling stations are similar to gas stations. FCEV trucks can be refuelled in a few minutes, which is much shorter than the charging time required for BEVs of a similar size.
  • FCEVs work better in cold weather than BEVs. A study in 2019 found that battery electric buses lose more range than hydrogen fuel cell buses when the temperature falls from 50–60˚F to 22–32˚F. On average, battery electric buses lose 37.8% of their range compared to just 23.1% for hydrogen fuel cell buses.

Some major companies are interested in using low-carbon green hydrogen to power things like trucks and heavy industry. Truck makers, like Daimler Truck AG and Volvo Group, are already moving towards electric vehicles and have created a joint venture to produce hydrogen fuel cell systems.

Daimler Truck, the world's largest manufacturer of heavy trucks, plans to only make vehicles that do not produce emissions by 2035. A key interim goal for Daimler Truck is to make long-haul fuel-cell trucks that are cheaper to operate than diesel trucks by 2027. The company is making good progress on this goal, as testing continues on the GenH2 truck, which offers a range of up to 600 miles.

On the heavy industry side, mining companies are some of the first to adopt FCEVs. Companies like Anglo American, Fortescue Metals Group, and Antofagasta are all working on implementing FCEV technology. In 2021, Fortescue Future Industries, a subsidiary of Fortescue Metals Group, began testing hydrogen fuel cell-powered haul truck and drilling rig technologies.48 The company plans to start using FCEVs by the second half of the decade and has a goal to be carbon-neutral by 2030.

The main reason why FCEVs have not become more popular is the lack of hydrogen fuelling stations. However, this is changing as hydrogen becomes more accepted. For example, on January 31, 2022, Blackrock Inc, Daimler Truck Holding AG, and NextEra Energy announced a joint venture to build and operate a $650 million battery charging and hydrogen refueling station network in the United States. The initial focus will be on critical freight routes on the East and West Coasts and in Texas for medium- and heavy-duty vehicles.

There are some challenges with FCEVs. They are less efficient and more expensive than BEVs. But despite this, there is potential for cost declines and technology improvements in the coming years. This will create growth opportunities for FCEV vehicles and electrolyzers for green hydrogen production. According to the U.S Department of Energy, FCEV medium- and heavy-duty trucks will be cheaper than diesel-powered trucks by 2035, and green hydrogen could become a cost-competitive fuel source by 2030.


We believe that electric cars (BEVs and FCEVs) are becoming more popular as part of the global effort to slow climate change. Electric cars currently make up a smaller percentage of car sales, but this is growing quickly. There are more and more electric cars being developed, and the number of charging stations is expanding rapidly. This creates opportunities for investors throughout the electric car supply chain.

It is very important that the demand for lithium mining and battery manufacturing increase so that there will be enough batteries for electric cars. Electric cars have a lot of benefits, like being lighter and taking less time to refuel. The demand for electric car technologies is going to increase over time, which means there are more opportunities for companies that are different from each other in the electric car space.

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