Factor 5

ElringKlinger and Plastic Omnium have been working on joint plans to harness the potential of the fuel cell market since October 2020. Both company CEOs, Dr. Stefan Wolf and Laurent Favre, are confident that hydrogen will be an important driver of future mobility systems. Due to their performance capabilities, the fuel cell stacks of the joint company EKPO Fuel Cell Technologies in particular represent a competitive alternative to battery-electric drives or the internal combustion engine. Higher unit volumes are expected to reduce the current price of a system by a factor of 5 before 2030.

Is there a link between the partnership deal you have agreed and the Coronavirus pandemic?

Favre — The pandemic is accelerating a transformation that began years ago in the automotive sector, especially with regard to the development of climate-neutral forms of mobility. Another factor here is that governments all over the world are investing huge amounts of money to promote “green” growth once the crisis is over. If you take just Germany and France together, around €16 billion is being plowed into measures to create a hydrogen economy.

Wolf — The EU’s hydrogen strategy has certainly sent out a really useful signal, but the main factor in our decision to set up a joint venture is our corporate strategy. ElringKlinger has been working on fuel cells for the last 20 years. We knew we had an excellent stack but we realized that we would need a partner to produce a complete system. Plastic Omnium is a leading industry player in the field of hydrogen pressure tanks. We began talking before the pandemic, and since then we have just carried on negotiating, mostly by video conference.

There are already quite a few providers competing in the fuel cell market. What is unique about your joint company?

Wolf — Flexibility is one of our strengths. Some of the big car makers have chosen to develop their own systems in-house and buy in high-quality components and modules. In that case, we will simply be performing the same role as for the combustion engine. However, smaller vehicle manufacturers need to find a partner whose expertise covers the entire fuel cell system.

Favre — …and that is exactly where we come in and why we decided to combine ElringKlinger’s system business in Austria and our own operations in Switzerland into a single company.

Wolf — And let’s not forget, in terms of our competitive position, that our components are technologically at a very advanced stage. We already have the capacity we need to produce up to 10,000 stacks a year.

Favre — If we receive a new development order today from one of our customers, we reckon we can supply that product in series quality within three years – anywhere in the world!

„From a geostrategic perspective, too, hydrogen-based mobility systems would make us less dependent on other regions when it comes to meeting demand for energy and raw materials.

Laurent Favre, CEO of Plastic Omnium

Looking ahead, why do we need hydrogen fuel cells when we already have battery­electric drive systems?

Favre — A vehicle driven by fuel cells that use hydrogen is an electric vehicle. For us, it’s not a question of either-or. There are so many factors involved – the level of infrastructure provision in each local market, for example – that will determine which technology comes out on top. When it comes to range, hybrid vehicles that combine a fuel cell drive with a small battery have the edge.

Wolf — It’s also worth bearing in mind that hydrogen from solar, hydro, or wind energy is a potentially infinite resource. By contrast, the production of lithium-ion batteries is based on the extraction of finite raw materials, and the extraction methods used are not always environmentally friendly. That’s not an argument against the use of electric drive systems in urban areas, but when you are dealing with vehicles that need to cover very long distances, the fuel cell is a better solution from a sustainability point of view.

Favre — From a geostrategic perspective, too, hydrogen-based mobility systems would make us less dependent on other regions when it comes to meeting demand for energy and raw materials.

Wolf — I would certainly agree with that. At present, Europe is way behind the Asian countries in the battery cell market. By contrast, we lead the world in fuel cell technology.

It looks as though manufacturers and some governments in Asia are moving ahead in the fuel cell market, too.

Wolf — We have already set up numerous development projects in China and other countries through EKPO. That shows our technology is highly regarded all over the world. The fact that countries such as Japan are now investing heavily in hydrogen presents us with a great opportunity. After all, car makers in every one of those countries will be looking to buy in components.

Favre — We expect the business to take off initially in Asia, where the market is growing faster than here and where we have already strong industrial presence and customer portfolio. That said, we have operations all over the world and have also set up our first projects in North America and of course in Europe.

„Thanks to fuel cell technology, we will be able to produce vehicle drives that give us a bigger share of the value chain, and that will help us to keep more skilled jobs here in Europe. It’s a win-win for the economy and the environment.

Dr. Stefan Wolf,
CEO of ElringKlinger AG

When will fuel cell drives reach cost parity with the diesel engine?

Favre — That depends on the technology, the materials, and of course production volumes. Our target is to reach cost parity somewhere between 2027 and 2029. To do that, we will have to reduce our production costs by a factor of five or so.

Wolf — It also depends on how expensive it is to clean up the exhaust gases produced by diesel engines. With regulations governing internal combustion engines getting stricter all the time, we expect demand for new technologies such as the fuel cell to keep on growing.

What concrete plans do you have to make fuel cells cheaper?

Wolf — Bringing the cost down is one of the key tasks we have set our new joint venture. Let me give you an example. We used a platinum coating for the first generation of our bipolar plates. Now we use gold, and we are already working on a technique that would dispense completely with the need for precious metals.

Favre — I’m very confident that fuel cell drives will be competitive across the board by 2030, not just in trucks. Even a large SUV with a fuel cell drive will be more cost-effective than a plug-in hybrid with a combustion engine.

Wolf — One Japanese car maker has announced plans for two million fuel cell vehicles in 2030, and a Korean manufacturer for one million. What’s more, all the European car makers are at least running development programs. I believe we have good reason to be optimistic.

In many cases, the success of a business partnership depends on the culture rather than the technology. What makes you so confident that ElringKlinger and plastic omnium are a good match?

Favre — We both represent listed family-owned companies, so we have a lot in common in terms of culture. We have solid foundations, so we get on with things and then talk them over. What’s more, we stand for strong values and take responsibility for our employees.

Wolf — I agree with every word of that. We are aware, too, that while we take our climate obligations very seriously, it’s just as important to maintain economic prosperity. Thanks to fuel cell technology, we will be able to produce vehicle drives that give us a bigger share of the value chain, and that will help us to keep more skilled jobs here in Europe. It’s a win-win for the economy and the environment.

The interview was conducted by Johannes Winterhagen.

Laurent Favre

The French automotive engineer Laurent Favre (born 1971) took on the role of CEO at the French supplier Plastic Omnium in early 2020. He is the first CEO in the company’s history to come from outside the Burelle family, which founded the company in 1946. Favre speaks excellent German after working for ABB, Benteler, Thyssenkrupp, and ZF, and even lived in Swabia for three years.