DaimlerChrysler, Ford to Invest $100 Million in Fuel Cell Company

Published September 1, 2004

DaimlerChrysler and Ford have agreed to invest $100 million in Ballard Power Systems, the world’s leading manufacturer of fuel cells for vehicles. The investment, announced on July 8, is being hailed by industry analysts as an advancement that will quicken the pace of research into hydrogen fuel cells as a potential automobile fuel source.

In return for their investment, DaimlerChrysler and Ford will gain control of Canadian-based Ballard AG, a venture that, according to the July 9 Detroit Free Press, “designs systems to deliver the hydrogen fuel and power associated with a car.”

Deal Could Accelerate Practical Fuel Cell Development

According to the July 8 issue of the Toronto, Canada-based Globe and Mail, “The companies hope the deal, which includes a much-needed cash injection [for Ballard], will accelerate the development of a mass-produced car using Ballard’s fuel cells, seen as a possible clean alternative to the internal combustion engine.”

The responsibility for developing the fuel cell system, “which is very complicated and very much aligned with the car, is now being assumed by the automakers, and we think that’s a plus for us,” said Ballard CEO Dennis Campbell. “It’s an expensive part of the business and we can now shift that responsibility and burden to the automakers.”

Campbell further stated the automakers’ expertise in developing hybrid vehicles provides them with the knowledge and experience needed to accelerate the pace of fuel-cell development for automobiles.

The U.S. Department of Energy’s Energy Efficiency and Renewable Energy agency noted DaimlerChrysler, Ford, and Ballard “will be jointly responsible for the research, development, and manufacturing of the vehicular fuel cell systems, which include all the components other than the fuel cell itself. Ballard, meanwhile, will work on developing the next-generation electric drive system and the next two generations of vehicular fuel cells, for which it will receive up to $58 million in funding from DaimlerChrysler and Ford. The changes are intended to optimize the role of the three partners in developing vehicular fuel cells, while providing Ballard with improved financial and operational flexibility.”

Difficult Barriers Remain

According to the National Automobile Dealers Association (NADA), “auto industry executives and observers agree on the immense potential for hydrogen as the fuel of the future. Major automakers,” the organization said, “hope to have affordable cars powered by hydrogen fuel cells in showrooms in a decade.”

Nevertheless, NADA acknowledged that “difficult barriers remain, including the cost of fuel cells and the lack of a mainstream hydrogen distribution system.”

“Distribution and storage of hydrogen–the least dense gas in the universe–are other technological and infrastructure difficulties,” observed Matthew Wald in the May 2004 issue of Scientific American. Not only is hydrogen fuel more expensive than gasoline, but the hydrogen fuel cell that must be built in automobiles is significantly more expensive than the internal combustion engine. Noted Wald, “The hydrogen fuel cell costs nearly 100 times as much per unit of power produced as an internal-combustion engine.”

Noted a February 2004 ExxonMobil study, A Report on Energy Trends, Greenhouse Gas Emissions and Alternative Energy, “There are a number of additional challenges associated with the manufacture of hydrogen from renewable energy. Currently, using average costs for renewables in the U.S., hydrogen is five times more expensive than gasoline when produced from wind and 17 times more expensive when produced from solar energy.”

The study continued, “One must consider whether hydrogen use for transportation fuel is the most appropriate use of renewable resources. A unit of wind or solar energy that is used to displace coal in power generation saves 2.5 times more carbon dioxide than using the same unit of wind or solar energy to replace gasoline with hydrogen.”

The ExxonMobil study concluded, “We and others believe that resolving the issues surrounding hydrogen will take many years, perhaps decades. Therefore, significant commercialization or broad marketplace deployment is not likely for some time. This general view is shared by DOE [the U.S. Department of Energy] and Honda, among others.”

James M. Taylor ([email protected]) is managing editor of Environment and Climate News.

For more information …

visit the Web sites of DaimlerChrysler, at http://www.daimlerchrysler.com; Ford, http://www.ford.com; and Ballard Power Systems, http://www.ballard.com.

Matthew Wald’s article in the May 2004 issue of Scientific American, “Questions about a Hydrogen Economy,” is available online. Point your Web browser to http://www.heartland.org, click on the PolicyBot™ icon, and search for document #15486.

The February 1 ExxonMobil report, A Report On Energy Trends, Greenhouse Gas Emissions and Alternative Energy, is also available through PolicyBot™. Search for document #15485.