Battery vs. Hydrogen: A Clash of Titans in the race to Zero Emissions

This narrative addresses the critical issue of greenhouse gas emissions from traditional internal combustion engines, recognizing that BEVs and HICEVs may be essential solutions for a broader transformation towards a sustainable transportation future.

Original equipment manufacturers (OEMs) across the globe have vowed to slash CO2 emissions by 90% in 2050 compared to 2020 levels, aiming for net-zero emissions. Achieving this ambitious goal demands drastic reductions across the entire value chain, not just vehicle technologies.

Deloitte's report, Pathway to net-zero: Mastering the Twofold Goal of Decarbonization and Profitability, underscores this point. Shifting automotive production towards cleaner technologies necessitates substantial investments in R&D and the creation of robust manufacturing capabilities for these emerging solutions.

For the direction toward BEV, ensuring battery supply resilience becomes paramount. Fraunhofer ISI reports that China held a near-monopoly (99%) on global LFP battery production capacity in 2022. While projections suggest a decline to 69% by 2030, China will likely remain a dominant player. This concentration poses a significant challenge, especially considering batteries contribute roughly 40% of a BEV's total cost.

According to Deloitte, most consumers are concerned about the "cradle to grave" environmental impact of an EV battery, requiring industry stakeholders to implement sustainable practices across the entire battery life cycle since its extraction, processing, manufacturing, recycling, and disposal. 

On the other hand, as the focus shifts towards HICEVs and fuel cell electric vehicles (FCEVs), developing a robust hydrogen gas station infrastructure becomes crucial. However, this path is fraught with challenges – building a single hydrogen station is considerably more expensive than a traditional gas station.

Besides, clean (Green) hydrogen requires electricity for production, called 'electrolysis.' The distribution network and gas stations for hydrogen for FCV owners' accessibility are still far from creating a critical mass.

Beyond these specific technologies, the overarching theme is integrating sustainable practices across all aspects of the automotive industry. It is essential to implement practices that minimize resource usage during production, promote responsible recycling of materials, and utilize environmentally friendly methods for decommissioning vehicles at their end-of-life.

Embracing these changes has its challenges. Short-term profitability concerns might arise due to the upfront investments in clean technologies and infrastructure. However, the long-term benefits outweigh these initial hurdles. By prioritizing sustainability, the industry can significantly contribute to a cleaner environment, improve air quality, and even achieve cost savings through increased energy efficiency.

Yet, the journey extends beyond just technological advancements. Investing in the workforce is equally crucial. Upskilling and reskilling employees are vital to ensure they possess the necessary skills and knowledge to navigate the evolving landscape. Fostering diversity and inclusion within the workforce will bring a broader range of perspectives and experiences, ultimately leading to more innovative and sustainable solutions.

Thailand’s EV3.5 policy currently prioritizes price parity incentives to accelerate the adoption of electric vehicles (EVs) and draw investors to become the automotive hub of the region. The nation is simultaneously exploring the potential of hydrogen as a sustainable alternative for the transportation sector.

Thailand's Energy Development Plan (PDP) recognizes hydrogen as part of its ‘Alternative Fuels’ strategy, aiming for ten kilotons of oil equivalent (KTOE) of hydrogen energy consumption by 2036. This commitment is further solidified by the pilot project in collaboration with partners, which resulted in Thailand's first hydrogen refuelling station. These initiatives showcase Thailand's multifaceted approach to achieving a sustainable transportation future. 

Navigating this transition requires proper exit tickets for current stakeholders and supply chains. Ensuring a smooth transition for all involved will be critical to the success of this grand play toward a sustainable future.

The entire automotive industry must transition beyond specific technologies and embrace a holistic approach that integrates environmental consciousness across its entire value chain, in the race for a sustainable future. This transformation, though challenging, holds immense value for the future: a cleaner environment, improved air quality, and long-term cost savings. By selecting sustainable practices across all aspects, the industry can play a leading role in shaping a greener future for all.

Mongkol Somphol | Automotive Sector Leader

Chodok Panyavaranant, Ph.D. | Manager - Clients & Markets

Deloitte Thailand