Hydrogen Faces Economic and Operational Hurdles in Automotive and Freight Sectors

Hydrogen’s High Costs Challenge Transport Applications
A recent analysis by Lux Research experts Christopher Robinson and Anirudh Bhoopalam highlights significant obstacles for hydrogen as a fuel source in both the automotive and freight sectors. Currently, hydrogen prices range between $15 to $30 per kilogram, making it economically impractical for widespread use in transportation. While hydrogen is 14 times lighter than air and has long been considered a potential clean alternative to fossil fuels, the operational costs associated with producing, storing, and transporting hydrogen far exceed those of electricity. As the automotive sector shifts towards electric vehicles (EVs), which benefit from lower operational costs and increasingly accessible charging infrastructure, the role of hydrogen in this space becomes increasingly questionable.

Electric Vehicles Outperform Hydrogen in Automotive Sector
Robinson and Bhoopalam firmly state that the future of the automotive industry is electric, not hydrogen. Despite the potential for future reductions in hydrogen prices, they argue that hydrogen cannot compete with electricity when it comes to operating costs. With EVs continuing to gain market share and advancements in fast-charging technology, the hydrogen fuel cell vehicles struggle to offer an economically viable alternative. Additionally, electric vehicles are more energy-efficient and increasingly cost-competitive, making hydrogen’s potential in passenger vehicles appear limited in the near term.

Freight Sector’s Hydrogen Bet Risks Being Overturned by Battery Innovations
In the freight and trucking sector, hydrogen has been touted as a potential solution for long-range transportation. However, Robinson and Bhoopalam point out that this assumption rests on the belief that battery technology cannot achieve the necessary range or fast-charging capabilities. They caution that emerging technologies, such as battery swapping stations, could undermine hydrogen’s value proposition by offering quick turnaround times without stressing the grid. With electric trucks improving in range and infrastructure, hydrogen’s competitive edge in freight transportation is becoming more tenuous.

Hydrogen’s Promising Role in Decarbonizing Steelmaking
Despite these challenges in transport, hydrogen still shows promise in other sectors, particularly in heavy industry. The steelmaking industry, which has long relied on fossil fuels for high-temperature processes, is increasingly turning to hydrogen to decarbonize. Companies are replacing traditional blast furnaces with electric arc furnaces powered by hydrogen-based direct-reduced iron (DRI). This shift aligns with global decarbonization goals, as hydrogen could offer a cleaner alternative to the high-emission methods currently used in steel production.

Looking Ahead: Hydrogen’s Industrial Applications Show Greater Promise
Lux Research suggests that, rather than focusing on hydrogen’s application in transportation, energy clients should prioritize industrial sectors—particularly steelmaking—that are more receptive to hydrogen for decarbonization. As the steel industry moves toward hydrogen as a key component of its sustainability strategy, hydrogen could play a crucial role in reaching net-zero emissions in the coming decades.