[Inside Chodong] Priming for a Better World: Faster Together

Hydrogen: A Fair and Clean Energy Source
Hyundai and Toyota Collaboration Expected to Expand the Market

Henry Ford was not able to open the curtain on the popularization of automobiles because he accurately pinpointed what the market wanted. In the early 20th century, the main mode of transportation on the roads was horse-drawn carriages. Ford once said, "If I had asked people what they needed, they would have said faster horses, not cheap cars." At that time, the conditions for the new technology of automobiles to be accepted by the majority were not yet in place. Nevertheless, by lowering production costs and gradually creating conditions that made buying cars inevitable, the stage was set for widespread adoption.

Since modern times, demand and supply have generally been closely intertwined in the market realm, but sometimes the strong will of suppliers looking to the future acts as a catalyst that raises demand. The rapidly popularized smartphone in the 21st century is a case in point. When Apple introduced a phone with PC-level performance, dispelling the early dull image of smartphones, they became a necessity.

What about hydrogen-powered cars? Hydrogen is the most abundant element in the universe and does not emit pollutants during energy utilization. This is why it is considered a fair and clean energy source. However, applying it in real life is another matter. Although engineering technologies have been refined and applied over decades, lowering the barriers significantly, it still lacks competitiveness compared to other energy sources. It is still expensive as a fuel and there are not many applications.

The only domestically produced hydrogen electric passenger car, Nexo, costs 69.5 million won just for the car itself. It is more than twice as expensive as a similar class domestic compact sport utility vehicle (SUV). Hydrogen electric trucks or buses cost around 500 to 700 million won each. Similarly, buyers have to pay several times more than for existing vehicles of the same class. Without government subsidies, they would not sell. The companies are not pricing them high to make large profits. The parts that convert hydrogen into electricity are still not mass-produced and remain very expensive.

Achieving carbon neutrality in the transportation sector is difficult because it requires consensus among various social stakeholders. In the power generation or industrial sectors, the entities operating the facilities, i.e., a small number of decision-makers, can provide momentum. The situation is different for automobiles, which make up most of the transportation sector. Ownership is dispersed, so each owner must be persuaded to participate. Appropriate regulations as well as a process of coaxing and encouraging are necessary.

Battery electric vehicles quickly established their position thanks to the ‘unconventional’ player Tesla and the rise of China as a latecomer in the automotive industry. While the necessity of hydrogen electric vehicles is acknowledged, currently only Hyundai Motor Company, Japan’s Toyota, and some Chinese commercial vehicle manufacturers supply them to the market. Since the oil crisis, most automakers have researched next-generation energy sources, and hydrogen was a major research target, but few have pursued it persistently. Hyundai and Toyota began serious hydrogen car research in the 1990s and released mass-produced vehicles in 2013 and the following year, respectively.

The public glimpsed the potential of hydrogen cars by watching Hyundai and Toyota. It was also understood that hydrogen vehicles are more suitable for commercial use such as buses and trucks rather than passenger cars. They have sufficiently played the role of a catalyst that benefits the world through transportation. Both companies are attempting various collaborations with other automakers and different industries. Manufacturing is more efficient when done collectively rather than alone because economies of scale can be realized. Just as Hyundai Motor Group Chairman Chung Eui-sun and Toyota Motor Corporation Chairman Akio Toyoda joined hands through motorsports as a connecting link, cooperation in the hydrogen car field is also anticipated. While competition for leadership is good, at this point, growing the market together is more necessary.

Choi Dae-yeol, Deputy Head of Industrial IT Department