Hydrogen plan: the automotive sector remains on the sidelines

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The hydrogen plan is a clear victory for the hydrogen lobby obtained this summer thanks to the in-depth work undertaken over several years to form a common front, structure arguments, and forge alliances and strategic partnerships between companies and industries that are not very familiar with each other. The French equipment manufacturers are part of this rather large club which has been formed and strengthened over the years, but the manufacturers are not really part of it. Given the importance of the LCV dossier for our manufacturers as well as for the French site, this marginality of the automobile in the country's hydrogen plan stands out as an anomaly to be corrected.
 
Announced with great fanfare in the autumn, the "hydrogen plan" is becoming clearer week after week.
The last significant event in this clarification was the grand mass in Albi at the end of February where the ministers concerned (Economy, Industry, Environment and Research) came to enthrone the National Hydrogen Council which was meeting for the first time.
 Chaired by P. Boucly of France Hydrogène (formerly AFHYPAC - French Association for Hydrogen and Fuel Cells), the said Council is intended to represent the entire sector, which would allow for the production of carbon-free hydrogen, storage, transport, distribution and the development of its uses.
 
Thus, energy and oil companies (Total, EDF, Engie) or hydrogen specialists (Air Liquide) cohabit with representatives of the major strategic committees of the sectors concerned (Chemicals & Materials, Mining and Metallurgy, Aeronautics, Marine Industries, Railways, Construction and Automotive). The automotive industry is well included in the list and Patrick Koller, General Manager of Faurecia and representative of the CSFA, is in charge of the "coordination of industrialists", along with Benoit Potier of Air Liquide. 
 
However, it is only one of the many components and, on reading the plan, priority seems to be given to the greening of hydrogen production under economic conditions that will become acceptable in the long term.
Moreover, the government press release clearly states that the work of the Council will be carried out by the permanent delegates of the CSF "Energy Systems". The government is thus subcontracting its hydrogen policy to the lobby that has been able to structure itself to promote this priority, and this lobby has not been able to count on a very active participation of the two French manufacturers, who have, as a result, kept the CSF - and the PFA - on the sidelines. Only the activism of Faurecia, Plastic Omnium and Michelin made it possible to correct this feeling of a very timid commitment of the French automobile industry to this path.
 
Apart from the doubts which continue to persist on the merits of this support and the anti-hydrogen arguments which seem to be reinforced as the choice to support the sector is asserted, this timidity can be explained (and not justified) by two main factors.
 
The first - which can be seen to a large extent in VW's attitude - relates to the fear of car manufacturers that the range of aid for the development of battery electric vehicles that they request from the States or the EU will suffer as a result of this support for a technology that is perceived as competing.  
 
Since, collectively as well as at the level of each firm, the scale of the challenge to be taken up in order to electrify its ranges, convince customers and ultimately regain its competitiveness in the new world in which the combustion engine vehicle will be outlawed, any dispersal seemed inept. Thus, where some - like Carlos Tavares - were still advocating 'technological neutrality' in 2019, others - like the directors of VW - were convinced that such neutrality was no longer appropriate and that the tempo desired by Brussels and Beijing left manufacturers and public authorities no room for manoeuvre.
 
In the same way that it was not possible to demand charging stations from the public authorities while at the same time asking them to subsidise the development of compressed hydrogen distribution networks, it was not possible, in this vision, to seek to develop fuel cells and new generations of batteries at the same time.  
From this perspective, what is true from an economic point of view for reasons related to the relative scarcity of public and private resources to be allocated to projects is also true from a political point of view: When one tries to argue in terms of strategic independence by invoking the advantage taken by the Japanese, Koreans and Chinese in the field of lithium-ion batteries, one can either claim that this handicap will only be overcome by "putting the package" on the new generations of batteries or claim that France and Europe have infinitely more chances of succeeding in going up the slope in the hydrogen way.
 
Thus, whether we like it or not, in an industry like the automobile, which needs standards, hydrogen is still a competitor to battery electrics. Moreover, it was necessary to trigger the "whatever it takes" in 2020 for the lobby, which had been struggling in vain to convince the State, to finally succeed.
The second element that explains this French reluctance is that the French car industry has lost its VI manufacturer in recent years. Indeed, the slow process of merging Renault Trucks with Volvo came to an end with the total withdrawal of Renault in 2012: even if Renault only held 6.5% of the capital of Volvo AB, this still gave the French 17.2% of the voting rights and, in the balance of the whole and the allocation of R&D resources between Sweden and France, this was important.
 
Indeed, everything indicates that since then neither the Renault Trucks brand nor the French engineering departments have been high on the list of priorities of the Göteborg management.
 
Therefore, the fact that, in Brussels as in the HGV industry in general, hydrogen cannot be neglected does not mean that the existence of a significant HGV industry in France is likely to correct the lack of interest shown by car manufacturers: we still have factories but no more engineering and decision-making centres, and the result is that if Volvo, CNH or Scania are interested in hydrogen, this will not be through France.
 
The heavy transport designated as the "natural" field of application of hydrogen technologies will be rail, sea or air rather than road in the French case. Germany, Korea, Japan and the United States will take care of road vehicles.
Despite this rather obvious delay, since September, all may not be lost. Indeed, even if this part of their activity is subject to considerable turbulence, the two French manufacturers have very strong positions in Europe in the field of light commercial vehicles.
 
As was already the case for Peugeot and Citroën, and as the takeover of Opel in 2017 and the merger with FCA this year have significantly strengthened this weight, Stellantis finds itself in a position where its market share in the EU (+ EFTA) exceeds 34% (2019 figures: 755,000 registrations out of 2.195 million) and must help Toyota to strengthen its position in order to satisfy Brussels.
 
Renault and Nissan, with 519,000 sales in 2019, have a market share of over 19%, leaving Ford (348,000), VW (256,000) and Mercedes (211,000) far behind. In this field, within the Alliance, Renault is very clearly designated as the leader in the "leader-follower" scheme which must now be systematically adopted and the bulk of its assemblies (and a major part of those of Nissan LCVs) are French.
Insofar as the European requirements in terms of CO2 by 2030 (-31%) and the air policies of the major European cities will require a very rapid change in the mix of LCV registrations without the battery-powered vehicle being able to cover the range of user requirements, both Stellantis and Renault-Nissan will have to pull out all the stops to preserve their very strong positions in this market.
 
For the heaviest vehicles concerned and for those used for the longest distances, the hydrogen solution will in all likelihood have to be offered to customers. With some possible commercial and technological agreements, this could also cover the needs associated with "small carriers".
 
There is therefore every reason to mobilise the hydrogen plan for French manufacturers. Renault made a move in this direction at the beginning of 2021 by announcing its JV with Plug Power (and the end of its collaboration with Symbio). PSA has indicated that its first 100 hydrogen-powered commercial vehicles will be Peugeot Expert, Citroën Jumpy and Opel Vivaro equipped with Symbio systems. Opel will also join the German plan.
 
While 93% of the LCV market will still be thermal vehicles in 2020 (French figure), everything remains to be done on the LCV market and this is an operational emergency for the French industry. In this context, the hydrogen plan offers an opportunity that manufacturers would be wrong to ignore. 
 
08/03/2021
 
 

The weekly column by Bernard Jullien is also on www.autoactu.com.

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