Does the increasing environmentalism of consumers spell disaster for the car industry? Or can they innovate, saving themselves, as well as the planet? Students Adam Jarvstrom and Lydia Woodcock submitted this piece as part of their People and Organisations 2 module. In it they explore the benefits of Hydrogen powered cars, as well as the obstacles the industry faces.
As the automobile industry stumbles into 2020 with almost all UK car production paused due to COVID-19, the future looks uncertain. However, one thing is for sure: combustion engines are soon to be history.
Governments are setting deadlines for the eradication of petrol and diesel cars in order to meet future sustainability targets; the UK has gone as far as to ban diesel cars by 2035.
To the average consumer, electric cars are the future and sales are forecast to be 21 million units a year by 2030. Surprisingly, the world’s biggest polluter (China) now accounts for half of the global electric vehicle (EV) sales - supported by $60bn in state subsidies.
However, elsewhere, hydrogen powertrains are set to take centre stage. Honda, Toyota and Hyundai have responded to the global market stimulus caused by environmental pressures by offering a vehicle with the cleanest fuel possible.
Automobile manufacturers now have the option to take a strong ethical stance by signalling their commitment to making environmentally friendly vehicles. To then exceed this, by upgrading their product range with hydrogen fuel cell vehicles (HVs) which only emit water vapour, would have many positive externalities for the public. Some academics argue that organisations can take progressively more intense ethical stances that incorporate an increasing range of stakeholder interests over time. Firms can then expect the public to judge these stances in the long-term.
A major barrier preventing an increase in HVs is the lack of infrastructure available to refuel the cars, with it currently costing £4.3 million to build one station. This is where key stakeholders have an important role to play.
Currently there are 3 HVs available on the UK market: Toyota Mirai, Honda FCV Clarity and Hydundai ix35 . Toyota, Daimler and BMW are leading a group of 13 companies across the world, investing $10 billion over the next 10 years in developing hydrogen technology and infrastructure.
The UK government would also have a role to play. They are needed to subsidise refuelling stations, to encourage investors to invest in infrastructure, as well as to help consumers buy the product through offering grants. There are grants currently in place but unfortunately aren’t sufficient due to the large cost of these vehicles. The Toyota Mirai for example is priced from £66,000.
A report by the government mapped out the future of HVs and found that the uptake will progress as new models are created and the fuelling network progresses. Once mass production is established, costs will be brought down, with the potential for 1.6 million vehicles on UK roads by 2030, and annual sales of more than 300,000. The potential for returns, as well as the environmental necessity of the technology, highlights it as a key area for organisations looking to invest.
A key stakeholder for promoting the use of hydrogen fuel cells are oil companies, specifically Shell and BP. They failed to capture the electric charging market but now have an opportunity to retrofit existing fuel stations for hydrogen refilling. The two multinationals are leading the way in this field, as part of a group lobbying the UK government to create a world leading hydrogen economy.
A report they released contained five new policies to help the government reach its goal of net zero emissions by 2050. One of these was the suggestion to collaborate to build 100 hydrogen refuelling stations for road transport by 2025.
A 2017 study revealed that 88% of customers will be “more loyal” to a company that supports environmental or social issues. For any automobile firm aiming to position themselves as an ‘ecologically conscious’ brand (a desirable label), they should emulate Toyota.
Toyota know that producing batteries for EV’s requires approximately 20 tonnes of CO2, alone, and over its lifetime a vehicle will achieve 124g/km in CO2 emissions- after decades of refinement. The company’s first ever HV emits 120g/km of CO2 and is then halved when biomass is used to obtain the hydrogen.
Presently, the largest obstacle facing hydrogen power is the lack of filling stations. The UK has just 13. In fact, a similar shortage has limited sales growth of EVs. Scarce financial resources limit the expansion of either electric or hydrogen refuelling stations. Furthermore the organisational shift from combustion engines to EVs has already cost manufacturers vast sums (Volkswagen are spending £30bn over the next 4 years).
Another limitation is that the mainstream production of hydrogen (representing 95% of its manufacturing in the US) comes from methane reforming - thus limiting the ecological benefits of HVs.
Finally, we must consider the difficulty inherent in changing historical brand cultures, such as the iconic American love of “big, rumbling, powerful V8 engines”.
The rapid shift away from combustion power can be credited to the collective bargaining power of the consumer base, to a great extent. The public desire for environmentalism - with 64% of Europeans stating ecological protection is “very important”- may be the cause of the shift towards alternative energy sources for automobiles.
Expected Corporate Social Responsibility
Corporate Social Responsibility (CSR) incorporates sustainable development into a company’s business model. Hydrogen powered cars would strengthen a company’s CSR policy because the organisation is acting ethically by contributing to wider society, and helping the UK government achieve carbon neutrality. Consumers, employees and stakeholders prioritise CSR when choosing a brand, therefore, this could increase the company’s profits.
Hydrogen is the way forward for the pioneering car manufacturers, they see hydrogen is the future both for their consumers and for contributing to their CSR policy.
- The Government subsidisation of hydrogen refuelling stations will be necessary in accelerating the rollout, with the NREL estimating a future cost of around £4.3m per station (to equal number of petrol stations would cost £36bn).
- Electric cars may only be a short feature in the coming future of cars- only propped up by cult-like figures such as Elon Musk.
- Companies are going to become more ecologically conscious to meet the increasingly aware customer base.
Photo by Andrew Roberts on Unsplash