During the media days of the 2017 North American International Auto Show in Detroit, we (Gerald Irish and myself) sat down with Steve Ellis, Manager of Fuel Cell Vehicle Marketing for American Honda, and proceeded to pepper him with questions concerning the past, present, and future of Honda's Fuel Cell Vehicle initiatives. Following is a (slightly edited, for improved readability) transcript of our conversation, which stretched for over 40 minutes.
Gerald Irish: Can you talk a little bit about the consumer response to the Clarity program (with respect to) the first generation and how the market is responding to the second generation offering that's coming up?
Steve Ellis: So one thing, just to clarify, this is actually the third generation (FCEV). The first generation really was the blue, kind of boxy Honda FCX, that we first introduced in 2002. It was based upon the EV Plus, and we delivered the first ones to the City of Los Angeles in November of 2002. So it was totally a fleet-based program, but it was the first time (that) any automaker had ever handed the keys to a customer. Then, during that period, in early ‘05, we delivered to the world's first retail consumer – that was Jon Spallino and his wife – and that was the new Honda-stack car, so FCX was really the first gen. That lead to FCX Clarity, which was really 2nd generation. And some people called that the "generation skipping" fuel cell technology. It was that advanced.
Jeff Palmer: How many of those FCX Clarities did you actually end up delivering to customers in California?
Steve Ellis: So that's a little bit different story. We said we were going to do about 200 cars, it was during the period of the Earthquake/Tsunami in Japan. It truly did impact the program. We had vendors who were completely lost in the tragedy. So we delivered just under 100 cars, yet we accomplished what we needed to do – which was, again, to take it to that next level retail consumer-based program and focus on a new level of station/car interface, learning how dealers can actually deliver cars to customers and answer questions like "Hey, is hydrogen safe?". So these were valuable lessons which bring us to today, where now we have a network of 12 dealers, and we're moving from 10's of cars to 100's of cars, to 1000's of cars.
JP: How do you see that timeline progressing? Do you see it going in to 10's of 1000's of cars sooner than later, or are we looking at something like a 20-year time frame?
SE: Well in answer to that question, it has to be commensurate with station development/station growth. We can't put more cars out there than there are stations available to support them. So that's another part of my job, of a lot of hats that I wear, one includes Chairman of "Station Locations Roadmap" working group of H2USA, a national organization to do outside of California, what we've already been doing in California.
JP: Have you identified any potential partners to help you establish a nationwide filling network – something to just get your foot in the door and enable customers to complete cross-country drives? Have you guys reached that level where you're speaking with people who can potentially roll this out on a nationwide scale?
SE: Absolutely, so what Honda did was to help fund one of the startup companies (that was) getting into the business of bringing hydrogen to consumers, and that was First Element Fuel Corporation. That's in a press release that we've already announced – it was a $13M loan. And by doing that, we both accelerated the growth of stations in California, and added to the number that would happen. So, we're seeing an unprecedented level of station growth today. As to going outside of California, that is the role of H2USA. . H2USA is a public-private partnership between US DOE, automakers like Honda, and I chair one of the 4 working groups. And of them, my working group mission is to answer the question "How many stations are needed, where, and when?". So that's our mission, you might say, and so it's still work in progress. We'll see stations develop first and foremost in the northeast – it's already starting today. But really we're starting there today kind of where we started in California 10 years ago. So yes it's behind California, but it can accelerate and catch up because we've already proven it in California.
JP: It's my understanding that there is already quite a bit of hydrogen production in place for industrial purposes. What level of production increases would be necessary to support a large fleet of hydrogen vehicles? Is this something that is viewed as a huge roadblock for expansion or development of this technology?
SE: Not only is the production side NOT a roadblock, it's not even a bump in the road, you might say. The companies that are making hydrogen today – Air Liquide, Air Products, Linde – people like that. These are international companies, US-based companies. They make enough hydrogen today to fuel over 10 million cars.
JP: And they have sufficient excess capacity?
SE: They have excess capacity, but the second part of that is, remember, for every hydrogen fuel cell vehicle put out there, we're displacing gasoline. Hydrogen is a key part of today's cleaner gasoline, so every place there's an oil refinery in America, there's also a hydrogen supply, whether it's renewable production or some other form of hydrogen. So we can take that hydrogen (that's been) displaced and now apply it to fuel cell cars. But we need less of it because the vehicles themselves are over 2 to 3 times more fuel efficient.
JP: What about on the distribution side? What do you see as the best model for distribution? For example, local production from green sources, or some sort of hydrogen pipeline system? How much of the existing infrastructure could be retrofit at a reasonable cost?
SE: One of the great advantages of hydrogen is that we have this regional variation, so we can do things with hydrogen based on, let's just say, the dynamics of the region. Take the Pacific Northwest, right? They have hydro-electric power – very low carbon electricity. Well, that production side is very constant, but the demand side actually varies every day. Up and down, right? So off peak, they can make hydrogen and store it. That's a no-brainer. In areas like Texas and Oklahoma, where there's a lot of wind, we can utilize that electricity, you have natural gas supply, bio-gas supply. Simply put, the supply side can be diverse and take advantage of the regional characteristics of energy. That's the key.
JP: Let's talk about sustainability and lifetime cost analysis, particularly in comparison to BEVs. For fuel cells, what are you modeling for the longevity of the fuel cells? How much of that is recyclable or waste at the end of the life of the vehicle? Also with respect to the hydrogen storage tank in the car, what is the lifespan of those? Can you compare and contrast the differences?
SE: So, on the battery side, FCEVs use a small battery, like a hybrid. Okay, so everyone is working on greater recyclability of batteries. That's a given. But overall, all vehicles, we're striving now for kind of cradle to grave – all aspects, of both the energy equation and also the recyclability of the car. So, overall, that's ongoing work Honda is doing today such as zero waste manufacturing.However it's real simple on the fuel cell stack itself. Everyone talks about the precious metals, platinum and things like that. That same discussion happened when the first catalytic converters were produced for cars. Today, the majority of those precious metals come from recycled catalytic converters. The model is sound. We can do the exact same thing for fuel cells. So the fuel cells will have a life of the vehicle, as will the carbon fiber fuel tanks. The tank is good for the life of the vehicle, generally viewed as 15 years. After that, then there's recycling processes and cradle to grave programs.. So on the stack side, those precious metals will be taken out and reused again. The models are there and already proven with catalytic converters. For example, the aircraft industry – they're actually running point on the recyclability of carbon fiber – and other industries that are the biggest users of it today. So we benefit from all of their good work.
JP: So I know years ago, one of the great advancements in the fuel cell technology that Honda had developed was very low temperature operation, and generally being able to operate in the extremes, whereas the earliest systems could not operate reliably at these extremes. Where is Honda now with the technology today?
SE: Sure. With that first generation program, the original FCX Honda-stack car – we did deployment in subfreezing temperatures up in Albany, NY, with the state of California, and also at the other extreme, which was extreme high temperatures in Las Vegas, vehicles leased to the City of Las Vegas. So we learned a lot from those leases. FCX Clarity was then introduced, andwhat we announced with both of those cars was operability at -20 degrees F. So, fpr subfreezing temperature operation now, we've crossed that hurdle. You know, once again, for years we heard things like "well its only exhaust is water, and, water freezes at freezing temperatures". Well, that's a challenge for engineers to solve, and they've solved it.
JP: By heating the exhaust?
SE: There's other ways. There's lots of ways to deal with and manage the water itself. The simple one is, when you turn off the ignition, you hear the car kind of purge. It's blowing the water out and reducing it to a minimum. That's one of the ways to mitigate the issue.
So, I did want to come back to something because we quickly moved over into the hydrogen and storage and infrastructure side, but you had asked a pretty good question which was "Where are we going with this, are we just dipping our toe in the water, or really taking off with it?" and the answer is, we're really taking off. So I have actually a graph that shows what I call a stair step approach to Honda's Fuel Cell Vehicle pathway. Because, we develop the car, then we run it for ‘X' number of years, and then we learn from that, gather data, learn from that, and then we developed the next car, ramped it up and run with that. That was that 2nd generation, now we're in this 3rd generation. But already on the books today, we've announced a partnership with General Motors as working to develop the fuel cell, really to combine patents and develop the fuel cell technology itself and storage for fuel and other key components. Those results will come to fruition around 2020-2021. There will be more news coming out from Honda and General Motors on this working partnership, but it will come later.
JP: I know you can't talk too much about the PHEV Clarity or BEV Clarity, but from a broad scope, is Honda focusing primarily on the FCEV version and then leveraging the platform to support the other technologies? Where do you see everything converging or diverging down the road?
SE: So there's really three steps to that. First and foremost, it's kind of a single platform with 3 different technologies. But all 3 technologies have unique plusses and minuses, right? So with the hydrogen fuel cell Clarity, it's restricted by market to where the hydrogen stations exist, first and foremost. Skip to the other end, which is the plugin hybrid – there's no restrictions. This is a vehicle Honda can sell in all 50 states, through our entire dealership network and there is no, let's call it "infrastructure challenge". But, people can benefit from all-electric range. The battery electric is kind of in the middle there, right? So Plug In infrastructure is ahead of the curve from hydrogen infrastructure, and both of them serve a valuable goal as zero emission vehicles. So simply put, we're not preferencing any one of the 3, we're letting the market choose. Choice is a good thing.
JP: I guess where that question comes from is maybe 6-7 years ago, a former Honda CEO had indicated that Honda was all-in on fuel cells, and they saw a use for BEVs, but that fuel cells were ultimately the future, and that's where they were focusing most of their R&D efforts. He did mention that the traction motors and control systems could all be common (between FCEVs and BEVs) and you're basically just talking about the difference in energy source. It seemed like that the thought back then was that maybe not today, but definitely in the future that FCEVs were the most sustainable path. I was just curious if philosophically that's still where Honda was leaning.
SE: Really, very little has changed. Because even then, Honda wasn't saying fuel cell in deference to plugins. It was really this. You need to send signals to government to make sure that they understand, this is a technology that is critical towards society's goal to have zero emissions transportation. What comes from this approach, and I think you mentioned it a minute ago, is under 5 minute refueling PLUS 300+ mile range. Remember, back when that announcement was made, we didn't have 200-mile battery electric vehicles, and we were just visualizing you might say, 300-mile range fuel cell vehicles. But we knew we would have long range fuel cells and it would still be 3-5 minutes (refueling time). So, simply put, it's important to make a statement.. to say "we're bullish on this technology" and we need government interaction to help on the infrastructure side for stations and incentives toward fuel cell technology. And if you don't send those signals, then government gets confused, they don't know which way to go. So at Honda, in reality, nothing has changed. We believe choice is critical, and this technology provides the same operation as every gasoline vehicle that we drive today: 5 minute refueling, over 300-mile range. So from that standpoint, the breadth of platforms that we can put it in, is already proven and we'll see that approach continue down the road.
JP: Now, not to get too political, but it seems like energy policy of the outgoing administration presented some road blocks or challenges on the fuel cell side, when prior to that point things had been progressing fairly rapidly. But the policy change shifted focus and money more towards the battery side. Do you see the new administration's energy policy once again creating an environment which is more conducive towards accelerating the development and deployment of fuel cell technologies?
SE: Well look, the Department of Energy has been with us now for a few years, since some of those challenging days – we'll just call it the "pendulum swing" – and so they're working really hard on the research side and developing technologies, especially with storage and infrastructure, and on the materials science side. As to where it's going tomorrow? Look, you know, we have an administration that likes infrastructure projects. They like jobs for America. They want to do things for, I believe, technologies that will keep the money at home. Right? So alternative fuels accomplish that. These are fuels that will always be domestic, and we won't be doing with hydrogen like the US does with oil today, sending money overseas for oil and gasoline. So I think there's enough room, and time will tell, we'll see where it goes, but it's a matter of just leveraging those things that are important to this new administration for these fuel cell technologies. After all, society will benefit from having a fuel that isn't subject to wild price swings based upon oil cartel pricing.
JP: Will we ever see $7500 tax credits for fuel cell purchases?
SE: (Laughing) I appreciate your question. Look, what we need from government is long-legged incentives. "Long-legged" meaning something that we can put a stake in, let's say 6, 8, 10-year type of incentives. Even if it starts at $7500, ramps down to $5000, and finishes at $2500, we need that. We need certainty, and that way we can run advertisements with it, we can bake it into our websites, we can talk to the consumers about it, the dealers can sell the car on the promise of having an incentive. That's what we have not experienced over the last 3-4 years.
GI: So you talked a little bit about, you know, 1st generation (FCX): gather feedback, baked it into 2nd generation. 2nd generation: run the program, gather feedback. So what are some of the key insights that you've gotten from the customers in the 2nd generation for the FCX that have informed the design here?
SE: So actually, we'll go back to the 1st generation. The 1st generation, kind of the biggest "ah ha" was we need a lot more range. That was a car which was initially EPA certified at 160 (miles) and then up to 180 (miles) with the Honda stack. With the FCX Clarity, we had 240 (miles), and with FCX Clarity the voice of the customer was clear. "We want large interior space, a 5-passenger car" just like any other Hondthey could buy, and also, more range. So with this next generation car, with well over 300-mile range, and 5-passenger seating, we've proven we can make good on lessons learned, things that customers are asking for. So being kind of customer-focused, customer-centric in our development helps a lot. Other lessons learned: with the first one, it spewed its water out on the ground when you parked it in the garage. One customer in particular said that he didn't like the water in his garage, and today we just hold it in the car until it's up to speed on the freeway.
GI: (jokingly) He could just use towels??
SE: Hey, you know it was a funny interaction between he and his wife. They were both in the focus group and he mentioned it, and she says: "Water on the garage floor? What's wrong with that??" and he looked at her and he said: "You don't like water on your kitchen floor, do you??" so was a very funny interaction between the two, but the engineers took it to heart.
JP: Sorry, one quick question. You mentioned the (passenger) volume of the car, and I know that's impacted a lot by the hydrogen tank. It's a big, massive thing. Where is the technology going to address this? Is the fuel cell efficiency going to continue to improve as well as reducing the size of the tank, to alleviate some of the packaging issues?
SE: You know, you think about it, we've had over 100 years to get the internal combustion vehicle we know today, and with hybridization and electrification, fuel economy has increased significantly. With the old FCX, that one was in the 50s (MPGe) for fuel economy, FCX Clarity was EPA rated at 60 (MPGe), this one's rated at 67/69 (MPGe), and 69 (MPGe) is in the city, not the highway. So we're almost about 70 miles per kilogram, (per gallon equivalent), in the city. So my point is, it's continuing to advance in efficiency and, of course, smaller size and packaging. That's the key to this current car.
JP: What are some of the variables with respect to operating efficiency? Does it have anything to do with the actual storage pressure of the hydrogen? Or is it more related to the stack design itself? And do you guys know, theoretically, what kind of efficiency limits there are, and how close you currently are to approaching those limits?
SE: The advances in fuel cell technology actually far exceed the advances on the battery side. While batteries continue to advance, with this new fuel cell we're talking about 33-percent size reduction and a 60-percent greater power density. So if you had those types of advancement metrics on a battery, see what I mean? That's a huge "wow". So, the size/packaging continues to get smaller. It can, into the future, even more so. The efficiency gains have been significant. It will continue to gain in efficiency. But that's really just the powertrain. Nothing to do with, let's just say, the fuel and the storage. So, opportunities for storage – everyone's constantly looking at size reduction, cost reduction, but right now the industry has kind of coalesced around 10,000 psi. All of the stations are developed that way. The SAE J2601 standard for the protocol of fueling the cars makes sure that every fill is within a narrow band of accuracy, so every time you fill, you can expect the range of the car to be the same. Gases, you know, are variable based upon temperature. In old CNG cars, they varied in range a lot because the stations didn't have the advanced filling technology. So, there's efficiency, there's the cost reductions and other values that will come with improving storage, but also there's the infrastructure side where we can assure a high customer satisfaction with refilling the vehicles, and again, getting great fuel economy whether it's in the city or on the highway.
GI: Obviously cost is a big component of a fuel cell vehicle, and you're trying to drive adoption, and to do that, you guys have subsidized the cost through attractive lease terms. What kind of timeline can we look at before you guys can get the cost to a point where you no longer have to subsidize the cost anymore? And how much of that has to do with economies of scale?
SE: You just answered 60 to 80-percent of the question. Really, it is scale as the biggest factor for cost reduction. And so when I said 10's of cars, 100's of cars, 1000's of cars – when we get into that, you know, 10's (of 1000s) and beyond, then we'll see costs that will make it, really you could say, business as usual. The opportunity then for the industry, is to do the same with hydrogen stations, and have all the reduced costs aligned. And this next generation vehicle that's coming, let's just say 2021 or so, that's where I think we'll see the big "Aha", come into play with higher volumes and scale, so again, it's just another stair-step path forward. We have to keep developing fuel cell cars. It took about 10 years for that 1 millionth hybrid to be sold, from the day the first hybrid was put into the market. You can see what I'm getting at. It's hard to move the needle that fast, even if we wanted to, because you also have (a) supplier base that has to be developed. You need to a station network, it has to develop. The gasoline station owners today need an incentive or reason to say "Hey, I want to get into this business, too", and make hydrogen a regular part of the business. Companies like Shell, they've actually proven the ability to put the hydrogen dispensers right under the canopy, by taking out 2 of their gasoline dispensers, and putting in 2 hydrogen dispensers that have 4 hoses filling 4 hydrogen cars simultaneously. See? The models are already there, the models are proven. All of these things impact cost reduction. All the way back to your question "How do we get there?". All of these key pieces have to play together.
JP: Would most of those stations just have large hydrogen tanks underground?
SE: Good question – that goes back to the supply side. Again, the diversity of stations can be on-site reformation, on-site electrolysis, delivered compressed, we actually have examples of pipeline stations, so it's piped in. Therefore if you had a market with a network of pipelines today, you could feed off the pipeline, and that's valuable. On-site reformation simply means taking advantage of the pipeline that exists today, which is the supply of natural gas to that gasoline station, and reforming it into hydrogen. Today, California requires 33% of the hydrogen to be renewable. That's a floor. The actual amount is over 40-percent – 44, I think it is today. So this approach is a pathway to 100-percent renewable hydrogen using a variety of supply sources and energy supplies, plus a diversity of delivery methodologies at the station
JP: So this is kind of a combo suggestion/question. I'm curious if Honda has considered making something that's a real flagship, something that's drop dead gorgeous, offering eye-popping performance numbers, and not cheap by any means. People are currently spending LOTs of money on certain luxury BEVs today, over $150000 in some cases. Has Honda considered entering that sphere, because there are a lot of sales in that arena and people are spending a lot of money on these cars? I feel like Honda can jump in there and create something with beautiful styling, a lot of luxury, and a lot of performance, because people today like to show off how "green" they are. A FCEV with these truly aspirational qualities could drive a lot of interest in Fuel Cells. It could be a good play for an Acura-badged vehicle.
GI: I have the same question too. Some of it is, you can support a more expensive product if you position it as a luxury, lifestyle vehicle. That's not necessarily in Honda's wheelhouse, but for a product like this, do you think that's something that could help with the awareness of fuel cells and something that Honda would look at?
SE: So I'll build on your words. Thank you for your suggestions, and we don't talk about future products. However consider the current Clarity fuel cell. When you drive the car, you're going to see that it has an amazing interior, luxury and a NVH level that's kind of unprecedented in the Honda line. So we understand your point, and I think making it a larger car, making it 5-passenger – the rear seat space is huge, and so, there's qualities of this new fuel cell car that meet, let's just say, exactly what you're describing. But, yes, we have to be competitive in the market too.
JP: I know you're beyond the proof of concept stage now, but at some point you can make a splash as far as the marketing and the exterior design goes. And the Clarity is a nice looking car, but it still has a kind of, I don't know how to characterize the look, but it's different. Let's just say that. It's not necessarily classically what people would consider to be "premium" or attractive in the traditional sense, like a big luxury sedan.
SE: Well, you should interview the current drivers of the cars today. I mean, they love it. They think it is very luxurious. Style? Design? They really, really like the style & design! It's the Honda DNA. Fun to drive, and you get behind the wheel and you feel that DNA plus and all the technology, the safety technology, the (Honda) Sensing, all the user interface functions. And we have an app for the car!As soon as you open it up, even while sitting at your desk, it shows how much fuel's remaining, it shows the range available, you tap that, find stations –it shows all the stations within your driving range within a circle to let you see how many are within range. And it'll map you to those stations.
GI: What if you don't have any stations within driving range, does it just show a big red ‘X'?
SE: I would say, you shouldn't be there! Right? If the car gets somewhere that far from a station, you're in never never land.
JP: Will it alert you if you're leaving a zone where you'll be outside of refill range and tell you to turn around?
SE: No, people are smart. That is, I think you asked about lessons learned? That's what we learned. People can live with a limited network of stations; they just have to be savvy about it. That's all. And the car, especially today with this unique HondaLink app, gives them guidance. It's like "here's the solution to living with a hydrogen fuel cell car". The app helps you do that.
JP: So quickly back to the storage side: There's no quote unquote "leakage" or parasitic losses in the hydrogen system, correct? I'm thinking along the lines of how a BEV will discharge itself if it's parked while being disconnected from a power connection. In a BEV, these losses can be significant over the course of a week or more. Is this a problem with FCEVs?
SE: No. No. I've heard some crazy narratives about, you know, these cars leaking, stuff like that. It's kind of laughable. Here's a car, if you park it at LAX, and if you went overseas and you forgot about your car for a year, you'd come back, and of course, you'd have to jump start it, because the 12V battery would probably be dead, but it would start right up, and the tank pressure would be exactly where it was when you left. That's the point.
JP: So there's no margin of leakage that's acceptable? Not even, say, a few molecules here and there?
SE: No, no. This is a very structurally sound fuel tank with a liner that has no permeation, and electronic solenoid valves that are normally closed, so it's only open when the system says to open the valve, and it's done electronically.
JP: Would the solenoids be the biggest wear items?
SE: No, those are proven through the same technology that we've had with our natural gas cars for over 20 years. So it's just a mechanical open or closed valve which is normally closed, and it's mechanically pulled open by the solenoid, so when the ECU and the fuel system says everything checks right, it opens the valve. The same ECU technology is used such that if there was an accident or something that it sensed was wrong, even like a hydrogen sensor showed some sort of leakage by nature of an extreme accident, it then shuts off the electricity. So, any type of gaseous fuel system, if there's a leak, the way you stop the leak is to shut off the supply. The tank valve does that.
We had a few more questions for Steve that weren't part of the recorded Q&A, and one of them was concerning the details of the recently announced Clarity lease program. The following details have been announced: $369/month, $2868 due at signing, 36-month lease term, 20,000 miles per year, 24/7 roadside assistance, 21 days of Avis Luxury Rental car rentals, and Hydrogen fills worth $15,000). For now, this lease is only offered to California residents who live or work near one of the 12 designated Clarity Fuel Cell dealerships in California. One question we had concerned whether or not maintenance was included in the cost of the lease. We were told that the consumer was responsible for the maintenance costs, but that Honda designed the Clarity to require minimal maintenance, and the annual maintenance costs should be in line with what a typical Accord would cost to maintain.