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Stepping into the logistics market: initial progress of Fuel Cell Heavy-Duty Trucks demonstration in China
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【Snapshots】
 
1. Starting in 2024, the construction of hydrogen refueling stations on highways will speed up. As a result, more heavy-duty trucks powered by fuel cells may be put into operation for long-haul logistics.
2. Many 12~18-ton FC heavy-duty trucks have started the cross-province demonstration for a single trip distance of 200~300km.
3. The gap between FC heavy-duty trucks and IC heavy-duty trucks is expected to narrow in the coming years.
Keywords: #hydrogen fuel cells #heavy-duty trucks #logistics #long-haul logistics #market analysis #model-city-cluster project
 
If you like this article, please also refer to our comprehensive analysis report "2023 Hydrogen Supply Chain in China" and "2023 Hydrogen and Fuel Cell Industry in China"
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In 2023, Chinese FC heavy-duty trucks began operating on highways for logistics services. Due to their ability to endure cold temperatures and refuel quickly, more and more provinces are advocating for the creation of "hydrogen corridors," which we expect will lead to an increase in these trucks driving across different cities (daily operation mileage≈2/300km). But other benefits such as long driving range and light vehicle gross weight (compared to battery trucks) have not been realized yet due to various reasons. Nonetheless, industry pioneers are working on solving these issues and have begun running demonstrative operations for small-scale logistics services. In this article, we will explore and analyze the current and ideal application scenarios for heavy-duty trucks in the long-haul logistics market.
 
Sign of FC logistics application: refueling infrastructure network development
On Dec 1st, 2023, Jointly Build China’s Hydrogen Highway Action Initiative《共建中国氢能高速行动倡议》is released by CATARC, Sinopec, CHN Energy, and other parties. This Initiative aims to accelerate the development of HRS on highways and the primary target is to connect the model-city-cluster areas. The chairman of the China Association for Science and Technology Mr. Wan Gang (万钢) has also advocated several times in 2023 that China shall build the initial ”Four Vertical and Three Horizontal” (四纵三横) expressway refueling network (shown in Pic 1).
 
Two logistics centers are covered in this plan already (Yangtze-river-delta region and Pearl-river-delta region). The third logistics center is Cheng-yu region (Sichuan Province and Chongqing), which has not been selected as the model-city cluster region yet. However, some experts have proposed to extend the Shanghai-Wuhan route to Chengdu City, as the local governments are very enthusiastic to initiate the demonstration.
Pic 1: Four Vertical and Three Horizontal Hydrogen Expressway Network
Source: Integral’s analysis
 
There are so far 5 hydrogen expressways constructed in China (respectively in Shanxi Province, Zhejiang Province, Henan Province, Hebei Province, and Shandong Province). The logistics scenario has a high expectation for engine endurance, driving mileage, and availability of energy refueling stations. For FC heavy-duty trucks, however, the number of HRS on highways is far from enough, limiting its current daily mileage to only 250 km/day which satisfies mostly industrial logistics services. Typically, these FC heavy-duty trucks transport heavy-industry products in a fixed route for the ease of hydrogen refueling (1~2 times in a round trip). In the future, as the hydrogen infrastructure matures, the long-haul logistics will mainly serve e-commerce and manufacturing industry products transportation, which usually requires a daily driving mileage of over 1,000 km.
 
FC heavy-duty truck development in China
An expert once said, “The Chinese FC heavy-duty trucks developed before 2021 were so-called “null vehicles”, which means that they were designed to receive subsidy with a minimum requirement such as the rated power(<80kW) and lifetime(<10,000h) of the FC systems. As the FCEV subsidy policy was modified in 2021 and the requirements slightly rose, many FC heavy-duty trucks developed after 2021 started to have actual meaningful demonstrative on-road experiences. By 2023, the performance of domestic FC heavy-duty trucks has show an initial result in short-distance enclosed operation scenarios. However, comparing the parameters of the rated power, lifetime, and driving range, FC heavy-duty trucks are still incomparable to IC heavy-duty trucks (see Pic 2).
 
Pic 2: heavy-duty trucks performance comparison
Source: 1) Public information summarized by Integral 2) 2023 CATARC FCEV evaluation
 
Case study: Changzheng 18T logistics trucks operating from Baoding City, Hebei Province to Tianjin
 
Pic 3: Changzheng 18T FC heavy-duty trucks cross-province demonstration
Source: Official websites of FTXT and Great Wall Motor
 
Starting from Oct. 2023, these FC heavy-duty trucks are transporting automotive parts from the Havel Xushui Factory in Baoding City, Hebei Province to the GWM Lianchi Factory also in Baoding City(≈25km), or to the Havel Tianjin Factory (≈250km, shown in Pic 3). The lowest hydrogen consumption can reach 4.7kg/100km. If driven on the expressway, the trucks need to be refueled 1~2 times in a round trip.
 
The current market price of hydrogen in Hebei Province is around 35 RMB/kg – along with the national subsidized price. However, considering the current diesel price is around 8 RMB/L, and the fuel consumption per 100km of diesel is 3 times higher than that of hydrogen. Thus, given the current conditions, only if the hydrogen price drops to 25 RMB/kg, it will have an economic meaning of commercialization.
 
This truck model is equipped with an FTXT 110kW FC system that is also manufactured in Baoding City. In addition, the end-user of these trucks is Great Wall Moter Ant Logistics (长城蚂蚁物流) which also serves GWM’s inner business of transporting Havel auto parts. For an 18-ton logistics truck, this FC system generates sufficient output for average performance. In the past two years, there has been an increasing proportion of metal bipolar plates, thanks to their comparably higher power density and maximum rated output. As more and more FC system integrators launch the 200kW FC stack/system prototypes in 2023, we expect the 49-ton trucks will deploy 150~200kW FC systems in 2023.
 
At the current stage, the end-users/FCEV operators are typically affiliated with the OEM or the FC system integrators. And the single trip is usually under 300km mostly across 3 adjacent provinces in China. In correspondence, the 1 or 2 designated hydrogen refueling stations will be constructed along the fixed route on the expressway. Usually, it is a combined gasoline-hydrogen refueling station so that the driver does not need to change the original route. In addition, the FCEV operator would collaborate with the system integrator and the OEM to provide 24/7 after-sales services (more details have been introduced in this blog: FCEV Operators in Logistics Industry in China).
 
The gap between the current heavy-duty trucks and the ideal heavy-duty trucks used for long-haul logistics
There are 3 critical determinants in purchasing long-haul logistics trucks – cost, efficiency, and safety. The cost includes both the vehicle and the fuel cost, which are highly dependent on the national subsidy policies at the current stage. For the regions with rich by-product hydrogen resources, the price can be as low as 20RMB/kg. However, for the regions without much hydrogen and are also far away from any hydrogen sources, the price can be as high as 80RMB/kg (i.e. Foshan city). Due to the poor economy, some hydrogen refuel stations have been temporarily shut down in China. Efficiency measures the overall performance of the FCEV compared to the same model of ICEV, in terms of accelerating, loading, hydrogen consumption efficiency at high speed and idle speed, ease of hydrogen refueling, etc. The overall goal is to benchmark the same efficiency as ICEV. Safety has been a universal but less addressed issue right now, due to the small population of FCEV. Eventually, it will become one of the most important factors at a fully commercialized scale.
 
Considering the discrepancy between the current application scenario and the future ideal scenario, we have summarized the table below regarding the current pain point when purchasing fuel cell trucks and the temporary solutions for the initial commercialization. It is unrealistic to resolve many of these pain points in the short term. Therefore, many industry players are exploring suitable short-term application scenarios such as short-haul logistics in mine sites and ports. The majority of the end-users are still heavy-industry enterprises that need decarbonized in-house transportation, or traditional road freight logistics companies that provide warehousing logistics to large food and beverage manufacturers. Only a few of the express delivery logistics end-users have started to deploy a few FC heavy-duty trucks for intercity logistics, which are mostly operating within one province.
 
  ICEV purchasing factors FCEV pain point Temporary solutions
Cost Initial purchase cost The initial purchase cost is about 3 times higher than the same model ICEV
National subsidy covering 2/3 of the purchase price;
Promoting the vehicle financial leasing model that is led by local government or state-owned investment companies
Fuel economy Hydrogen economy – the high cost of hydrogen;
high H2 consumption in high-speed conditions 
National subsidy forced the hydrogen price to decrease to 35 RMB/kg (but sometimes not executed);
Some provinces started to loosen the regulation by allowing onsite hydrogen production at HRS to reduce transportation costs;
System integrators are working on further reducing hydrogen consumption at the full load expressway condition (at 90km/h)
Ease of maintenance No FCEV 4S shop or maintenance chain stores; No FCEV-specific car insurance FCEV operators collaborate with OEMs and system integrators for regular onsite O&M;
System integrators and OEMs offer a long-lasting warranty 
Residual value in the 2nd hand market No market mechanism so far No attention so far, which may arise as a critical issue for individual customers
Efficiency Engine performance FC system performance is not yet at the desired level; Still need a large Li battery
Focus on metal BPP/composite graphite BPP (the best domestic metal FC stack can reach a rated output of 300kW in 2023);
Collaborating with foreign leading system integrators;
Running road tests in different environments, especially at high elevations and in extreme cold weather; 
Weight capacity & size of the container Too much space and weight has been taken by hydrogen tanks and Li batteries resulting in low economic returns
OEM FCEV chassis design started in 2023 (before 2022, the chassis were mostly retrofitted from electric trucks);
More trucks deploying metal FC stack with a higher rated power to reduce the battery size
/ Hydrogen scarcity: many locations do not have any refueling stations
Jointly Build China’s Hydrogen Highway Action Initiative accelerates the construction of HRS for long-haul logistics end-users;
70MPa hydrogen tanks have been developed and may be deployed onboard in 2024;
FCEV operator bridges between the end-users and the HRS investors to construct new stations;
Intelligently design the driving routes which are mostly fixed routes
Safety / Concerns about hydrogen safety 
Public education on hydrogen safety;
Big data monitoring platform for intelligent alarms
Table 1: FCEV market pain point and solution
Source: Integral's analysis
 
Current progress and future outlook in the next few years
Over the past two years, there has been a significant rise in the use of FC heavy-duty trucks in China, especially for close-loop and short-haul applications. However, for long-haul logistics, promoting the use of FC heavy-duty trucks in the short term will depend on finding a balance between customer demands, the total cost of truck ownership, and fuel economy.
 
It is expected that the heavy-duty truck market will boom by 2035 when the hydrogen refueling infrastructure reaches maturity, according to the central government Hydrogen Energy Mid-to-long-term Development Plan. Until then, the cost of the FC system is expected to decrease by 20% every year, and hydrogen consumption per 100km will also be improved, according to the past 3 years’ industry trend; however, some other issues are unlikely to be resolved in a few years. Hydrogen prices are likely to remain high in the next 3 years due to a limited capacity for cost reduction in purification, as the majority of hydrogen sources are by-products. It is currently uncertain whether the FCEV subsidy policy will be prolonged after 2025 (similar to what happened 10 years ago to electric vehicles). If not, whether the customers are willing to pay for the “green premium price” in 2026 remains a question.  Additionally, the FC heavy-duty truck industry needs to focus on establishing a well-built after-sales services network and having a better vehicle body design with lower weight and larger capacity. This will address one of the major concerns among drivers of pure electric heavy-duty trucks.
 
Although there are many challenges, we anticipate the development of more hydrogen branch lines along the Four Vertical and Three Horizontal expressway trunk lines with the cooperation of the local government and leading enterprises. We expect to see more demonstration routes of 300-500km (e.g. from Zhengzhou City to Jinan City) in length in the coming years, starting from the five cluster leaders.
 
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