makers and suppliers must successfully address 12 ‘commercialisation’ challenges
if fuel cell vehicles are to have significant long-term impact in the vehicle
industry, according to a new study by Roland Berger Strategy Consultants .

The most difficult among the 12 challenges are low-cost infrastructure, range
and power density. Other challenges include cost reduction, component integration
complexity and safety issues.

These and other findings of the study ‘The State of the Overall Fuel Cell
Industry and the Challenges for the Automotive Fuel Cells’, are based on
interviews with senior executives from vehicle makers and fuel cell developers
from various industries around the world and extensive secondary research.

The study assessed the current state of the fuel cell industry and identified
key trends and challenges. It also offers insights regarding critical strategic
issues for future success in the fuel cell industry.

The opportunity is alluring. Fuel cells (FC ) offer a virtually pollution-free
source of power, which has generated significant interest by a number of companies
hoping to benefit from this opportunity. These companies are developing products
for three broad markets: transportation, portable communications and stationary

will see the launch of fuel cell products in all three major markets during
the next four years,” said Michael Heidingsfelder, managing partner of Troy ,
Michigan-based Roland Berger.

“However, fuel cell products will succeed only if they have a value proposition
greater than their competing technologies in any given market.”

Developers of these products fall into two major categories: newer, smaller
dedicated fuel cell developers who have raised substantial funding through capital
markets; and older, larger companies, for whom fuel cells are an ‘insurance
policy’, and who are internally funding their research.

"To get there, companies should develop a clear ‘commercialisation
roadmap’ and form strategic relationships to overcome these challenges,"
said Mahesh Lunani, project manager of Roland Berger’s automotive competence

“They also need to leverage their experience across markets. To do all
of this, they need continued support from capital markets.”

In the automotive realm, vehicle makers’ commitment is strong. According to
the study, vehicle makers and others will invest as much as $US5.2 billion in
research by 2004 to develop and try to ‘commercialise’ workable, low-cost
fuel cell technology.

uncertainties concerning government regulations, technology implementation and
customer acceptance, automakers remain steadfast in their pursuit of commercially
viable fuel cell vehicles.

Suppliers will be key. Successful suppliers of FC technology and systems for
the motor industry must have a proven track record in related technology, a
willingness to share development costs and be able to work closely with vehicle
makers to develop product requirements and understand the mindset of the makers
and their industry as a whole.

“While the next few years will be an exciting time in FC vehicle development,
there is certainly no guarantee for success,” says Heidingsfelder.

“The winner in the automotive fuel cell industry will be one who can build
a fuel cell vehicle very close to the sticker price of a comparable internal
combustion engine vehicle."

To view related research reports, please follow the links below:-

Cells to 2004

world’s car manufacturers: A financial and operating review