It’s tough to sell those fuel cells
It was a tough sell. But Noordin Nanji, marketing vice president of Ballard Power Systems Inc., was determined.
Accompanied by his publicist, Nanji walked the floors of the sprawling Cobo Center in January, collaring journalists attending the North American International Auto Show to make his pitch. He was pushing fuel cells, specifically proton-exchange-membrane fuel cells produced by his company, which is based in Burnaby, British Columbia, Canada.
The problem is that fuel cells are no longer sexy. They’ve been eclipsed in the media’s mind and, thus, in the mind of the public, by gas- and diesel-electric hybrid technology.
It matters not that, in the automobile industry, hybrids generally are regarded as an interim step toward cleaner, more fuel-efficient technologies, such as hydrogen fuel cells.
Gas-electric and diesel-electric hybrids are the rage; the news media love them. Toyota Motor Corp., the biggest purveyor of hybrids, gets lots of greener-than-thou credit for promoting them. There’s a buzz; and where there’s buzz, there are politicians. And when you mix buzz and politics together, you get policies, which beget certain permutations in business.
For example, Travelers Insurance has announced that beginning this month it is offering a 10% auto-coverage discount for hybrid-vehicle owners in the United States. It is not so much that hybrid vehicles, per se, are safer than other cars. Nor is it that, for example, a luxury hybrid sport-utility vehicle is any more fuel-efficient or sensible than a high-mileage subcompact car. It’s more about the driver profile. “Our preliminary research indicates that hybrid owners tend to fall into the preferred insured category, and at Travelers, lower-risk drivers are rewarded with lower premiums,” said Greg Toczydlowski, senior vice president of product management for Travelers.
Translation, courtesy of Travelers spokesman Greg Gibson: “Our experience is that the kind of people who buy hybrids tend to be safe drivers.” And because hybrid vehicle sales, now barely a sliver of the U.S. market, are expected to occupy a 10% to 15% share by 2015, it makes sense for Travelers to go after the kinds of customers who buy hybrids.
So when you juxtapose the hybrid craze with the fuel-cell daze, you get an idea of how lonely and difficult Nanji’s life must have been during the media-preview days of the auto show. He had no hip-hop dancers, no scantily clad models and no hybrids in a show where it seemed that all other exhibitors had all of those things. I admired his spunk, and I joined another journalist in listening to him.
“Look,” Nanji said, “we know that we have a way to go before we can make fuel cells commercially viable. But we’re making progress.”
We’d heard that before. We pointed out to him that progress does not make headlines. Journalists need a hook.
“When?” we said.
Nanji hedged. It was understandable. Ballard is the world’s leading developer of fuel-cell technology. In automotive parlance, that means it’s a supplier. In the car business, as in most businesses, suppliers do not dictate product-implementation schedules, especially for a technology as complicated as fuel cells, devices that electrochemically combine hydrogen and oxygen to produce heat and energy, emitting only water vapor as a byproduct.
The technology for fuel cells has existed since the 1830s, and fuel cells routinely have been used in spacecraft launched by NASA. Car companies, led by General Motors Corp. and DaimlerChrysler AG, have invested billions of dollars into the possibility of using fuel cells to power cars and trucks. Both of those companies originally planned to bypass hybrids altogether and go directly to fuel cells. But that turned out to be a big public relations mistake.
The media have no patience for eventualities. Ditto the public they inform. Perception is reality; and if the perception is that hybrids are in, the reality is that you are out as a corporation if you aren’t making and selling hybrids. And so, although they say they have not abandoned their fuel-cell dreams, GM and DaimlerChrysler, along with Ford Motor Co. and Volkswagen AG, have all joined the hybrid bandwagon.
But Nanji says that Ballard is pushing on and that by 2010 the company will have developed an affordable, marketable fuel-cell power system that can be used in cars, trucks and buses worldwide -- albeit initially in government-supported demonstration projects.
“We can do it,” Nanji said. “We can make this technology viable. We can get it to the original equipment manufacturers [the car companies]; after that, it will be up to them.”
Until then, and perhaps afterward, there are myriad ancillary fuel-cell issues to be resolved, not the least of which is developing the supply and service infrastructure for delivering the hydrogen critical to the fuel-cell process.
But the likely breakthrough in winning public acceptance for fuel cells probably will come from Japan -- the country that has made hybrid technology such a hit, Nanji said. It has something to do with need.
Japan is substantially more dependent on outside sources of energy than is the United States. Fuel cells offer the possibility of greatly reducing that dependence.
Already, the Japanese government, in cooperation with Ballard, is developing a program to use fuel cells to power homes and commercial buildings, Nanji said.
That made me wonder if he would have been better off spending his time at a housing convention.