France’s big bet on hydrogen will fail
Emmanuel Macron’s ambitions to make the country a leader in green hydrogen technology have put Renault on the wrong track
Tesla has powered forward to become the most valuable auto manufacturer in the world. A host of well-financed start-ups from Polestar to Lucid are jostling to chip away at its position. And the giants of the industry from Ford to Mercedes to General Motors are pouring billions of dollars into developing their own ranges. The electric, battery-driven car is widely seen as the vehicle of the future.
But hold on. Renault, with some back-seat driving from President Emmanuel Macron, is making a big bet on an alternative technology. The company has just announced ambitious plans for a hydrogen-powered vehicle, not long after France unveiled a massive programme of investment in the fuel.
And yet, that is already looking like a terrible mistake. Hydrogen is an unproven technology. The infrastructure for fuelling vehicles is woefully inadequate and unlikely to get any better. And unless hydrogen hits a critical mass there will be very little incentive for anyone else to come into the market. Renault was carving out a potentially successful niche in electric vehicles, especially with the big-selling and relatively cheap Zoe. It looks like blowing it on a high-risk wager that is doomed to fail.
The days when a new car launch simply featured some pleasant tweaks to the bonnet, an upgraded hi-fi, and some snazzy new colours, are long behind us. These days it is all about how it is powered. Petrol and diesel-driven vehicles are set to be phased out, and replaced by greener alternatives. Governments are already offering massive tax breaks for electric cars, and fossil fuels are set to be banned from the roads over the next couple of decades.
On top of all that, the soaring cost of oil, with the family car often costing £100 or more to fill up, has finally tipped the scales. Already 11pc of new car sales in the UK are electric or hybrid, and that is currently growing by more than 70pc a year. It won’t be long before they dominate the roads.
And yet Renault has this week decided to go in a different direction. It is launching a new concept car, the Scenicvision, that will run on electricity for shorter trips, and hydrogen for longer journeys. Over 70pc of the material used in the car will be recycled, and the company claims it will have a carbon footprint 70pc lower than its main rivals. It is a striking move, and one that is very different from its main rivals. The Japanese giant Toyota is also developing hydrogen-powered cars, but the rest of the industry is sticking firmly to the view that electric is the future.
Renault certainly needs to do something. The company has had a torrid year. It has been forced to sell off its thriving Russian unit, which accounted for a huge percentage of its total sales, at an estimated loss of more than $2bn. Its shares are down by 25pc so far this year, and by more than 70pc over the last year. Although the Zoe has been a success, it is stuck with a range of mediocre, mid-market vehicles, with high costs, and technology that is increasingly obsolete. Against that backdrop, chief executive Luca de Meo may well feel it needs a bold bet to try to turn things around.
But hydrogen? It is not hard to detect the hand of the French state, which has a 15pc stake in the business. It is surely not a coincidence that in October last year President Macron announced an ambitious plan to make France the world leader in green hydrogen by 2030. It is the kind of ambitious industrial strategy that the French government tries from time to time. But of course a bet on hydrogen only makes sense if there is a demand for the fuel. A few words from the Elysée Palace may have helped persuade Renault to make its decision.
The trouble is, hydrogen looks like the wrong technology at the wrong time. Elon Musk, the Tesla founder, who can justifiably claim to know a bit about this stuff, only last week described hydrogen as “the most dumb thing I could possibly imagine for energy storage”. In reality, there are three big problems. First, the technology is still unproven. Sure, electric cars have their problems. Drivers suffer from range anxiety, they have to plan their journeys and the materials used to build them mean they are not as green as they are made out to be. But there are millions of them on the road, we are getting used to them, and the technology is improving all the time. Hydrogen, by contrast, is a big unknown, and there is a lot of work to be done before it works smoothly.
Next, the infrastructure is not yet there. We don’t yet have enough charging points for EVS, but we have even fewer for hydrogen. Even worse, until there are a couple of million of them on the road, there is no incentive for anyone to build it. Finally, with so much money being spent on electric cars, the technology and infrastructure will both improve rapidly, as it does with any system that is widely used. With only a couple of manufacturers betting on hydrogen, it will always lag behind.
Renault had made a start on cheap and cheerful electric cars. That could well be a huge space. Not everyone wants to splash out on a top of the range Tesla, especially for a second car. But switching to hydrogen looks like a big mistake for both the company and the French state – and will prove a very costly one.
‘The trouble is, hydrogen looks like the wrong technology at the wrong time’