U.S. start-up and DEVK want to modernize freight transport

The gleaming white hall in Chicago where the team from the start-up Hyzon is working on the future of mobility has something of a laboratory about it.

The heart of the development work is as big as a cupboard and gray-blue with orange power cables: the company’s own fuel cell. It is being developed for use in trucks. Hyzon’s work on climate-friendly freight transport has ensured that the company is now valued at just under a billion dollars. The first tractor-trailers equipped with the company’s technology are scheduled for delivery in 2023

The journey began in 2003 with students at the University of Chicago, says CEO Craig Knight. “Everyone was fascinated by the fuel cell, its design, its commercialization.” In 2010, backed by Germany’s Linde Group, they launched the first air-cooled fuel cell, low-power but portable. “These were portable devices for powering remote areas,” Knight explains. “Things really took off when mobility applications became interesting seven years ago.”

In the future, the fuel cells will also be shipped to Cologne. Sara Schiffer heads the company Hylane there, a spin-off of DEVK. The mutual insurance company, once founded by railroad workers, is active in many places in the transportation sector. Now DEVK is getting involved in the hydrogen experiment.

“We didn’t want to just talk about climate-neutral transport anymore, we wanted to do it,” says Schiffer. “Hydrogen technology is new and needs to be put into practice.” Hylane buys the relevant trucks and rents them to transport companies.

The first partners have already signed on, from Dax corporations to medium-sized companies. They include the rail subsidiary Schenker, and more recently the consumer goods group Henkel, plus the logistics companies Hermes and Koch and the event service provider Mitea.

Generous funding

Hylane plans to purchase at least 44 fuel cell trucks by 2023. The government subsidy will cover 80 percent of the additional cost of purchasing a hydrogen truck compared to a diesel truck. The Federal Ministry of Transport approved the funding decision in June. According to a sample calculation by Hylane, a new hydrogen truck costs 500,000 euros. The classic diesel costs about 100,000 euros. In this example, the subsidy covers 320,000 euros of the acquisition costs.

The longer the vehicles will be in use at Hylane, the cheaper the project will be. According to internal calculations, the rental costs of a hydrogen tractor unit over six years are likely to be 70 cents per route kilometer. A diesel truck comes to 50 cents. Without the federal subsidy, however, the costs would be up to two euros per kilometer.

In total, the federal subsidy comprises 15 million euros in the first tranche. “We were opportunistic in our approach,” explains DEVK board member Bernd Zens. “We want to invest green and stay connected to the transport market.” Its biggest future task, he says, is decarbonization.

The first seven trucks are scheduled to arrive in Germany these days. They will not yet come from Hyzon, but from Hyundai. The South Korean manufacturer will supply 17 trucks, two will come from Daimler Truck, two from Framo and, starting next year, 23 from Hyzon. The long-hyped U.S. supplier Nikola is not yet far enough, he said. By 2024, Hylane wants to have 150 vehicles on the road.

The advantage of hydrogen

Hyzon CEO Knight is confident his trucks will pass the field test: “Electrification of large trucks doesn’t work. We’re talking about 40-ton vehicles that are driven 18 or 20 hours a day. These can’t be converted to battery power.” The spark, as Knight calls it, came from Asia: “The Chinese government was the first to decide to promote hydrogen trucks to reduce pollution in big cities.”

The problem with battery-powered trucks, he says, is the size and heaviness of the battery. “Our engine is also electric, but the necessary energy is generated on demand.” Hydrogen refueling is costly, but more practical, he said. Electric trucks would need special charging stations, for example.

“Do you know how much electricity Tesla needs for its trucks? 750 kilowatts for a fast charge,” Knight said. “There aren’t many places where a 750-kilowatt outlet is available. There simply isn’t the infrastructure. And even where there is, these columns present enormous challenges to the electric grid, both at the charging point and in distribution and generation.”

Hydrogen is a different story: to convert the large intercity trucks that crisscross the U.S., all that would be needed is to install appropriate fueling pumps at existing stations. In fact, according to calculations by the Boston-based environmental organization Clean Air Task Force, eight to twelve times fewer refueling stations are needed than for battery-powered trucks because of the longer range per fill.

The director of the Fuel Cell Technology Center at the University of California, Irvine points out another aspect. “Hydrogen is light. You can put a lot of it on board a vehicle and it can still carry its full payload,” says Jack Brouwer.

Skepticism about the technology

But not everyone is so convinced about the technology. “It’s still completely open which type of drive will ultimately prevail. The market decides, as it always does,” says Christian Koenig. The automotive expert has worked for Porsche in North America and runs an electromobility consultancy in Atlanta.

“Hydrogen first has to be produced in large quantities, which requires new production facilities. And hydrogen is not green per se; it depends on which energy source is used in production. In addition, production is particularly energy-intensive,” says Koenig. It is also highly flammable.

The hydrogen drive is also not fundamentally better in terms of charging and range. For example, the necessary refueling infrastructure is still completely lacking. In addition, the battery range is growing steadily: “Today, there are vehicles that can go up to 500 miles per charge. Hydrogen trucks are still ahead on the long haul. But that can change.”

Even industry players like Andy Marsh, CEO of U.S. fuel cell manufacturer Plug Power, believe hydrogen technology will first catch on in industry, not transportation. “It will take a long time to build the necessary network,” Marsh said.

VW subsidiary Traton (MAN, Scania), for example, is fully committed to battery power. Large investments in fuel cells are a waste of money in the view of the Munich-based company. Three quarters of the energy is lost in hydrogen trucks due to poor efficiency. With battery trucks, on the other hand, the ratio is exactly the opposite, Traton argues. MAN wants to launch the first real battery trucks with a range of 600 to 800 kilometers by 2025. With new battery generations, even 1000 kilometers are possible in the second half of the decade, they say.

Tesla is also fully committed to e-mobility. However, the truck, called Semi, which was presented in 2017, is still a long time coming. According to Tesla CEO Elon Musk, production is unlikely to start before 2023.

Two-pronged strategy

Other manufacturers, including Volvo Truck and Daimler Truck, are taking several approaches. First, Daimler is building a U.S.-wide charging network for electric commercial vehicles that is intended to increase customer acceptance of the new powertrain technology. In addition to Daimler, U.S. investment house Blackrock and the power plant division of U.S. energy company Nextera are on board. The project’s start-up financing amounts to around $650 million and is to be provided in equal parts by the three partners.

On the other hand, Daimler is pushing the practicality of hydrogen propulsion. “Hydrogen trucks can be a viable option for our customers, especially in tough long-haul applications,” Chief Technology Officer Andreas Gorbach tells Handelsblatt.

As one of the world’s largest commercial vehicle manufacturers, Daimler is committed to the Paris climate agreement. “In this context, we have the ambition to only offer new vehicles in our global core markets that are CO2-neutral in driving operation by 2039,” Gorbach explains. In the future, he says, every customer will receive a tailor-made solution for every transport task without CO2 emissions – for example, electric trucks on short-haul routes, hydrogen trucks on long-haul routes. “We will successfully bring both technologies to the road.”

Since 2021, the fuel cell prototype “GenH2 Truck” has been tested on the company’s own test track and public roads. The plan is to achieve a range of 1000 kilometers and more. Series production is scheduled to start in the second half of the decade.

Crucial practical test

So there is still a lot to be tested. The auto industry is therefore keeping a close eye on the Hylane project. The goal is to get started as quickly as possible, says Schiffer. That’s why they’ve also opted for the rental model. “Our users don’t have to take on any financing risk and don’t have high acquisition costs.”

The challenges now include setting up the filling station network. The industrial gases group Linde has agreed to build two filling stations on its own account, and others must follow quickly, Schiffer says. Hylane is therefore working with the Berlin-based start-up H2 Mobility to expand the network: “Filling up takes ten to 15 minutes.”

“Hydrogen technology is promising,” explains DEVK board member Zens. But it is also clear that “we are not engineers. Only the practical test, which we are now starting, can show whether the technology will prove itself. Someone has to start.”