Fuel Cells: a reason why Elon Musk may be wrong

What may give fuel cells the boost to become a technology for the future of cars?

Fuel cell
Credit: Pixabay

REVISED JAN 31, 2020

After over a hundred years of petrol dominance, most automotive companies seem to think the future belongs to electric cars. Lithium-ion (Li-ion) battery-powered cars, that is. However, hydrogen fuel cells may soon become another viable alternative technology for transport.

A fuel cell is an electrochemical cell, which produces electrical energy (i.e. electricity), heat and – water (yes H2O instead of CO2!) – by combining hydrogen and oxygen.


Arguably, there are four key dates in the history of fuel cells:

  • 1838 – Welsh physicist William Grove wrote about fuel cells in a letter. In 1842, he developed the first rudimentary fuel cell. He called it the gas voltaic battery.
  • 1932 – English engineer Francis Bacon developed the first proper fuel cell: the alkaline fuel cell (known as the Bacon fuel cell).
  • 1958 – two chemists working for GE improved the technology and developed the Grubb-Niedrach fuel cell.
  • 1965 – an Apollo lunar mission used GE’s fuel cell technology to generate its electrical power.

Since then, fuel cells have been used to power some motorcycles, automobiles, buses and boats.


For a variety of reasons, fuel cells have never been widely used. And people like Elon Musk of electric car maker Tesla even dismissed them as stupid – he called them “fool cells”.

Hydrogen is highly flammable and difficult to store. In addition, fuel cell systems are only around 60% efficient (i.e. they convert around 60% of stored energy into usable energy) compared to Li-ion battery electric vehicles, which are around 90% efficient. (Still better than the petrol internal combustion engine, which is less than 20% efficient!)

However, fuel cell vehicles have advantages too. They are potentially lighter, smaller, cheaper, faster to refuel – and cleaner (considering the whole life cycle from mining to disposal) – than Li-ion battery ones.

A major barrier is the hydrogen refuelling infrastructure. It is severely lacking in Europe and elsewhere. It is more challenging to implement than the Li-ion one, partly due to a lack of innovation in this technology at the global level, for several years.


There is a strong reason that may give fuel cells the boost they need to become a mainstream power technology for cars and most if not all forms of transportation: geopolitics.

China stands to massively benefit from the Li-ion battery boom. It has come to dominate the Li-ion industry because of its ability to manufacture cheap batteries, combined with large reserves of lithium ore. In addition, Tianqi Lithium, a Chinese company, controls around half the global production of lithium.

The Japanese carmakers – Toyota, Honda and Nissan – have been investing in fuel cells for many years and remain determined to continue to do so. They are backed by their government which does not want to depend on China. In addition, hydrogen is the most common element in the universe!

Some Western car and technology companies are betting on fuel cells too.

Final thoughts

There is no doubt that Elon Musk is doing great things with Tesla. But he may be wrong on fuel cells. We believe that in the future the choice of the car you drive may not be between a petrol and an electric vehicle (Li-ion). It may be between two different electric vehicles – Li-ion and fuel cells.

We also believe that eventually, fuel cells may become the dominant power technology, at least for larger vehicles.

(The author started to learn about fuel cells in the late 90s working for a carmaker in the US. He later learnt about commodities managing trading projects for a Swiss bank. He now follows the evolution of car tech & related commodity markets as an advisor and investor.)


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Mauro Tortone

View posts by Mauro Tortone
Mauro advises financial services, technology and mobility businesses and leads the Strategy & Finance practice. His expertise is in strategic change, capital markets and more. Mauro has over 25 years of experience working with banks such as UBS and Deutsche Bank, smaller financials, fintechs and others across Europe, the US and Asia. He sat on the CISI Corporate Finance Forum Committee for ten years and is passionate about sustainability.
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