Jul. 28, 2025
Economies of scale is a term you often hear in the zero-emissions technology industry. It's all about how companies can save money because they produce more and how the savings are passed to the customer. This helps lower costs for making and buying products, making it possible for more people to use these technologies. This is the goal for most businesses but it's not always easy, especially with new technologies or industries that are just starting out.
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In the simplest terms, economies of scale mean that when you make more of the same product, each piece should cost less. Every company has basic costs like rent, energy, and staff salaries. When you produce more, these costs get spread out, so each one becomes cheaper to make and sell. Plus, when we buy more from our suppliers, we can negotiate better prices, which helps us lower costs even more. This isn't just good for us – it's good for the whole industry.
In areas like zero-emissions power, making technologies less expensive means it’s more accessible for industries to use them, which makes the market more competitive. This also helps with things like total cost of ownership (TCO), making these technologies more attractive to everyone. By building economies of scale, we can make fuel cell technology and hydrogen fuel more accessible to everyone.
The benefits of economies of scale
Growing activity and investment in fuel cells and hydrogen power are expected to bring down their costs, making them more competitive with other energy sources.
For electrolyzer and fuel cell manufacturers, economies of scale will make the market stronger and better able to meet demand. In the world of zero-emissions power, higher demand will create more competition – encouraging businesses to invest more in innovation to stand out from competitors. It will also prompt infrastructure providers to create or expand hydrogen power hubs, as they’ll identify it as an area of growing profitability. Growing activity and investment in fuel cells and hydrogen power is expected to reduce costs, making them more competitive with other energy sources.
Economies of scale and fuel cell technologies
In the world of emerging technologies like fuel cells, achieving economies of scale is a big deal. Right now, using hydrogen technology is a bit too expensive for many industries. However, as more companies start using it, costs will decrease, making it more affordable for everyone. This will also attract investors who might not usually invest in clean energy, seeing it as a smart opportunity.
So, what would economies of scale do for the industry? Well, they'd help bring down vehicle costs and make hydrogen more accessible. But to make that happen, both electrolyzer and fuel cell manufacturers need to scale up their operations.
It's not just about the big players, though. When companies invest in these new technologies and grow their operations, it benefits everyone. Other companies can learn from them and improve their own products. Plus, competition in the market pushes us all to make better, more reliable products, which is great news for consumers.
What’s holding hydrogen and fuel cell power back
Currently, fuel cell and hydrogen fuel technology is supported by government subsidies, grants and private capital investment. Many see it as the future of sustainable power and are allocating significant resources to help it become broadly commercially viable. Its current high cost and limited infrastructure aren’t unusual if you take electric vehicles as an example.
When one company introduced the first competitive electric vehicles in the early s, each vehicle had a six-figure price tag. Yet, with more investment and time, lithium-ion battery pack prices decreased by 89% between and .
Infrastructure was also a challenge for electric vehicles at first. In , just 50,000 public charging points existed globally, but the number in the US alone had risen to close to 145,000 by . There are currently around 59 hydrogen charging stations in the US, with another 50 under construction. As demand rises, it’s likely these numbers will increase rapidly, but current infrastructure is making adoption a challenge.
Already, the price of fuel cells has halved since – but the price of hydrogen-powered vehicles is still higher than ICE cars and trucks. While that’s to be expected for an important industry in its relative infancy, zero-emissions power needs to become more financially sustainable as an industry. The goal is to leverage economies of scale so a viable total cost of ownership (TCO) ensures customers can choose hydrogen technology solutions.
Regulatory challenges
Governments worldwide are offering incentives to encourage businesses to transition away from ICE vehicles and embrace lower emissions alternatives. In the US, some regions are making a concerted effort to support fuel cell adoption. California’s Clean Vehicle Rebate Program, for example, offers a rebate to those who buy hybrid, plug-in electric or fuel cell vehicles. At the federal level, there’s also the option to claim a tax credit for new electric vehicles, including those powered by fuel cells.
Even so, there’s a lot of work to be done. The average California hydrogen power station can fuel around 30 cars per day, meaning they’re unlikely to be able to fuel more than one truck per day. For businesses with fleets, this makes hydrogen fuel cell adoption a challenge – particularly if they need to travel long distances away from depot fueling stations. Building a robust hydrogen fueling network is the most practical way to encourage companies to embrace new products.
Another significant obstacle is the lack of consistency around how hydrogen technology is regulated. Different global and local jurisdictions approach key aspects like classification and regulation differently, making it difficult for large-scale businesses to transition their entire fleet or operations. The price of hydrogen also varies significantly from station to station, so governments could implement fixed margins as they have done for gasoline to offer more predictable pricing.
Making hydrogen power widely viable
Arguably, the biggest challenge beyond infrastructure is the current cost of hydrogen. In , the cost estimate to produce hydrogen on a large scale was between 2.50 and 6 USD. According to Hydrogen Council’s Hydrogen Insight report, the estimated levelized cost of producing renewable hydrogen (LCOH) with a proton exchange membrane (PEM) electrolyzer built today is about 4.5 to 6.5 USD per kilogram (USD/kg), increasing from 30% to 65% from the previous year.
The U.S. Department of Energy (DOE) “Hydrogen Shot” goal is to reduce the cost of hydrogen to $1/kg by , excluding delivery and dispensing, for production using electrolyzers. To reach its target, more investment is needed in the industry.
The DOE has already kickstarted one focal point on its roadmap – the regional clean hydrogen hubs. With up to $8 billion in investment through the Bipartisan Infrastructure Law, seven H2hubs are poised to build a much stronger hydrogen infrastructure network across the U.S. and decarbonize multiple sectors of the economy. More recently, the DOE announced plans to allocate another $6 billion to funding across 33 projects spanning eight industrial segments to decarbonize hard-to-abate sectors.
The 45V clean hydrogen production tax credit is also a key player in unlocking further investments toward hydrogen availability. While still pending final publication, Accelera recognizes the tax credit’s importance in scaling the U.S. green hydrogen economy and is ready to support customers nationwide in deploying their hydrogen projects.
How Accelera is building hydrogen economies of scale
At Accelera, we have a deep understanding of the challenges and opportunities associated with bringing new technology to market. Backed by 100 years of industrial expertise through Cummins Inc., and with key partnerships across the hydrogen power sector, we’re forging a path that will bring fuel cell technology to more homes and businesses.
Accelera already has innovative products in the market, powering heavy-duty long-haul and medium-duty trucks, vocational trucks, and even passenger trains. Freight trains, marine vessels, and mining and construction equipment are also great options for fuel cell use, again creating economies of scale. Our line of fuel cell technologies has been engineered to work across these different applications to do just that.
Accelera has electrolyzers in operation around the world, enabling industrial manufacturing to produce green hydrogen and decarbonize production processes for steel, oil refining, ammonia and methanol. Our electrolyzers decentralize hydrogen power, helping businesses transition to zero-emissions power before regional and global hydrogen infrastructure is fully implemented.
The automotive industry is taking another look at hydrogen fuel cells, but how they ultimately fare depends on a combination of consumer demand, automaker investment and infrastructure build-out.
Hydrogen fuel cell technology has been steadily advancing over the past six decades since the first practical fuel cell system was demonstrated by Cambridge engineering professor Francis Bacon. The technology itself dates all the way back to . Since then many uses of hydrogen fuel cells have been employed as efficiency and effectiveness have been improved, but so far it has yet to achieve mass deployment.
That could change as the automotive industry begins looking at alternatives to battery electric vehicles.
“With hydrogen you’re buying resiliency,” said Monterey Gardiner, senior hydrogen and eMobility Technology Engineer at BMW Group. “Electricity is more expensive to store than produce, and it creates a challenge for the infrastructure. With a PHEV (plug-in hybrid electric vehicle), which you can do now, you get about 40 to 50 miles of electric range. With an FCEV (fuel-cell electric vehicle) you get high-performance and long range.”
Cost will be key in this equation. “We’ve been doing fuel cell work with Toyota and the market readiness is there,” said Gardiner. “The challenge is additional hydrogen infrastructure and high system cost. Right now you need to make 500,000 vehicles per year to get to a competitive cost. We will have an X5 fuel-cell electric vehicle in , which will be a small series production. We expect mass market after .”
That date roughly coincides with timeframes defined by Hyundai MOBIS, which is part of the Hyundai Motor Group. Byung-Ki Ann, senior vice president for MOBIS’ Electric Powertrain Division, said in a recent presentation that hybrid fuel-cell vehicles will be commercialized within the next 5 to 10 years. He noted that some technology is still under development, such as the cooling system. “We might need a different coolant,” he said.
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Other companies are working on hydrogen fuel cell technology, as well. Nearly three years ago, General Motors and Honda announced a manufacturing joint venture to mass produce an advanced hydrogen fuel cell system that will be used in future products from each company. According to GM’s website, Fuel Cell System Manufacturing would operate within GM’s existing battery pack manufacturing facility site in Brownstown, Michigan, south of Detroit. At that time, the companies said mass production of fuel cell systems was expected to begin around and create nearly 100 new jobs. The companies are making equal investments totaling $85 million in the joint venture.
The pair has been working together through a master collaboration agreement announced in July , which established the co-development arrangement for a next-generation fuel cell system. That agreement also covers hydrogen storage technologies, integrating development teams and sharing hydrogen fuel cell IP to create a more affordable commercial solution for fuel cell and hydrogen storage systems.
At this point, it is likely that hydrogen fuel cells will follow a similar path to adoption as battery electric vehicles, according to Puneet Sinha, director of new mobility solutions for the mechanical analysis division at Mentor, a Siemens Business. “As the automotive industry moves toward a larger adoption of electrification in a complete portfolio, not just for passenger vehicles, fuel cells absolutely have a huge value proposition — especially for heavy-duty vehicles, as well as forklifts and warehouse applications where the fuel recharge time right away has strong revenue implications.”
In the passenger vehicle arena, given how battery technology has evolved in last 5 to 10 years, hydrogen fuel cells may not offer much benefit over battery electric vehicles initially, Sinha said. That could change with increasingly autonomous vehicles, where revenue is based on miles driven rather than vehicles sold. And the quick refueling of hydrogen fuel cell vehicles could help tip the scale, as well.
“This is not to say they will replace the battery electric vehicle, but they can get some share of the day-to-day transportation in the passenger vehicle space if it is a shared autonomous electric model,” said Sinha. “This makes more sense since nobody knows how this is all going to pan out, but forces are coming together that can make fuel cells a reasonable value to the passenger vehicle arena, such as the connected autonomous electric vehicle model — in addition to the fact there is a lot of renewable energy. There are estimates that we are losing, on an average basis, around one terawatt of renewable energy because we are not able to store it very well.”
Tom Wong, director of marketing, design IP at Cadence, agreed. “A decade ago, few people really believed battery electric vehicles (BEVs) had a future for anything other than short-distance city driving. For mainstream use, it was widely thought they would never have enough range, they would be too slow to recharge, and there wouldn’t be sufficient public charging infrastructure. In , KPMG surveyed 1,000 senior auto executives, a majority of whom agreed to some degree that BEVs will fail due to infrastructure challenges. The main advantage of fuel cell electric vehicles (FCEVs) over BEVs is the short refueling time.”
Where are we today?
“With improvements in battery technology and manufacturing scale, government subsidies in many countries, investment in charging infrastructure, and the availability of moderately affordable and fun-to-drive BEVs, those assumptions from 10 years ago turned out to be wrong,” Wong said. “BEVs are quite commonplace today. In , there will be approximately 1 million BEVs sold in the U.S., with the Tesla Model 3 being the highest-volume EV in a single model. In China, unit shipments are likely to approach the 2 million unit target, with multiple car makers supplying the end markets. These are the two largest auto markets in the world.”
Contrast that to hydrogen fuel cell vehicles. “Honda, Toyota and Hyundai are the three most visible FCEV manufacturers in the world,” Wong said. “Together, they have only sold or leased fewer than 10,000 hydrogen FCEVs in the U.S. This is almost double the unit shipments in Japan, the second largest market. But these are tiny numbers compared to the popularity of BEVs.”
Technologically, and ecosystem-wise, the two can and should co-exist, said Sinha. “They have their own technology, battery electric vehicles and fuel cell electric vehicles. They have their own strengths and weaknesses. Also, the automotive industry also doesn’t come in one flavor. There are passenger vehicles, and for every passenger vehicle, there are also have forklifts that go in all kind of warehouses like the Amazons and Walmarts, along with long-range trucks for freight. All of these have different mission profiles and different needs. As you look at this flavor of variety of automotive needs, there are areas where fuel cells may have a better value proposition.”
Refueling/recharging
The biggest advantage of fuel cells is the refueling time, which is similar to filling up with gasoline. “That has huge advantages,” Sinha said. “Even with the best superchargers, for a battery electric vehicle it takes about 15 to 30 minutes to fill up electric for a 300 mile range. For hydrogen fuel cell vehicles, you’re talking about 5 minutes max to fill the tank.”
This is especially important in industrial applications. The slower time to charge a battery electric vehicle may not pose a big challenge for day-to-day driving, but for a forklift it has direct financial implications.
“You can have two types of forklifts,” Sinha said. “Let’s say you have a battery forklift and a hydrogen fuel cell forklift. For a battery forklift, even if you have to charge for 20 to 30 minutes, you are talking about downtime. If you have a fuel cell based forklift, then of course, the charging time of less than 5 minutes is a huge value proposition. That’s why you’ll see in the forklift side of things, there are a lot of hydrogen fuel cell driven forklifts already out there, and this is one of the biggest reasons for that.”
Driving range is a big differentiator in this equation. With a BEV, the only way to add range is to add batteries. In hydrogen fuel cell vehicles, you just add more hydrogen fuel, which can be accomplished with a larger tank or a refilling station. This is particularly important for long-haul trucking, most of which is now diesel-powered. Large trucks typically can run 500 to 700 miles before refueling. Achieving similar results with batteries requires a lot of them, and that requires space and adds weight.
That explains why Nikola Motor Co. is developing hydrogen fuel cells for long-haul trucks. Those easily can travel 500 to 700 miles between refueling by putting in larger hydrogen tanks.
Fuel cells vs. batteries
These value propositions are less obvious in passenger cars today because fuel cells are not as efficient as batteries. A 100 kilowatt hours of AC electricity from grid delivers roughly 69 to 70 kwH of energy at the wheel of a BEV. For a fuel cell, that drops down to about 20 to 25 kwH of energy, Sinha said.
The reason is the energy conversion in fuel cells from hydrogen to electricity. Once the hydrogen is put in the tank, it is converted to electricity in the fuel cell stack, and then passed to the vehicle. The fuel cells stacks are only about 50% efficient, whereas batteries are about 80 to 85% efficient.
“Beyond that, if you look at the fuel cell powertrain and the battery powertrain, the only difference is that one has a fuel cell stack, one has a lithium-ion battery stack,” he said. “Otherwise, everything is the same. Both of them require power electronics, both of them require electric motors. Thus, the energy efficiency of power electrics and motor remains the same.”
But the battery electric power train, from battery to wheel, is about 70% to 75% efficient, versus about 45% for fuel cells, he noted.
Cost hurdles
Today, the initial price of an FCEV and ongoing hydrogen fuel cost are still too high for mass adoption.
“Despite eligibility for government rebates, FCEVs are still substantially more expensive than their BEV counterparts,” Cadence’s Wong said. “In addition, ongoing cost of ownership of an FCEV is more expensive. Based on gas mileage, the cost to power an FCEV equates to spending nearly $6 per gallon of gas. Is it about reducing carbon footprint? Or replacing the internal combustion engine? Or the cost to own and operate? Or having more fun with instant torque? But before diving into the pros and cons of more investment in FCEVs, and whether lack of hydrogen infrastructure is a structural impediment to the growth and adoption of FCEVs, we need to take stock and revisit the objectives of developing FCEVs more than a decade ago.”
The costliest thing in hydrogen fuel cell technology is platinum, which is a catalyst needed for the electrochemical reaction to happen that converts hydrogen and oxygen into electricity. An 80 kwH fuel cell stack requires between 30 and 60 grams of platinum. The model of Toyota’s hydrogen fuel cell vehicle model, the Mirai, contained close to 30 grams.
“The industry is striving toward getting the grams of platinum close to 10,” Mentor’s Sinha said. “If you look at today’s IC engine vehicles, you still have platinum in there in the catalytic converters totaling approximately 7 grams. If it can be set to 10 grams of platinum in the fuel cell stack and still get all the power and performance and life, then platinum goes away from the cost equation compared to the IC engine. The industry is working toward that, and this is the one of the biggest engineering R&D aspects to drive the cost down.”
Much progress has been made in that area. Between and now, the cost of fuel cells has dropped 70%, mostly due to a reduction in platinum.
“Economies of scale will take care of further cost reduction here, in addition to improvements that have happened in the industry to simplify the system, reducing the cost from balance-of-plant,” he said. “Cost-wise, it is moving in the right direction. The latest data from Department of Energy says that based on today’s technology — where the state of technology is if you can produce it in large volume, which is 100,000 units — the model cost will be around $50 per KwH, which is very good. But again, the economies of scale have to catch up to get to that number. These are the challenges that continue to keep fuel cells always five years away from the commercialization and large scale adoption.”
The over-arching premise of FCEVs was to find solutions to save the planet and move away from internal combustion engines.
“It was believed that hydrogen-powered vehicles and BEVs were both viable options, if we put in the hard work to advance those technologies and established government incentives to enable that as well as to encourage consumers to adopt these new technologies,” Wong noted. “It is clear that BEVs have achieved a high degree of success and adoption due to advances in battery technology and pioneering companies like Tesla, as well as investment in BEVs by the likes of Toyota, VW, Porsche, GM, BYD, etc. The big question to ask is, ‘Now that we have seen the success of BEVs, what other benefits can FCEVs bring to make them a commercial success?’ Or are we now looking at a FCEV solution looking for a problem that already has been solved in the past decade by BEV?”
Hydrogen infrastructure
This is only part of the market, though. Hydrogen is being used today as a fuel source for industrial equipment. According to FuelCellsWorks, more than 25,000 electric industrial trucks with fuel cells were in use globally in March , and Sustainable Bus notes that more than 400 hydrogen buses are operating today in the U.S., Europe and China.
Hydrogen power has been available for years, but in an extremely limited capacity. Wong noted there are currently 39 public hydrogen fueling stations in California, with another 25 in development. There also is investment in hydrogen infrastructure in other states, as well, but on a much smaller scale.
Fortunately, automakers are teaming up with government agencies and utility companies to solve this chicken-and-egg problem as it relates to hydrogen infrastructure. The State of California is spending more than $2.5 billion in clean energy funds to accelerate sales of hydrogen and battery vehicles. That includes $900 million earmarked to complete 200 hydrogen stations and 250,000 charging stations by .
Sinha believes these infrastructure issues are definitely a bottleneck, but not necessarily forever. “Batteries have shown the way,” he said. “Ten years back, I would have said the same thing to about lithium-ion batteries, but now we don’t talk about that. Tesla has shown the value of having your own network, and with lots of companies investing there’s a hope that some of the companies will also invest in hydrogen infrastructure. Then, slowly but surely, this bottleneck will go away.”
Another factor that will contribute to adoption of hydrogen fuel cell vehicles is consumer demand. “That consumer demand will be triggered by the mobility experience and how society changes as far as the transport ecosystem of the future,” Sinha said. “If the world is taken over in the next 20 years by the shared mobility model, then consumers of that ecosystem don’t have to worry about the refueling and recharging or the energy efficiency. What we have to care about is the cost, such that perhaps it may not matter whether you are giving me power through battery or through fuel cells. It will come down to the fleet owner and what it takes for cost-effectiveness. Both technologies have their strengths, and the good thing is they both are electric vehicles.”
Conclusion
How this ultimately shakes out is anyone’s guess. But for now, there are healthy business opportunities for both BEVs and FCEVs.
“BEVs already surpassed FCEVs in consumer adoption for clean vehicles,” said Wong. “FCEVs may very well find a comfortable home in the trucking industry and metropolitan bus services. Contrast this with consumers, who have very unpredictable and random driving/route behaviors. We want to go anywhere anytime, whereas semi-trucks run on relative stable routes and schedules. As long as hydrogen refueling is available at the starting point and destination, the issue of lack of widespread hydrogen infrastructure may not be a big issue at all. Similarly, metropolitan buses also exhibit more predictable usage behavior, where the hydrogen refueling infrastructure can be easily managed. We may need to re-define the main goal of future FCEVs – to reduce the carbon footprint and cut emissions. This seems like a natural fit for semi-trailer trucks and double-decker buses.”
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