The value and fears of projections – A Hydrogen Revolution?

The value and fears of projections – A Hydrogen Revolution?

It is not easy making projections or forecasts as there are so many unknowns. Chances of being wrong are high both in terms of event and timing of event. Change can also involve fear, denial, resistance, and other emotions. Change can be disruptive. However, having a plan or projection is better than having none and having a plan mitigates fear and provides a baseline for discussion, critical thinking, change, growth, and opportunity.

Hydrogen power is important for numerous reasons – energy independence from a political and economic perspective, growth in energy needs, depletion in oil reserves, … , and environmental concerns. The subject is also important from a business development and investment perspective. Although oil is used in many ways, transportation is a primary use. Will there be significant changes?

Table 1 contains some rough projections on changes that may happen in auto industry in next 20 years.

Table 1 – Automobile Production Rough Projections

Source: Author’s projections.

Notes:
1) Annual market growth is based on a) world GDP growing at 6% with most of grow coming from developing countries, China (11%), India (9%), etc, and, b) Toyota, the market leader, forecast their annual worldwide sales at 4% for next several years.

2) Market size uses 2007 as the based and is projected to increase annually by the ‘annual market growth’ assumption. This projection could be significantly low as oil prices of $100 per barrel could be considered low at some time in the near future. Higher energy prices will expedite the development and, perhaps, cause an early replacement of traditional autos.

3) Currently, hydrogen market share is nil but a) almost every major auto maker has a concept car, b) there are approximately 887 hydrogen fueling stations worldwide as of 2007 (Fuel Cells, 2007), c) Honda will have lease vehicle available on limited basis in California in Mid-2008 (Reed, 2007), California has 25 fueling stations and another 10 planned (CA Partnership, 2007).

4) Middle East instability and world economic growth will be major drivers of oil price increases causing this decline. Environmental concerns will also contribute.

5) Hybrids are efficient near-term. Toyota is retro designing most of their product line to hybrid.

Worldwide demand for autos and oil
Demand for automobiles is growing worldwide with economic growth in developing countries. For example, Tata Motors is expected to introduce a $2,500 auto for the India market in mid 2008. Nissan announced plans for a $3,000 auto for the India market (David, 2007). Just small percentage changes in these large populations will be huge in terms of absolute grow. The oil situation will only get worst. Motor bikes are popular in many parts of the world and hydrogen power vehicles are being developed for this market (Green Bike, 2007).

References:

CA Partnership (2007). California Fuel Cell Partnership. Retrieved December 28, 2007 from: http://www.fuelcellpartnership.org/fuel-vehl_map.html

David, R. (2007, December 19). Tata Motors Unveils Details Of '1-Lakh' Budget Car. Forbes Magazine. Retrieved December 28, 2007 from: http://www.forbes.com/markets/2007/12/19/tata-budget-car-markets-equity-cx_rd_1219markets03.html

Fuel Cells. (2007). Worldwide Hydrogen Fueling Stations. Fuel Cells 2000. Retrieved December 28, 2007 from: http://www.fuelcells.org/info/charts/h2fuelingstations.pdf

Green Bike. (2007, November 15). Green Bike - Rob is Loughborough to see the world's first fuel cell powered motorbike. BBC News. Video. Retrieve from http://www.bbc.co.uk/broadband/mediaplayer/players/bbc2/nb_wm_console.shtml?redirect=console.shtml&lang=en&nbram=1&nbwm=1&bbwm=1&bbram=1&ms3=6&ms_javascript=true&bbcws=2&package=4588723&clip=wl_thu_151107_segment1
Reed, J. (2007, November 14). Honda to lease hydrogen fuel-cell cars. Financial Times. Retrieved November 15, 2007 from: www.ft.com/cms/s/0/8139d758-92e0-11dc-ad39-0000779fd2ac.html