How can a successful transition to Hydrogen Fuel Cell Vehicles (HFCVs) take shape under the assumption of a value proposition that is equivalent to conventional Light Duty Vehicles (LDVs)? While attention for and investment in HFCVs is growing, several historical cases demonstrate failures of newly introduced Alternative Fuel Vehicles (AFVs), despite sizeable public and private investments to initiate a transition. HFCV transition dynamics are complex. Here we analyze the challenges and characterize high leverage policies that can overcome them.

Transition dynamics within the LDV market are complex, first because diffusion is the result of interdependent decision making by many distributed actors including consumers, OEMS, fuel providers and policymakers. Further, the automotive market is dominated by several positive feedback processes including the spatial co-evolution of new fueling infrastructure, the development of consumer familiarity through marketing and social interaction, technology improvement through R&D investment and production experience, as well as economies of scale and scope. In addition, adjustment of physical assets and decision maker perceptions introduce crucial time delays. These factors together make the LDV market prone to tipping points and lock-in effects and make successful support of a transition towards HFCVs a formidable challenge. The respective challenges presented by the various feedbacks must be well understood to inform public policy and private firm strategy.

To gain understanding of these transition challenges a behavioral dynamic model has been developed at MIT. The spatially disaggregated model treats decisions of the various stakeholders explicitly, and captures the evolution of the installed vehicle base, the relevant vehicle attributes and of the consumers' attitudes and fueling infrastructure endogenously.

This particular research project employs the dynamic transition model to identify critical parameters and high-leverage policies for successful diffusion. Using California as the laboratory for experimentation, we analyze the potential impacts of various individual policies, and their interplay. Our purpose is not to forecast diffusion scenarios, which is premature due to great uncertainty in technology attributes, the policy environment, and particularly in parameters conditioning consumer choice among AFVs. Instead we focus on characterizing global dynamics. We conduct sensitivity analysis around best available parameters to identify high-leverage parameters and assess the robustness of policies, which also guides subsequent efforts to elaborate the model and gather needed data.

The model base run can achieve successful diffusion of HFCVs but requires long time periods, on the order of decades, and substantial public subsidies prior to the emergence of a self-sustaining market. The duration is sensitive to policies and technology assumptions about the potential performance, but remains long. Polices are derived from an understanding of the feedback and behavioral detail For example, analysis of the asymmetries between urban and rural demand/supply interactions, suggests that an effective transition, even when focusing on urban adopters, may require larger shares of support for fueling outlets outside those urban areas. Preliminary analysis further suggests that alignment of incentives for vehicle purchase and fueling infrastructure development is critical.

This work on HFCV Transition Challenges is made possible through support from Shell Hydrogen.