Fuel cells will enter a particular market once the cost of the fuel cell hits a particular cost point and becomes cost competitive. Fuel cells must reach a tolerable durability level of useful life of more than 5,000 hours. Suppose, a fuel cells operational life is 1,000 hours or 20,000 miles than durability issues inhibit consumer investment until fuel cells reach 5,000 hours operational levels or 100,000 miles making them feasible. Introduction of the fuel cell will probably start with PCs and handheld PDAs then be introduced into transit and commercial fleets, and finally automobiles when cost reduces to $50 kilowatt. Suppose that new passenger vehicle market sells 17 million vehicles and new transit vehicle sells are 5,000 per year. It is doubtful that fuel cell manufacturers will be able to recoup their investment, if they are sell primarily to the transit vehicle market. Initially fuel cell manufacturers will depend on government subsidizes that support the public transit system. Automotive market is the only market segment that offers sufficient volume to attract the interest of, and investment by, the vehicle manufacturers and fuel cell manufacturers. “10% market penetration” is needed to create adequate momentum for the fuel cell technology to propel itself forward exponential and replace the internal combustion engine.

Fuel cell cars will follow a three phase cycle: pre-production vehicles, number in the hundreds which will be tested and improved; phase II, next generation fuel cell vehicles into fleets numbering in the thousands; and phase III, adoption sells of tens of thousands of vehicles. Factors affecting the three phases will be gasoline and diesel prices, technical issues such as durability and useful life, government incentives to support initial introduction tactics, standard for hydrogen production, and the development of hydrogen infrastructure (Stuart Energy Systems, HydrogenSource, Proton Energy Systems, and H2Gen are offering commercial hydrogen appliances). Volume production means learning how to make identical products, with real quality control, and meeting customer expectations.

Ballard could be the Intel of the automotive industry. “If an industry standard is reached in what is the core component of a car, the engine, then even a newcomer from the outside such as Ballard could become the price leader. Ballard is recognized as the leader in PEM fuel cell technology and has experience in stack cell technology, stack components, and integration of stacks with fuel processors. Ballard maybe the first company too offer $20-35 kilowatt or $2,250-3,750 for 75 kilowatt engines. The race is on to make fuel cells cars affordable.