HYDROGEN BUSES MARKET ANALYSIS

Global hydrogen buses market size is estimated to be valued at US$ 10.78 Bn in 2023 and is projected to reach US$ 165.34 Bn by 2030, exhibiting a compound annual growth rate (CAGR) of 47.7% during the forecast period (2023-2030).

Hydrogen buses were gaining attention as a cleaner and more environmentally friendly alternative to traditional diesel and gasoline-powered buses. Hydrogen fuel cell buses utilize hydrogen gas to generate electricity through a chemical reaction, with the only emission being water vapor. This technology is considered a potential solution to reduce greenhouse gas emissions and air pollution from public transportation systems.

Global Hydrogen Buses Market Regional Insights

• North America: This region held a significant market share in 2022 due to the favorable government policies to shift to clean alternatives, which is estimated to drive market growth across North America. The market for hydrogen buses in North America is expected to grow in the near future as the technology matures and becomes more cost-competitive. Regions in North America with stringent environmental regulations or those that have set ambitious carbon-neutral goals (such as California, U.S.) are more likely to adopt hydrogen buses.
• Europe: The European hydrogen bus market is set for growth as the continent progresses towards decarbonizing public transportation. A total of 370 fuel cell buses were in operation in Europe till January 1, 2023. But there are plans to get over 1,200 by 2025. In 2021, Europe has been a watershed year, with 158 registrations, that market grew to 236% in Europe. In 2022, on the other hand, registrations in the old continent decreased by 99 units. The integration of hydrogen buses is likely to scale up due to improving economies of scale, advancements in fuel cell technology, and the growing setup of hydrogen refueling stations.
• Asia Pacific: The market for hydrogen buses in the Asia Pacific is expected to grow during forecast period (2023-2030). This region has emerged as one of the key markets for hydrogen buses due to the growing emphasis on reducing pollution from the transportation sector and the favorable initiatives by several governments in the region. Governments in the Asia Pacific region, particularly in countries like China, Japan, and South Korea, are actively promoting the use of hydrogen fuel cell vehicles (FCVs), including buses, as part of their sustainable transportation policies.
• Latin America: This region is still in the early stages of adoption, with countries like Brazil starting to show interest in hydrogen as part of their urban transit strategies. Anglo American successfully launched the first hydrogen-powered bus in 2023 for operational service in Chile, in partnership with Andes Motor, a leading national company, representative of the main manufacturers of trucks, vans, buses, vans and machinery in the world, Foton, a Chinese company that designs and manufactures trucks, buses and sport utility vehicles, Copec a Chilean energy and forestry company with a chain of gas stations throughout Chile, and Linde, a global industrial gases and engineering company, delivering innovative and sustainable solutions for our customers and creating value for all our stakeholders. Given the fact that Latin America has vast renewable energy potential, this region holds significant promise for the production of green hydrogen.
• Middle East and Africa: The Middle East, with its significant natural gas reserves, is exploring hydrogen as a means to diversify its economy and has begun investing in fuel cell bus trials. Similarly, parts of Africa witnesses’ potential in hydrogen to combat urban pollution and are slowly beginning to explore its feasibility for public transportation.

Figure 1. Global Hydrogen Buses Market Share (%), By Region, 2023

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Global Hydrogen Buses Market Drivers

• Environmental regulations to reduce greenhouse gas emission: Stricter environmental policies and regulations by governments worldwide to reduce greenhouse gas emissions have been influential. They push for the adoption of cleaner transportation options, with hydrogen buses being a viable solution due to their zero-emission nature. The number of fuel cell buses deployed in real-world operations worldwide grew from around 100 in 2015 to over 600 in 2020.
• Climate change commitments: International agreements such as the Paris Agreement it is a legally binding international treaty on climate change. It was adopted by 196 Parties at the UN Climate Change Conference, have compelled nations to take definitive action to combat climate change. Hydrogen buses contribute in meeting carbon reduction targets, thus driving their market adoption. According to the International Energy Agency, over 200 hydrogen buses were already in service across major cities like London, U.K., Cologne, Germany and Beijing, China till 2020.
• Advancements in hydrogen fuel cell technology: Advancements in fuel cell technology have increased the efficiency and reliability of hydrogen buses, thus making them more competitive with conventional buses and even other electric alternatives.
• Financial incentives and funding for development of technology: Financial incentives, subsidies, and funding for research and development (R&D) in the field of hydrogen fuel cell technology have been a crucial driver, as they lower the initial cost barrier for transit authorities and bus operators. In the U.K., according to a 2021 report by the Hydrogen Council, at least 20 cities have drawn up plans to introduce hydrogen buses by 2023, to meet air quality targets.

Global Hydrogen Buses Market Opportunities

• Infrastructure development to increase growth of market: The establishment and expansion of hydrogen refueling infrastructure provide an opportunity for the growth of the hydrogen buses market. This includes government and private sector investments in building new refueling stations to make hydrogen more accessible. In Asia, ambitious nationwide targets have been established to deploy heavy-duty hydrogen buses and build associated fuelling infrastructure. For example, China's goal of 1,000 fuel cell buses on the road by 2022 and South Korea's roadmap 2040 for eco-friendly urban transportation including 2,000 hydrogen buses deployed by 2025. This type of coordinated infrastructure development and future vehicle deployment commitments and targets from governments serves to significantly reduce risk and boost commercial viability for hydrogen bus manufacturers and providers.
• Innovation in hydrogen fuel cell technology: Continuous innovation in hydrogen fuel cell technology, including improvements in durability, efficiency, and cost, presents an opportunity for market expansion. Innovations can also lead to reduced operational costs, making hydrogen buses more economically competitive. According to the International Energy Agency's report, 2021, China aims to have over 20,000 fuel cell buses on the road by 2030
• Transitioning fleets as a beneficial alternative: As public transport fleets around the world transition towards zero-emission vehicles, hydrogen buses stand as a beneficial alternative, especially for routes that require longer ranges and quick refueling times. According to the Fuel Cells and Hydrogen Joint undertaking, over 300 fuel cell buses were already operational across Europe till 2022. Germany has committed in procuring 2100 hydrogen buses by 2030.

Global Hydrogen Buses Market Trends

• Increased government initiatives to support hydrogen transportation: Many countries are launching initiatives and programs to support hydrogen transportation infrastructure, which includes funding for hydrogen buses and refueling stations. This is in line with efforts to meet greenhouse gas emission reduction targets. As part of its National Hydrogen Strategy published in 2021, Germany aims to have 5,000 hydrogen buses on its roads by 2030. Similarly, France targets 1,000 hydrogen buses by 2024 through its National Hydrogen Deployment Plan.
• Collaboration between industry players: There's a growing trend of collaboration among manufacturers, energy companies, and government bodies. These partnerships aim to develop and expand the hydrogen economy, encompassing hydrogen production, distribution, and vehicles. In 2022, bus manufacturers Van Hool and Hydrogenics it is a developer and manufacturer of hydrogen generation and fuel cell products based on water electrolysis and proton-exchange membrane technology announced a partnership to develop and deploy a fleet of 100 hydrogen-powered double-decker buses for service in London by 2023. In another example, Toyota Motor Corporation is a Japanese multinational automotive manufacturer joined with Hino Motors is a Japanese manufacturer providing manufacturing services of commercial vehicles and diesel engines, in 2021 to jointly develop heavy-duty fuel cell trucks and buses. They plan to start mass production of these vehicles by 2025. This partnership combines Toyota's experience in fuel cell technologies with Hino's expertise in commercial vehicles.
• Improvements to increase performance and efficiency: Manufacturers are continuously improving fuel cell systems to increase their longevity, efficiency, and performance, while also working to reduce costs. These advancements are making hydrogen buses more competitive with traditional and other zero-emission counterparts. According to the annual report from the Fuel Cells and Hydrogen Joint undertaking European Union provided funding for 27 hydrogen buses and fueling stations to be deployed across major cities in 7 countries between 2021-2023
• Integration of renewable energy: To produce green hydrogen, there is an increasing trend of integrating hydrogen production with renewable energy sources like wind, solar, and hydroelectric power. This reduces the carbon footprint associated with hydrogen production. According to a report by the Fuel Cells and Hydrogen Joint Undertaking, in 2019, Germany had 279 hydrogen buses in operation across various cities. In 2021, Germany announced plans to have over 1,500 hydrogen buses on the roads by 2025. Similarly, according to the China Hydrogen Alliance, more than 10,000 fuel cell electric buses were in operation across various Chinese cities as of 2021.

Global Hydrogen Buses Market Restraints:

• High initial costs of hydrogen fuel buses: The upfront costs of hydrogen fuel cell buses are significantly higher than those of diesel or natural gas buses, which can be a deterrent for many public transit operators and municipalities. Public financial support in the form of grants, tax incentives, and subsidies can significantly lower the initial investment required for purchasing hydrogen buses and building the necessary refueling infrastructure. The initial investment cost of purchasing hydrogen gas needs to be controlled and proper infrastructure should also be put in place. According to a survey by the Fuel Cell and Hydrogen Energy Association in 2020, out of the 323 hydrogen refueling stations operational worldwide, over 70% were concentrated only in 5 countries mainly in North America, Europe and Asia.
• Lack of hydrogen infrastructure: Limited availability of hydrogen refueling infrastructure is a major restraint for the widespread adoption of hydrogen buses. Building a network of hydrogen stations is capital-intensive and not yet fully developed in many regions. Infrastructure should be designed to be easily scalable, starting with smaller stations that can be expanded as the number of hydrogen buses and other fuel cell vehicles grows. Germany and Canada which aim to have 100 and 30 hydrogen refueling stations respectively operational by 2023 for fuel cell vehicles according to latest targets released by their environment ministries.
• High production cost of hydrogen: While hydrogen can be produced from various sources, the most common method (steam methane reforming) is not carbon neutral. Producing green hydrogen through electrolysis is still more expensive than traditional methods, thus impacting the operational costs for hydrogen buses. As the demand for hydrogen increases and production volumes rise, economies of scale can potentially reduce the cost per unit of hydrogen produced. According to a 2020 study published by the International Council on Clean Transportation, the production cost of hydrogen was estimated to be around $5-10/kg in Europe
• Technological challenges: Ensuring the reliability and durability of fuel cell systems in varying climates and operational conditions is a challenge that needs constant innovation and can affect market perception. Increasing investments in research and development can lead to technological breakthroughs that enhance the performance and reliability of fuel cell systems while also driving down costs. According to the Fuel Cell and Hydrogen Joint Undertaking (FCH JU), one of the major public-private partnerships supporting research and innovation in this domain in the European Union, currently there are only about 500 fuel cell buses estimated to be deployed and operational worldwide as of 2021.

Key strategic initiatives:

According to 2023 report of Stellantis, by combining hydrogen and air in the presence of a catalyst, a fuel cell generates electricity to drive an electric motor, with water vapor as the only by-product. So, compared to a battery, a fuel cell is an energy converter rather than a storage device.

Recent Developments

New product launches

• In 2023, Otokar launched KENT hydrogen fuel cell e bus at Busworld Europe 2023. Kent hydrogen provides a range of over 500 km and efficient operational hours with its high hydrogen storage capacity, low hydrogen consumption, and high technology reliable systems.
• In 2023, Tata Motors launched their Tata Starbus Fuel Cell EV to Indian Oil Corporation Ltd. (IOCL), the leading petroleum company. It is India’s first hydrogen fuel bus with a range of 250 to 300km.
• In 2022, Turkish bus manufacture Karsan launched Karsan e-ATA hydrogen fuel cell bus. It has a range of over 500 km and can be refueled in just 15 minutes.
• In 2022, South Korean automaker Hyundai launched Hyundai XCIENT Fuel Cell City Bus. It has a range of up to 400 km and can be refueled in just 10 minutes.

Acquisition and partnerships

• In 2022, BMW announced partnership with Toyota to produce hydrogen fuel cell vehicles starting mid-decade and the two will begin producing and selling hydrogen fuel cell vehicles developed jointly as early as 2025.
• In 2021, Toyota announced a partnership with Hino Motors to develop and produce hydrogen fuel cell buses. This partnership is expected to accelerate the development and commercialization of hydrogen buses in Japan.
• In 2020, Ballard Power Systems acquired Proton Motor Fuel Cell, a Germany based manufacturer of hydrogen fuel cell buses. This acquisition gave Ballard Power Systems a foothold in the European hydrogen bus market.

Figure 2. Global Hydrogen Buses Market Share (%), By Application, 2023

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Top Companies in Global Hydrogen Buses Market

• Toyota Motor Corporation
• Hyundai Motor Company
• Ballard Power Systems
• New Flyer Industries
• Van Hool
• Wrightbus
• Solaris Bus & Coach
• SAIC Motor Corporation Limited
• Proterra Inc.
• CAF (Construcciones y Auxiliar de Ferrocarriles)
• Daimler Trucks AG
• SunLine Transit Agency

Definition: Global hydrogen buses market involves the production, sale, and adoption of buses powered by hydrogen fuel cells, which generate electricity by combining hydrogen and oxygen, emitting only water vapor as a byproduct, thus contributing to cleaner and more sustainable urban transportation.