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China To Take Leading Role In Global Fuel Cell Electric Vehicle Market

By Trevor Raymond, Director of Research, World Platinum Investment Council (WPIC)

With demand for platinum from fuel cell electric vehicles (FCEVs) set to equal current platinum automotive demand, possibly as early as 2033, China looks ready to take the biggest share of this growing market as it matures.

Platinum FCEV Demand Outlook

Achieving net zero in the automotive sector calls for a multi-pronged approach incorporating not only battery electric vehicles (BEVs) and FCEVs, but also more CO2-efficient internal combustion engine vehicles (ICEs), including mild-hybrid gasoline and mild-hybrid diesel powertrains. It is worth mentioning that diesel vehicles still emit far less CO2 than their gasoline equivalents and are now comparable in terms of non-CO2 emissions.

ICE vehicles are expected to be a significant part of the global drivetrain mix well into the 2030s. From a platinum demand perspective, as the energy transition progresses, any decline from falling ICE vehicle production volumes will be offset by tighter emissions standards and correspondingly higher platinum loadings – plus platinum substitution for palladium in gasoline vehicles.

Fuel cells as a technology have a surprisingly long history, having been invented around 180 years ago, deployed widely in aerospace since the 1960s and since used in a variety of stationary and mobile applications. However, the first commercially available FCEV – the Toyota Mirai – was only launched in 2014, but small production volumes and limited refuelling opportunities means FCEVs have been relatively expensive and impractical for early adopters. These challenges are being overcome, with an increasing number of FCEVs available today in all vehicle categories, and supportive government policies enacted in many parts of the world increasing economies of scale in both hydrogen and FCEV production.

Depending on the outlook, it is just a matter of time until FCEV demand for platinum equals current platinum automotive demand, as recent research by the World Platinum Investment Council (WPIC) assesses through the examination of two different scenarios. First, a more conservative policy-driven scenario, where FCEV adoption is driven by government and regional subsidies, incentives, and legislated targets. Under this scenario, FCEV demand for platinum equals current platinum automotive demand by 2039. Second, a scenario of broad-based commercial adoption, whereby the impact of the successful delivery of government and regional policies engenders FCEV production and infrastructure critical mass resulting in production economies of scale sufficient to promote widespread adoption on the grounds of costs and practicable usability. Under this scenario, FCEV demand for platinum will match current automotive demand for platinum as early as 2033.

Figure 1. Global adoption of FCEVs is expected to accelerate dramatically under both policy-based and commercially-enhanced scenarios.

Source: WPIC Research, Platinum Essentials (March 2022)

The FCEV Market And China

China is well positioned to be one of the leading forces in the FCEV market under either scenario, especially in the mass transport and heavy-duty (HD) sectors. This is perhaps not surprising, given that, in 2019, China was home to approximately 7 million heavy-duty trucks – or one-third of the world’s 20 million heavy-duty trucks. Based on Bloomberg NEF predictions, by 2040, 50% of the world’s heavy-duty trucks will be powered by clean energy.

China is well positioned to be one of the leading forces in the FCEV market under either scenario, especially in the mass transport and heavy-duty (HD) sectors.

The further expansion of the new energy vehicle (NEV) industry under China’s 2060 carbon neutral directive is highly supportive of FCEV growth. According to China Association of Automobile Manufacturers (CAAM) statistics, from January to July 2021, the country’s domestic new vehicle sales reached 14.756 million units, of which 1.478 million were NEVs, an increase of over 190% year-on-year.

Recent plans (NEV Industry Development Plan and NEV Technology Roadmap 2.0) will also help to stimulate the market for FCEVs. By 2035, the market share of NEVs in China is expected to exceed 50%, with the number of FCEVs reaching around 1 million.

Similarly, plans to stimulate green hydrogen production (the National Development and Reform Commission’s 2021-2035 plan on hydrogen energy development) appear to adopt the successful national model approach – make green hydrogen widely available and consumer demand for FCEVs will follow.

At the local level, more than 20 regions have so far issued phased plans for the promotion of FCEV deployment. Shanghai, for example, recently proposed a 2023 target of 100 hydrogen refuelling stations, 100 billion yuan of industry output, and 10,000 FCEVs deployed.

These efforts already appear to be effective – green hydrogen production capacity additions in China comprise 36% of all planned projects globally, and this alone is the key driver of creating the significant impact that facilitates our commercially-enhanced FCEV growth profile.

Hydrogen Refuelling Stations In China

The biggest early adoption challenges facing FCEVs in all regions are infrastructure and policy-linked. It is somewhat a cause-and-effect dilemma, hydrogen refuelling stations (HRS) are needed to make FCEVs a viable consumer option, but automakers are reluctant to invest in FCEV technology until the supporting infrastructure is in place. For FCEVs, this requires the establishment of hydrogen refuelling stations at a density sufficient to remove consumer concerns regarding easy refuelling.

China has taken an ambitious stance on HRS growth when compared to other countries, targeting 1,000 HRS by 2030. In comparison, the next most ambitious targets are South Korea, at 310 HRS by 2022, and Germany, aiming for 400 HRS by 2023.

Collaboration is also helping with China’s HRS rollout. For example, since 2020, REFIRE, a leading global provider of hydrogen fuel cell technologies based in China, has been working with Sinopec Shanghai to build a strategic hydrogen energy cooperation “ecosystem”, effectively promoting the large-scale application of FCEVs and rapid development of infrastructure such as hydrogen refuelling stations in Shanghai.

FCEV Production Estimates

Under both WPIC’s policy-driven and commercially driven scenarios, estimates are based around fuel cell production rather than sales. As far as light-duty FCEVs are concerned, we anticipate that production volumes will ultimately be led by China in both scenarios.

The first mass-produced hydrogen FCEV sedan, the CHANGAN SL03 FCEV, is expected to be launched in China in 2022.

China’s first mass produced FCEV LV is expected to launch in 2022. Picture credit: Changan

Light-duty commercial (LCV) FCEVs also show strong growth in China under both scenarios. Given that the fuel cell powertrains are likely to be highly interchangeable between LCV and light-duty models there could be substantial variability in the outlook for LCV if relative demand or regulatory policies cause automakers to prioritise one or the other.

Figure 2. China is expected to be a global leader in FCEV production and deployment in a scenario where government policy is the key driver for FCEV adoption.

Source: WPIC Research, Platinum Essentials (March 2022)

In the HD segment, it is clear that China dominates in the policy-driven scenario, with a particular focus on buses, which can be supported by dedicated depot based refuelling facilities. Furthermore, China’s ambitious HRS plans are reflected here, and although a large country, an extensive refuelling network is supportive of HD transportation and distribution networks along specific transport corridors.

According to the International Energy Agency Advanced Fuel Cells Technology Collaboration Programme, 5,648 FCEV buses were in deployment globally as at the end of 2020 and China is at the forefront of the growing hydrogen fuel cell bus market, with a fleet of 5,290, giving it an almost 94% share.

China leads the way with fuel cell buses, accounting for 94% of the global fleet. Picture credit: REFIRE

Figure 3. Total FCEV adoption will be more significant in a broad-based commercial adoption scenario, with some of the rest of the world keeping closer pace with China.

Source: WPIC Research

Forecast FCEV Demand For Platinum

Under both scenarios, global FCEV demand is initially modest. Over time, however, demand becomes meaningful; in the policy-driven scenario reaching 1 million ounces (Moz) a year by 2030 and continuing to grow to almost 4 Moz by 2040. The initial trajectory is similar in the commercially enhanced adoption scenario, before accelerating to 1.3 Moz a year by 2028, and almost 6.7 Moz by 2040. These demand levels are significant in comparison to the current annual global platinum supply of around 8 Moz per annum.

Under the policy-driven scenario, FCEV platinum demand from China accounts for 40% and 32% of global demand in 2033 and 2039 respectively. Under the commercially enhanced scenario this changes to 37% and 25% as other countries are more successful in keeping up with China’s lead.

Figure 4. FCEV demand for platinum could match current automotive demand by 2033 if there is broad-based adoption.

Source: WPIC Research

Platinum demand needs for green hydrogen and FCEVs is expected to easily exceed current automotive demand in the 2030’s. This demand outlook, in combination with platinum’s essential role in decarbonising the world, is continuing to increase the number and range of investors, including those with a strong ESG overlay, that are investing in platinum.

TREVOR RAYMOND leads research and investor development for the World Platinum Investment Council (WPIC). He joined from Anglo American Platinum, where he was the head of market intelligence and market relations. A precious metals specialist with over 30 years’ experience in the equity and metals markets, Trevor moved into the platinum industry in 2000 following 17 years in gold mining, where he held roles in engineering, mineral economics, and corporate finance.

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Lee Jia Yi

OPERATIONS & ADMIN EXECUTIVE
Before joining SBMA, Jia Yi worked as an Admin & Reporting Officer in her previous role. She holds a Diploma in Business & Social Enterprise from Ngee Ann Polytechnic. Jia Yi is responsible for managing and maintaining physical and digital files in SBMA, supporting invoicing processes, reconciling receivables and payables, coordinating meetings and conferences. Additionally, she will provide support to the team and assist the Business Director in managing the Association’s office operations and general administrative activities.

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Emily Oh

OPERATIONS & ADMIN EXECUTIVE
Emily Oh is the Operations & Admin Executive, a seasoned professional who values teamwork and effective communication. She is skilled at adapting to new challenges and takes a proactive and resourceful approach to every task. Before joining SBMA, Emily had experience coordinating international travel arrangements and spearheading community initiatives. Her role at SBMA will be providing operational and administrative support for projects and other matters to the team.

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Clara Chang

MARKETING & COMMUNICATIONS EXECUTIVE
Clara Chang joins SBMA as the Marketing & Communications Executive, enriching the team with her extensive experience in content creation, social media management, and digital marketing. Prior to joining SBMA, Clara held the position of Marketing Executive at her previous job. She holds two bachelor’s degrees from the University at Buffalo, one in International Trade and another in Geographical Information Science. Her core duties will include maintaining the SBMA website, managing the quarterly Crucible newsletter, among other responsibilities.

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Mr John Levin

Global Metals
TD Securities
John Levin is the Head of Metal Sales & Trading – APAC at the Toronto Dominion Bank’s Singapore office. Prior to this role, he devoted seven years to leading precious metal sales for the ANZ banking group in his home country, Australia. Notably, from 2009 to 2011, John played a significant role on the management committee of the London Bullion Market Association while serving as the Head of Precious Metals Sales for HSBC Global Banking and Markets in the UK.

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Fabian Lew

MARKETING & COMMUNICATIONS OFFICER

Fabian was a Business Development and Marketing Associate before joining SBMA. He graduated from Singapore Management University with a Bachelor’s degree in Economics.

He has joined SBMA since February, 2022.

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Margaret Wong

BUSINESS DIRECTOR

Margaret Wong, Business Director at SBMA (Singapore Bullion Market Association), brought valuable experience from her previous role at the World Gold Council (WGC). Her tenure at WGC provided her with extensive exposure to the gold community in Singapore and the broader region. This background has been instrumental in establishing strong working relationships within the industry.

Margaret’s role at SBMA encompasses a diverse range of responsibilities. She oversees office management, business support processes, finance, and administrative functions essential for the smooth operation of the team and management committee. Additionally, Margaret handles membership matters, member communications, and addresses public inquiries related to SBMA.

One of Margaret’s key responsibilities is coordinating with the Event Management Company for SBMA’s prestigious annual event, the Asia Pacific Precious Metals Conference. This flagship conference plays a crucial role in the industry, making her involvement pivotal in its success.

Described as resourceful and self-motivated, Margaret Wong brings a wealth of skills and experience to her role at SBMA, ensuring efficient operations and effective engagement within the precious metals community in Singapore and beyond.

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Albert Cheng

Chief Executive Officer

Albert Cheng joined the World Gold Council in March 1993 as a Regional Manager, becoming Managing Director, Far East in 2003. He retired at the end of March 2015 and was subsequently named its Advisor. He has also been an International Advisor to the Shanghai Gold Exchange since 2002.

His marketing career began with Dentsu Young & Rubicam, Hong Kong in the early 80’s. He began gold marketing in July 1985 when he joined the Royal Canadian Mint as a Regional Manager for Southeast Asia.

He was appointed honorary CEO of SBMA in November 2015. He is responsible for the success and strategic development of SBMA, represents the interests of the Association, and is responsible for all the legal and regulatory aspects of the work of the Association. He is the primary contact for regulators and government bodies on bullion market development.

Ms Pawan Nawawattanasub

Ms Pawan Nawawattanasub

CEO
YLG Bullion Singapore Pte Ltd

Pawan is the CEO of YLG Bullion Singapore and founder of YLG Bullion International. She has almost 40 years of experience in the jewellery industry and established YLG in Thailand in 2003. In 2012, she brought YLG to Singapore. She sits on the Board of Directors of the Thailand Gold Traders Association, the Thailand Futures Exchange’s Arbitration Committee, and the Rotary Bangkok committee. She holds a master’s degree in Political Science.

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Mr Shaokai Fan

Head of Asia-Pacific (ex China) and Global Head of Central Banks
World Gold Council
Shaokai Fan is the Global Head of Central Banks at the World Gold Council, responsible for advising governments on gold matters, and enhancing the gold market through engagement, dialogue, and thought leadership. He works directly with central banks and sovereign wealth funds on investment considerations. Prior to this position, Shaokai held multiple roles at Standard Chartered Bank, including Director for Asia Strategic Initiatives and Associate-Director for Public Sector coverage. Shaokai holds a Masters of Public Administration from Columbia University and the London School of Economics, and an undergraduate degree in finance and economics from New York University.

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Mr Alan Liew

Head of Bullion & Commodities Trading
United Overseas Bank Limited
Alan is Head of Bullion and Commodities Trading for Group Trading in Global Markets, United Overseas Bank (UOB). Alan joined UOB and started the bank’s commodities trading business in 2014, previously he spent eight years in Standard Chartered Bank (SCB) trading both precious and base metals. During his tenure at SCB, he obtained the SGE gold trader licence and was part of the pioneering team for the SGE business and the FX quantitative trading team. Prior to trading, he worked for Monetary Authority of Singapore in the Financial Risk Management Division. He holds a BSc (Hon) in Computer Science at National University of Singapore and a MSc in Financial Engineering at Nanyang Technological University.

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Mr Nikos Kavalis

Managing Director
Metals Focus Singapore Pte Ltd
Nikos Kavalis is a founding partner of Metals Focus. He has over 20 years of experience in precious metals, having previously worked for the Royal Bank of Scotland and GFMS. Since September 2019, Nikos has been based in Singapore, where he also runs the local subsidiary of Metals Focus.

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Mr Nuttapong Hirunyasiri

CEO
MTS Gold Global Trading Pte Ltd
Nuttapong Hirunyasiri is the CEO of MTS Gold Group, one of Thailand’s top 10 companies and top 3 bullion companies. He started MTS Gold Group’s first overseas office in Singapore and has been expanding the group business internationally. He focuses on product development and innovation for gold investment, with the aim of being a leader in providing the full suite of gold investment services in the ASEAN region.

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Mr Raman Walia

Executive Director, Head of Commodities Sales – APAC
JP Morgan Chase Bank N.A.

Raman is Executive Director and Head of Commodities Sales, APAC, for J.P. Morgan. He joined JPMorgan in 2008 in New York, moved to Singapore in 2011, and helped expand the precious metals business in the region. Raman has an MBA from Cornell University, and likes to travel in his spare time.

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Mr Andrew Clarke

Head of Brink’s Global Services
Brink’s Global Services Pte Ltd

Andrew Clarke is the Head of BGS (Brink’s Global Services) for Singapore, Indonesia, Malaysia and Brunei. He has held various leadership positions throughout his career in secure logistics and risk management with Brink’s, which started in Hong Kong in 2010. Andrew relocated to Singapore in 2018 to expand the precious metals line of business along with Brink’s portfolio of services and industries.

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Mr Kazuya Naoki

Head of Metals, Asia
ICBC Standard Bank Plc, Singapore Branch

Kazuya (Kaz) Naoki is the Head of Metals, Asia of ICBC Standard Bank in Singapore and is responsible for the precious & base metals sales and trading in the region. He joined Standard Bank Plc Tokyo Branch in 2008 and was relocated to its Singapore Branch in 2013 whose controlling stake was acquired by the Industrial and Commercial Bank of China in 2015. Prior to joining Standard Bank, Kaz spent 11 years focusing on commodity trading and risk management with Mitsui & Co in Tokyo, Sydney and London. Kaz has been serving on the SBMA Management Committee since 2016.

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Mr Vinh Nguyen

Head of Precious Metals, Asia
StoneX APAC Pte Ltd

Vinh Nguyen joined StoneX Group in Singapore at the beginning of 2008 and responsible for its APAC precious metals activities since 2019 until now.

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Mr KL Yap

General Manager, Singapore Refining Business Unit
Metalor Technologies (Singapore) Pte Ltd
KL YAP is the General Manager of Metalor Technologies (Singapore) Pte Ltd’s Singapore Refining Business Unit. He joined Metalor in 2013, initially in Refining Sales. In 2014, he became Refining Business Unit Manager, leading the development of a new precious metal refinery. KL was Vice Chairman of SBMA from 2017 to 2021, now serving as Chairman. With a degree in business commerce, finance, and marketing, he brings prior experience from refinery and heavy industries.