Bosch has invested almost $2.5 billion in hydrogen from 2021 to 2026 and is targeting $5 billion in sales by 2030. How has your read of North America changed since 2022 on hydrogen, policy, and investment?
The last couple of years have been ups and downs, and as an industry and as Bosch we have to adapt as we go along. Our belief in the market here is that it's a multi-lane highway of energy, and that is the key to being successful in a region like North America. There is a lane for every energy source on this highway, and it depends on the application and the use case. It's a big enough market to allow for multiple energy platforms: gasoline, diesel, hybrid approaches on passenger cars and increasingly on commercial vehicles, hydrogen, and battery electric somewhere in the center lane.
From a mobility standpoint, we need to differentiate between mobility and stationary. On mobility, commercial vehicle is the biggest platform that benefits from fuel cell applications, but we can't forget hydrogen engines either, because they use the same infrastructure of engines we have today. The challenge is timing of implementation and infrastructure, especially hydrogen availability, filling stations, and the development cost for fuel cell power modules and vehicles. Commercial vehicles live and breathe by TCO. You can support it with federal and state incentives, but at the end of the day it has to stand on its own. That's why some companies have delayed, cancelled, or put projects into hibernation. At Bosch we continue to work on it, and at ACT Expo last week we displayed a new fuel cell power module, the C-300, which is larger than our last generation C-190. We're prepared to put it into the market at the pace the market develops.
What specifically needs to be true in trucking demand, infrastructure, or customer commitments for the Anderson fuel cell investment to come off hibernation?
It cannot be just a sample phase or a small sample fleet. It has to have sustainability in volumes, yearly volumes, a couple of OEMs, some foundation to make sense, because at the end of the day it's about TCO. If I'm only building one or ten or a hundred, I'm not going to provide the best TCO to fleet operators on small volume production. That sustainability and volume is the key for the business case to make sense and to offer a cost-effective solution to the end customer.
It's also a velocity equation: when do we import it versus when do we localize it? Anderson is a very capable plant with a lot of competencies, and they have done a lot of the groundwork to be prepared. Whenever it comes, we're ready for Anderson to produce it. From that standpoint, I'm very confident in the plant capability and the work they have done to date.
On electrolyzers, you recently commissioned Farmington Hills. Who are the US integrated customers you're building toward, and on what timeline?
We can't talk about specific customer names, but the electrolyzer business now falls into the whole hydrogen business case for Bosch. Within Bosch we're looking at the entire hydrogen economy, not just the fuel cell power module for mobility, not just hydrogen engines, but also producing hydrogen and dispensing it through the cryopump. It's the entire circular economy and how we can be part of it. We put the electrolyzer into our Farmington Hills facility, which is the R&D center and headquarters for mobility in North America, right outside Detroit. It happened to be on St. Patrick's Day, so it was appropriately green, and it was very well attended.
The event was successful because we weren't just talking about hydrogen production or just the electrolyzer. Attendees included integrators, customers, and even some competitors, and the conversation covered hydrogen production, mobility, and stationary applications. We're seeing a lot more interest in the electrolyzer business because of energy and distribution needs. Megawatts wanted, more than ever, and that's exactly what we're seeing now with the energy crunch.
Where does that demand come from beyond data centers?
If you look at the projections for 2030 or 2035, the needs are growing based on data centers, but megawatts are not just for data centers. Future mobility electrification will require more infrastructure as it becomes mainstream, along with industrialization and industry more broadly. That power crunch requires a multi-lane highway of energy and multiple sources to meet the requirements: battery electric, diesel, natural gas, hydrogen. We're going to need all of them, not one or the other.
This is where the pull on electrolyzers becomes more apparent. They're a unique solution for areas where you're not getting great support from the grid, or where hydrogen supply comes through pipelines from refineries as a byproduct. You can also create hydrogen from a water source. The big question is when it makes sense on TCO, because integrators producing energy have to deliver it at reasonable kilowatt prices, and cost-effectiveness is the competing factor.
Electrolyzers up, fuel cells paused, SOFC suspended. Is this a sequencing call, or a deeper read on US demand building out structurally slower than Europe?
From an overall strategy standpoint, we want to be prepared at whatever pace it's coming, because we can't force it. A lot of companies learned their lesson when it comes to forcing a technology. It has to be the right time with the right cost and the right customer acceptance. Some of it has to be organic pull. The power crunch is going to push that through or create bigger pull as we get closer to the tipping point on energy supply. The electrolyzer is one competing technology to produce hydrogen, and there are others, so it has to fit into the bigger puzzle of energy availability.
The advantage at Bosch is that we continue work on all these fronts globally, not just regionally. We leverage the footprint of our R&D because some regions are coming faster than others, which keeps us prepared here. We also have to be resilient to policy. It can't be start one day, stop the next. We see it in different policies across the world, and we develop strategy that is resilient regardless of what comes next year or in three years.
You have to be realistic on the barriers as well.
We have to be realistic. We can't expect that because it's a great technology it can be implemented tomorrow.
It can be the best invention, but if it's not the right time, or the infrastructure isn't there, or the consumer doesn't see the value because there are other options in the market, then it isn't ready.
All these factors have to coalesce and come together for it to be a solution now.
How do your North America capex decisions hinge on 45V, and what do you need from Treasury and the Trump administration in the next 12 to 18 months?
That's a difficult one, because you're asking it from one side of the financial equation: what contribution into the investment would we need to make it happen? A big portion of the puzzle is who's going to buy it. I can have a hundred percent investment and nobody buys it, and what good is that?
A lot of factors have to come together to say this is the right time. Support from federal and state funding helps, but we also need to see the demand side for it to become a good financial equation and a good business model. When there is pull for it, support from government in incentives or funding, and companies can put in their share because they can sell it at the other side of the equation, that's when it comes together.
For an audience that knows a little about hydrogen but isn't expert, why are you convinced this is a great long-term technology?
It provides a solution to a problem that will happen eventually, which is scarce resources, especially in energy demand. It may not be an imminent problem today, but from a mobility standpoint it provides a good solution for commercial vehicles and long-haul trucks as an alternative to diesel, with the right infrastructure. On energy creation, it provides a source that will be needed in the future to complement all the different energy forms and meet the power demand in the region.
It's an option that uses technology we have today, so it's not something we still need to develop. It's already available and can be implemented. It's needed for power generation, it's a good alternative to diesel down the road, and it is developed today.
Could it also be a key part of the mix for energy security reasons in the current world?
It follows the same line of thinking. It's an energy source available to us today, developed to meet an energy or power crunch. That crunch may come for geopolitical reasons, or simply because there isn't enough to go around. There are a lot of reasons why this crunch could come or is potentially going to come, from geopolitics to plain scarcity, and some geographies may face it more urgently than others. Europe comes to mind.
