Commercial Success for Fuel Cell-Powered Vehicles Rests On Solutions to Numerous Challenges, Says New Roland Berger Study

    DETROIT, June 5 If fuel cell vehicles are to have
significant long-term impact in the auto industry, automakers and suppliers
must successfully address 12 commercialization challenges that loom over the
auto fuel cell industry, according to a new study by Roland Berger Strategy
Consultants.
    The most difficult among the 12 challenges are low-cost infrastructure,
range and power density.  Other challenges include cost reduction, component
integration complexity and safety issues, to name a few.
    These and other findings of the Roland Berger study "The State of the
Overall Fuel Cell Industry and the Challenges for the Automotive Fuel Cells,"
are based on interviews with senior executives from automakers and fuel cell
developers from various industries around the world and extensive secondary
research.  The study assessed the current state of the fuel cell industry and
identified key trends and challenges.  It also offers insights regarding
critical strategic issues for future success in the fuel cell industry.
    The opportunity is alluring.  Fuel cells (FC) offer a virtually pollution-
free source of power, which has generated significant interest by a number of
companies hoping to benefit from this opportunity.  These companies are
developing products for three broad markets: portable communications (e.g.,
laptop computers, cell phones); stationary (e.g., residential back-up,
electric utility grid support, hospitals); and transportation (e.g., fork lift
trucks, passenger vehicles, buses).
    "We will see the launch of fuel cell products in all three major markets
during the next four years," said Michael Heidingsfelder, Managing Partner of
Roland Berger in North America.  "However, fuel cell products will succeed
only if they have a value proposition greater than their competing
technologies in any given market."
    Developers of these products fall into two major categories: newer,
smaller dedicated fuel cell developers who have raised substantial funding
through capital markets; and older, larger companies, for whom fuel cells are
an "insurance policy," and who are internally funding their research.
    "To get there, companies should develop a clear commercialization roadmap
and form strategic relationships to overcome these challenges," said Mahesh
Lunani, Project Manager of Roland Berger's Automotive Competence Center.
"They also need to leverage their experience across markets.  To do all of
this, they need continued support from capital markets."
    In the automotive realm, vehicle makers' commitment is strong.  According
to the study, automakers and others will invest as much as $5.2 billion in
research by 2004 to develop and try to commercialize workable, low-cost fuel
cell technology.  Despite uncertainties concerning government regulations,
technology implementation and customer acceptance, automakers remain steadfast
in their pursuit of commercially viable fuel cell vehicles.
    Suppliers will be key.  Successful suppliers of FC technology and systems
for the auto industry must have a proven track record in related technology, a
willingness to share development costs and be able to work closely with
automakers to develop product requirements and understand the mindset of
automakers and their industry as a whole.
    "While the next few years will be an exciting time in FC vehicle
development, there is certainly no guarantee for success," says
Heidingsfelder.  "The winner in the automotive fuel cell industry will be one
who can build a fuel cell vehicle very close to the sticker price of a
comparable internal combustion engine vehicle."
    For more information and a copy of the study, contact Roland Berger at
248-729-5000.
    With more than 30 offices in more than 20 countries, Roland Berger is one
of the leading strategy consulting firms worldwide, providing strategy and
implementation support for clients in the automotive, high-tech, aerospace,
consumer goods, financial services, infotech, and other industries.  As a
leader in strategy consulting, Roland Berger works with blue chips and start-
ups to optimize their strategy, marketing, technology, operations and
management in the new and old economy.
    For more information about Roland Berger Strategy Consultants, visit
http://www.rolandberger.com

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