Weighing in at almost 2,600 kilograms, the brawny vehicle at DaimlerChrysler’s suburban Detroit skunk works seems an unlikely “car of the future.” The lines are distinctly late 20th century. Jump into the driver’s seat and it feels like your standard sport utility vehicle (SUV). But pop the hood, and it instantly becomes clear that this is no ordinary gas-guzzler: In place of a combustion engine lies a sophisticated onboard refinery-a fuel processor system of high-pressure gas lines, compressors and chemical reactors to turn methanol into hydrogen gas.

This multimillion-dollar moving laboratory-the Jeep Commander II-feeds the hydrogen to two fuel cell stacks, which silently combine hydrogen and oxygen in a chemical reaction that generates enough electricity to hurtle the SUV down the highway. The car’s operation is clean and efficient, generating only water, carbon dioxide and some spare heat. Missing are the toxic air pollutants and fine soot that spew from most vehicles’ tailpipes.

DaimlerChrysler and its partners-Canadian fuel cell developer Ballard Power Systems and rival automaker Ford Motor Co. -believe that fuel cell vehicles can deliver the power and performance that today’s drivers are used to. Commander II shows how tough a challenge this is. While the vehicle represents the state of the art in fuel cell technology, its engine takes half an hour to warm up and would cost several times more to mass-produce than a standard V6. But DaimlerChrysler is closing the gap. Its next fuel cell demo, a hatchback to be unveiled as early as this fall, will pack a fuel cell with twice the punch of Commander II’s. Not only will its fuel processor weigh half as much, but it will start up in less than a minute.

It is this type of steady and substantial improvements in fuel cell technology that have convinced many automakers and oil companies that the internal combustion engine has finally met its match. Facing tighter regulation of tailpipe emissions, several automakers are investing heavily to lead the transition. DaimlerChrysler, Ford and Ballard have spent close to $1 billion on fuel cells and plan to spend at least a billion more by 2004 to begin mass-producing vehicles. The goal is to take fuel cells out of the skunk works and into the showroom. “The great majority of our people who are working on fuel cells are working on the production program,” says Bruce Kopf, director of TH!NK Technologies, Ford’s electric car enterprise.

Ford and DaimlerChrysler’s competitors have joined the race, along with major parts suppliers. Japan’s four largest automobile makers invested more than $850 million on fuel cells over the past decade, and several are committed to commercializing the technology-possibly even before DaimlerChrysler and Ford.

These companies are excited about fuel cells because the internal combustion engine is getting harder to improve. Even the most sophisticated designs will struggle to meet the tougher emissions standards soon to be imposed in California and several states on the East Coast. And cleaning up the internal combustion engine is beginning to increase its cost. After 100 years of improvements, combustion technology is reaching its limits.

Fuel cells are also appealing because they will free electric cars from battery power, which provides the cleanest cars on the road today but also dooms them to a niche market. Battery-powered cars are zippy and responsive, and nearly silent without the rattle and roar of pistons. But these features have been overshadowed by the vehicles’ limited range. Batteries simply haven’t improved much since they were driven off the road by the internal combustion engine nearly a century ago. “The electric car’s inherent limitations essentially doom it to a very small operating range, and that’s the story today,” says historian Robert Casey, curator for transportation at the Henry Ford Museum in Dearborn, Mich. “The electric car has been the car of the future for the last hundred years.”

Membrane Magic

One way to extend the range of the electric car is to carry fuel and generate electricity onboard. This is the approach used by hybrid gasoline-electric cars such as the Toyota Prius, which hit U.S. showrooms this summer. The Prius employs a small, efficient combustion engine, plus a pile of batteries that supplement the engine during acceleration and absorb power from the wheels during braking. The problem with this solution is that it is inherently complicated and costly, since it combines electric and mechanical drive technologies. Robert Winters, a power technologies analyst with Bear Stearns in New York, says that the Prius is “heavily subsidized,” and wonders whether hybrids will ever be affordable. “You’ve got a redundant engine system in there. How are you going to overcome that?”

Enter the fuel cell. Unlike batteries, which store a charge, fuel cells generate electricity on the fly. Carry enough fuel, and the fuel cell will take your electric vehicle wherever you want to go. Winters says fuel cells are rapidly becoming a commodity, and vehicles carrying them could easily account for “several percent” of the 60 million or so cars that will be produced worldwide by 2010.

Though fuel cells come in half a dozen varieties, utilizing different fuels and materials, one version has emerged as the clear favorite for automotive use: the proton exchange membrane (PEM) fuel cell. A PEM cell is solid and compact and operates at a relatively cool 80 C. The heart of the PEM cell is a rubbery plastic membrane coated with a platinum catalyst. The catalyst splits hydrogen gas into protons and electrons; only the protons can pass through the membrane. The electrons travel around the membrane, generating the treasured electric current, before recombining with the protons and oxygen on the other side of the membrane to generate water. Stacking a series of these membrane-catalyst assemblies, or “cells,” multiplies the voltage.

PEM stacks lit the Gemini spacecraft that circled Earth in the 1960s, but generated a trickle of electricity too weak and expensive for commercial applications-let alone automobile engines. Then, in the late 1980s, researchers at Los Alamos National Laboratory made major advances in catalysts, reducing by 90 percent the amount of platinum required. Ballard multiplied the stack’s power density-the power returned per unit of precious vehicle space it occupies-by learning how to keep the membranes happy (wet but not soaked) and by perfecting the plumbing that moves hydrogen, oxygen and water through the stacks. Ballard, based in Burnaby, B.C., has close to 400 patents issued or pending to protect its lead in PEM technology.

Two years ago Ballard exceeded the minimum power density for automobiles-1,000 watts per liter-with its Mark 700 stack, two of which propel Commander II. Ballard’s Mark 900 stacks, released early this year, put out as much as 1,350 watts per liter. “That’s a power density that is practical for today’s vehicles,” says Paul Lancaster, Ballard vice president for finance. In other words, a car packing such a stack should accelerate the family road machine, luggage included, with the same gusto as an internal combustion engine.

Steering Around Obstacles

But hold on to your checkbook, because more work remains to make the fuel cell vehicle practical. All of its systems are too costly-even pricier than loading a car with batteries-and supplying hydrogen to the stacks is still a struggle.

Ballard’s top challenge is manufacturing cheaper stacks. The company is working with Ford and DaimlerChrysler to optimize its stack designs for cheap, automated production. And to achieve a critical mass of production, Ballard is commercializing fuel cells in multiple markets simultaneously-not just vehicles but portable power generators, residential generators and stationary power plants. Lancaster pegs the breakeven point at about 300,000 stacks per year. “To the extent possible, we’ve used common materials and common manufacturing processes across product lines, so we don’t have to make fuel cells for 300,000 cars to achieve that volume.”

DaimlerChrysler and Ford, meanwhile, are focusing on making the rest of the car. Their biggest headache has been keeping the stacks fed with hydrogen. “The issue with fuel cells has become the fuels. It’s not the fuel cell anymore,” says Mohsen Shabana, who as the fuel cell vehicles program manager at DaimlerChrysler’s engineering technologies operation in Rochester Hills, Mich., is responsible for making Commander II run. All three of the fuels that carmakers are considering-gasoline, methanol and hydrogen-pose serious challenges.

Onboard extraction of hydrogen from gasoline would make the transition to the fuel cell vehicle seamless, since gasoline is everywhere. But refining gas on the go is difficult. The reactions occur above 800 C, making the devices slow to start, and the chemistry is temperamental; while the process is routinely used in chemical manufacturing plants and oil refineries to make industrial volumes of hydrogen, squeezing it under the hood is tricky. Another unsolved problem is protecting the fuel cell from the catalyst-poisoning sulfur in gasoline.

Despite the technology challenges, General Motors and Exxon Mobil have recently announced the joint development of a gasoline fuel processor and say a demonstration vehicle using fuel cells powered by the processor could be ready within 18 months. The automaker argues that while hydrogen will likely be the fuel of the future, gasoline processing technology will provide a critical transition in making fuel cell cars practical.

Others are unwilling to wait for the gasoline processor. DaimlerChrysler is developing a methanol system. Some fuel cells run directly on methanol rather than hydrogen, but fuel cell experts say this technology is at least seven years away from the level of efficiency required to power a car. So using methanol as a fuel today means extracting its hydrogen. Methanol is an easier target than gasoline because it is sulfur-free and yields hydrogen at a relatively mild 300 C. But refining methanol is still a complex process involving many steps, each of which must take place at a particular temperature.

The methanol processor under Commander II’s hood chugs out enough hydrogen to take the vehicle a shade under 200 kilometers between methanol fillups. The range is limited by the small size of the fuel tank-a consequence of the bulky fuel processor. The big hangup, though, is that the fuel processor takes a half-hour to warm up, which is a half-hour longer than drivers are willing to wait. The problem is that the processor uses steam to free the hydrogen, and getting up a head of steam takes time-just as it did for the steam cars of the early 1900s.

DaimlerChrysler, Ford and Ballard say they are working on a solution: a next-generation fuel processor that uses a catalyst, rather than steam, to kick-start hydrogen production. The new system is much smaller-slightly bigger than a file box-and weighs half as much as the beast squeezed under Commander II’s hood. But this sophisticated little fuel processor has been a long time coming. Ford and DaimlerChrysler both planned to show the technology in demo cars this spring, but only Ford’s appeared on the auto show circuit-and its fuel processor was not functioning. Ford’s Kopf says the two companies decided to pool their resources-including the scarce automotive engineers comfortable with the electric vehicle’s communications systems-to get the processor working in DaimlerChrysler’s next concept car. “The system is so complicated, and it’s got a lot of computers talking to each other,” says Kopf. “There are not a lot of people in the world capable of making these run.”

While these elite engineers fuss over catalysts and controls, doubts are growing over the viability of methanol as a consumer product. Methanol is nasty stuff-not only can it prove fatal if ingested, but even splashing it on the skin can cause blindness and liver and kidney failure. And because methanol dissolves in water, it poses a threat to underground drinking water supplies. That makes oil firms nervous; they are already scrambling to get the methanol-based fuel additive MTBE (methyl tertiary butyl ether) out of their gasoline, after the foul-tasting chemical began showing up in California’s drinking water.

The most obvious solution, of course, is to directly use hydrogen as the fuel. That would eliminate the need for a reformer as well as the climate-warming carbon dioxide it generates (though some CO2 would still be released during hydrogen production from fossil fuels, the most common method today). The problem is that while hydrogen packs more energy by weight than any other fuel (about three times more than gasoline), it is hard to stuff much of this energetic gas in a fuel tank. Pack a commercially available compressed gas tank with hydrogen, and it will take your vehicle barely 150 kilometers-no farther than today’s best car batteries. Hydrogen is also the smallest of molecules and slips through the smallest holes-a worrisome trait, given its characteristic flammability. (Remember the Hindenburg?) DaimlerChrysler pushed a demo car 450 kilometers using a liquid hydrogen tank, but the cryogenic technology to store fuel at -253 C (just 20 degrees above absolute zero) is not mature for mass markets. And good luck finding a hydrogen filling station-there are only a half-dozen worldwide.

Hydrogen availability may become less of an issue, though, as major oil companies warm to the challenge of distributing the gas. Graham Batcheler, president of Texaco Energy Systems, the oil giant’s advanced-fuels subsidiary in Houston, says the company believes that the fuel cell will replace the internal combustion engine over the long haul. He considers it inevitable that drivers will be filling up with hydrogen-and he wants them to do it at a Texaco station. Rather than fighting to protect its gasoline franchise, Texaco is investing in the key technology to make hydrogen fueling possible: advanced storage tanks.

One possibility for solving the hydrogen packing problem is simply rethinking compression. Stronger tanks could compress the hydrogen to greater pressures, or radically redesigned vehicle frames could accommodate massive but oddly shaped tanks. Another option is to pack tanks full of materials that bind hydrogen, slowing down the molecules without liquefying the gas. Graphite fibers with intricate nanostructures, for example, have been shown to absorb more than 20 percent hydrogen by weight, allowing far more of the gas to be stuffed into a tank.

Consuming Visions

Given the challenges, Johannes Ebner, the executive in DaimlerChrysler’s fuel cell program responsible for fuel infrastructure, acknowledges that earlier company estimates putting 20,000 to 40,000 of the cars on the road in 2004 now look unrealistic: “It will be a very limited production.” Ballard, DaimlerChrysler and Ford will begin testing their technologies on consumers next year in California, where tough requirements for pollution-free vehicles are set to take effect in 2003. The California Fuel Cell Program (formed by these three companies along with other carmakers, fuel cell makers and several big oil companies) plans to put 60 fuel cell cars and buses on the road-taking fuel cell vehicles out of the hands of careful engineers and into the hands of demanding consumers.

These California cars, like the Commander II, will be custom-built. The real test for fuel cells will come when mass-produced cars hit the road-which both Ford and DaimlerChrysler have vowed to do in 2004 despite knowing that they will lose money on them. “We’ve stated we’ll have vehicles in the public’s hands, and there are programs in place to do that, but that doesn’t mean they’re commercially viable,” says Ford’s Kopf. He concedes that fuel cell cars are now “a lot more expensive” than battery-powered cars, which themselves are not cheap. Ford would have to charge at least $35,000 to cover costs on its battery-powered Ranger pickup, almost three times more than the price tag that wins it a profit for a no-frills combustion-engine Ranger.

Why are carmakers laying plans to lose money? Kopf says there is always the possibility that the technology will pay off sooner than expected. Instability in the Middle East, for example, could bump gasoline to $5 per gallon, sending Americans searching for fuel efficiency just as the oil crises did in the 1970s. “We want to have developed a core engineering capability-to know where the problems are, where we need to simplify. We want to be prepared.”

But he says the ultimate motivation is long-range. The fuel cell promises to make the automobile sustainable, cutting pollution and freeing it from the politics of oil-and ensuring that Ford can make as much of a killing in this century as it did in the last. The big appeal of fuel cells is “the promise of zero tailpipe emissions, potentially no greenhouse gas emissions and energy independence,” says Kopf. “Those are the holy grails of the automotive industry. ”

Looking into the future, Kopf imagines a world in which electricity from renewable sources such as wind and solar cells generates hydrogen from water-the reverse of the fuel cell process-to power a fleet of fuel cell vehicles. “You could make a fuel system and vehicle that produces zero greenhouse gases and zero tailpipe emissions-a hydrogen-oxygen-water cycle that is sustainable forever. That’s the ultimate goal.”

One might expect that kind of talk to unnerve the leaders at DaimlerChrysler, who recently announced a crash program to cut $2 billion from operations to quell shareholder anxiety over declining share prices and weak returns. But Ebner says DaimlerChrysler chairman Juergen Schrempp is personally protecting the fuel cell program’s $1 billion line of credit as a “pipeline to the future.” Schrempp’s vision sounds even more messianic than Kopf’s.

In a recent speech to the World Engineers Convention, the engineer-turned-business leader implored engineers “around the world” to throw down their projects and jump on the fuel cell bandwagon. Schrempp’s rationale? Ensuring that future generations are not overwhelmed by global climate change and economic dislocations from declining oil supplies. “We all share the responsibility for carrying out this project, for the responsibility for carrying out this project, for the assumption of responsibility is part of the dignity of human beings.”

COMPANIES STRATEGY PLANS DaimlerChrysler, Ballard Power Systems, and Ford MotorPartnering to commercialize fuel cells, fuel processors and electric drives. Ballard is focusing on cutting the costs of fuel cells, while DaimlerChrysler and Ford are demonstrating integrated vehicles running on compressed hydrogen, liquid hydrogen and methanol. Scheduled to demonstrate 30-40 vehicles in California between 2001 and 2003. Designing models for “limited production” in 2004. GM and ToyotaPartnering on electric cars. Both companies, leaders in battery and gasoline-electric hybrid technologies, have developed fully functional fuel cell concept cars, fuel cells and hydrogen storage systems.Expect to have fuel cell cars ready for commercialization by 2004. Ongoing investment in gasoline fuel processors. HondaBullish about its ultra-clean internal combustion technology, but also investing in fuel cells. Honda has built fuel cell concept cars with Ballard stacks and proprietary stacks, but equipment occupies rear passenger space. Plans to have a package of technologies ready for commercializing fuel cell cars by 2003, but hasn’t announced production plans yet. NissanAdapted its battery-powered station wagon to carry Ballard fuel cells and a methanol processor, but equipment occupies rear passenger space.Next prototype to stow equipment under the floor. Could produce fuel cell cars as early as 2003. BMW, International Fuel Cells, and Delphi Automotive Systems Partnering to replace batteries with fuel cell auxiliary power units (APUs) in combustion- powered cars.Plans to commercialize fuel cell APUs by 2005.