PARIS—Renault Group will form a joint venture to develop, build and sell long-range fuel cell electric vans in Europe with Plug Power, a U.S. company that just received a major investment from Korean battery maker SK Group, driving its market capitalization above $25 billion.
The 50-50 joint venture is expected to close in the first half of the year, the companies said. It will be based in France, with an as-yet-undetermined number of employees, said Gilles Le Borgne, Renault's head of engineering.
The joint venture aims to provide "turn-key fuel cell vehicle solutions," including supplying hydrogen, fueling stations, R&D, and sales and services, the companies said.
The first projects will be "midpower" hybrid hydrogen/battery electric vans based on the Renault Trafic and Master, the auto maker's medium and large commercial vans, in which electric motors are powered both by a fuel cell stack and a midsize battery pack.
"If you can't sell your customers an end-to-end approach, you could have a problem, because they are not used to hydrogen," Le Borgne said.
The vans will have a range of 500 km to 600 km (310 to 370 miles), Le Borgne said in a joint interview with Plug Power CEO Andy Marsh. He declined to give a potential price.
The existing battery-electric variant of the Master has an effective range of about 120 km (75 miles).
Renault currently has fuel cell variants of the Master and the small Kangoo van, with several hundred units of the Kangoo on the road in Europe, with a range of about 350 km (217 miles). Renault had worked with Symbio, a joint venture of Michelin and Faurecia, on those vans, but Le Borgne said that future Renault hydrogen vehicles would come out of the new venture with Plug Power.
The joint venture is aiming to capture at least 30 percent of the fuel cell van market, which in the future could be as large as 500,000 units globally, he said. PSA Group, which currently has the largest share of the European van market (Renault is No. 2), also says it is exploring hydrogen fuel cell vans.
Initial sales will focus on fleet buyers whose vans run regular routes and would install fueling stations at centralized depots, Le Borgne and Marsh said. "We won't have a big network of fueling stations in the short term," Le Borgne said. "We want to be very realistic."
There are no current plans to expand the joint venture to passenger cars, "but we never say never," he added. The companies are not planning to sell the vans in the U.S.
Investment boosts Plug Power
Plug Power's market capitalization soared last week on the announcement that SK Group Plug would invest $1.5 billion for a 10 percent stake in the company and form a joint venture to deploy hydrogen fuel-cell systems, fueling stations and electrolyzers in South Korea and elsewhere in Asia, starting next year. The news has driven Plug Power's market capitalization to more than $25 billion as of Tuesday from around $5 billion at the end of October.
The JV with Renault is Plug Power's first collaboration with an auto maker, Marsh said. His company has mainly focused on industrial customers and materials handling, notably providing hydrogen fuel cell electric forklifts to Amazon and Walmart. Plug Power says it has produced more than 40,000 fuel cell systems and is the largest buyer of liquid hydrogen.
Plug Power is committed to providing so-called green hydrogen, meaning that the energy in the extraction process comes from renewable sources such as solar, wind or water. Most hydrogen today is extracted using carbon-based energy sources, known as black hydrogen. (There also various processes that mix renewables and fossil fuels, colloquially known as brown, blue or even aqua hydrogen.)
The potential for green hydrogen is driving much of the enthusiasm for the fuel, and Marsh said green hydrogen production is hopefully in the works in Europe.
"I've been aggressively looking at that," he said about green extraction in Europe. "I fundamentally believe the key to this market is green hydrogen—just like with electric vehicles, the infrastructure is in place for them to run on renewables."
Le Borgne and Marsh said the JV would be instrumental in reducing costs for hydrogen fuel cell vehicles, through innovation but primarily through scale.
"We're in a volume industry, and we know how to manufacture cars in volume," Le Borgne said. "At the beginning (hydrogen) will be a niche market, but very soon, because of European regulations regarding CO2, we will see the market grow. So we need to have the technology ready."