A heated debate about the long-term running costs of hydrogen internal combustion engines (H2 ICE) has not stopped a build-up of momentum for the technology. In February, Hyundai Doosan Infracore announced a new hydrogen engine prototype, adding another big name to established players such as Cummins and Deutz already active in this area.

Hydrogen: hype, hope and the hard truths around its role in the energy transition
Will hydrogen be the skeleton key to unlock a carbon-neutral world? Subscribe to the weekly Hydrogen Insight newsletter and get the evidence-based market insight you need for this rapidly evolving global market

But although the potential for H2 ICE use in on-road applications, such as trucking, has grabbed the headlines, off-road applications — which includes tractors and mining vehicles — might be a more natural fit.

And in this segment, hydrogen combustion engines boast many advantages over electric drive train equivalents, such as battery electric or hydrogen fuel cells.

Off-road is segmented into many different types of machinery, each with its own challenges. Some of these, such as large excavators and tractors, are applications where BEVs really struggle due to the heavy weight of machinery.

The long hours of operation per day raises an additional problem for BEVs: it can run a battery flat, an issue that is further exacerbated by a lack of access to electricity in remote locations where mining, construction and agriculture take place. This gives a window of opportunity for hydrogen.

Dust resistance

Logistically, hydrogen fuel cells are also an option for operators of off-road vehicles. But the lower CAPEX of H2 ICE and better resistance to dirt and dust in operation may give ICE vehicles a competitive edge.Even so, BEVs remain the most promising option for almost all sectors, including off-road. In fact, we estimate that hydrogen engines will make up under 1% of all off-road vehicles by 2030.

So, hydrogen engine manufacturers would be wise not to limit themselves to this market. Put simply, truck volumes are too high to ignore, and H2 ICE could carve out a niche here too.

It will be difficult in this segment for hydrogen engines to compete with BEVs, which are far less expensive to run. But the cost equation can vary depending on various factors such as the distance travelled — a long distance is harder for a battery vehicle due to range — and the temperature. BEVs can work very well in low temperatures, but only with a larger battery or smaller range.

And, as some locations are easier to get large amounts of electricity and cables to than others, the cost of infrastructure remains a significant hurdle for BEV uptake.

But the market for trucks is very large, with just under 18 million new units registered globally in 2022. That includes light duty trucks, incorporating all pickup trucks and vans. However, medium- and heavy-duty trucks alone was over 3.4 million in 2022, so any small to moderate piece of the segment would be good business for engine manufacturers if the technology can find the right customer base.

Jamie Fox, principal analyst at Interact Analysis. Photo: Jamie Fox

Furthermore, once you have one vehicle on the market, it’s easier to adapt it for different applications than it is for off-road machines, which have a much wider variety of applications and are often designed to perform a specific task.

On-road is also quicker than off-road at moving to alternative technologies. The market for BEV in 2022 was about half a million already, although most so far are light-duty trucks. In off-road, it is much smaller. This was demonstrated at the recent CON-EXPO 2023 trade show, which did not showcase a large number of new electric vehicles.

Interact Analysis forecasts that a total of 5,771 H2 ICE vehicles will come into operation between now and December 2030, with more sales overall for on-road than off-road.

However, what if things go worse than expected? Say the price of hydrogen barely falls, battery prices crash due to oversupply, diesel price falls due to a low oil price, and regulators don’t consider hydrogen ICE a clean tech. In such circumstances there could be almost zero hydrogen trucks in the market. However, H2 ICE would still be able to find a niche in off-road in areas where diesels are being phased out and BEV just can’t get the job done.

So go for both

There is a case for H2 ICE vehicles in both on-road and off-road applications and it is not yet clear which will prove most fruitful for engine manufacturers. It may well come down to factors that cannot be accurately determined now, such as regulation passed by future politicians who have not yet even been elected.

In my opinion, engine makers should go for both. Look to get strong commitments from truck manufacturers, but, failing that, be prepared to get some business in off-road, where it may be possible to offset smaller volumes with higher margins.

For more information about this research, including forecasts for these and other markets including rail, marine, passenger cars, check out the full report.

Jamie Fox is principal analyst at UK-based market research house Interact Analysis.