Hydrogen gas cell automobiles are set to turn out to be a significant participant in China’s industrial truck market, predicts JPMorgan’s Elaine Wu.

“At present, the gas cell automobiles account for lower than 5% of the industrial truck market in China and that might develop to about one-third of complete market share in 2050,” Wu, head of Asia ex-Japan ESG and utilities analysis on the agency, advised CNBC’s “Squawk Field Asia” on Monday.

Gas cell electrical automobiles run on electrical energy powered by hydrogen, which may can be utilized to retailer and ship vitality derived from different sources. Hydrogen is a clear gas and when consumed in a gas cell, produces solely water.

One cause why gas cell automobiles are a “superb choice” for the industrial truck market is because of their refueling time of solely round 10 to fifteen minutes, Wu stated. Additionally they have a journey vary of round 800 kilometers, about 50% to 100% above lithium battery electrical automobiles.

Main automakers corresponding to Toyota, Honda and BMW are tapping into the hydrogen gas cell market.

China is already pushing for the promotion of gas cell automobiles, in keeping with the JPMorgan analyst.

“The [Chinese] authorities is selling one thing, what we name ‘metropolis clusters’ in order that there may very well be demonstrative cities telling profitable tales of how gas cell automobiles are applied in numerous components of the nation,” Wu stated.

“That is additionally a coverage that we noticed applied a few decade in the past, when the central authorities was making an attempt to provide lithium battery electrical automobiles. And we noticed how profitable that was.”

Beijing has stated it might like 20% of latest automobiles offered to be new vitality automobiles by 2025. Competitors is fierce within the home electrical automobile area, with Tesla competing towards the likes of homegrown gamers corresponding to Nio and Xpeng.

With China’s pledge to turn out to be carbon impartial by 2060, hydrogen will doubtless play a job in heavy trade as a clear vitality supply, in keeping with Wu.

“For this heavy industrial sector, excessive warmth content material is required and renewable energy subsequently isn’t choice to gas heavy industrial sector — however hydrogen is,” she stated.

The analyst stated China leads the world in hydrogen manufacturing, and accounts for a 3rd of world output.

“Sooner or later, there may very well be promotion of inexperienced hydrogen manufacturing whereby renewable energy goes for use to provide hydrogen,” Wu added.

Hydrogen is at present produced from coal, and shifting to inexperienced manufacturing will solely be attainable if renewable energy prices proceed to say no, she added.

“What we have seen up to now 10 years is that the fee to provide solar energy has dropped by 80% in China. The price of wind energy manufacturing has dropped by 40%,” she stated. “If this development continues — and we consider that it’s going to as a consequence of expertise development — in order that signifies that inexperienced hydrogen shall be attainable sooner or later when this stuff come into play.”

— CNBC’s Anmar Frangoul and Evelyn Cheng contributed to this report.