Daimler CEO Sees Fuel Cell Use in Near Future

With summer driving season around the corner, and the cost of gasoline at record highs, pain at the pump has become an everyday reality. And that has some automakers shifting their focus to alternative fuels, like hydrogen cells.

Recent predictions by auto industry tracking service J.D. Power and Associates indicate U.S. auto and light truck sales will fall to the lowest levels since 1994, in part because of rising gasoline prices. But, the maker of Mercedes says it will defy that trend.

Daimler Chairman Dieter Zetsche, also head of the Mercedes Group Cars, said in a recent, exclusive interview that Mercedes drivers could be putting the pedal to the metal on a generation of cars powered by fuel cells as soon as 2013.

"We are kind of leading the industry with fuel-cell cars," Zetsche said. "Our job is to make sure that reducing emissions finally to zero and reducing the consumption of petroleum utlimately to zero is not sacrificing the other great attributes of cars."

Zetsche said the company already plans for the 2010 S Class vehicles to reach unprecedented fuel efficiency at 44 mpg by using a combined diesel and hybrid engine.

That certainly could be a plus for Daimler if gasoline prices continue to climb as they already are this year. According to the U.S. government, monthly average gasoline prices are expected to peak at around $3.50 per gallon this spring and could hit $4 a gallon in some markets.

But challenges still remain for automakers hoping to make the shift to fuel-cell technology.  There are no commercial hydrogen filling stations. Some estimate that such stations would cost about $1 million each to build and that 12,000 stations in cities across the nation would be needed to put the new fuel within two miles of about 70% of the population. That’s $12 billion for the stations alone.

On top of that, hydrogen is a highly flammable gas. It reacts instantly with oxygen if exposed to a spark – the 1937 explosion of the German dirigible Hindenburg, filled with about seven million cubic feet of hydrogen, is the best known example.

“Marketability of fuel-cell-powered vehicles will depend on both their initial cost and the ready availability of hydrogen in convenient filling stations,” says Jack W. Plunkett, founder of Plunkett Research Ltd., a Houston-based market research firm. “Prototype cars are on the road in a few cities, and large scale production has the promise to eventually make such vehicles affordable and competitive, but the obstacles are significant.”

Even if the supply problem can be solved, the initial cost of fuel cells as well as storage and distribution of hydrogen are prohibitive. The current cost of a 200-horsepower fuel cell system is about $75,000, Plunkett says.

“It’s also difficult to store enough hydrogen in a vehicle to take it the 300-plus miles that drivers are used to getting on a tank of gasoline,” Plunkett says. “To do so, hydrogen must be compressed to 10,000 pounds per square inch and stored on board in bulky pressure tanks.”

Such tanks would drive designers nuts and the added weight would reduce the car’s fuel efficiency. Hydrogen could be stored in liquid form, but that would require constant refrigeration, adding another mechanical system and more weight to the car.

It's possible to chemically bond hydrogen to a metal, forming a metal hydride, which significantly reduces the amount of storage space required. However, the storage system weighs about 700 pounds.

Despite the problems, other major automakers besides Daimler also are working on fuel cells, including General Motors , Ford , Toyota and Honda .

CNBC contributor Scott Reeves and the Associated Press contributed to this article.

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