Elon Musk vs. Plug Power Stock: Here’s What Tesla’s CEO Thinks About Hydrogen Energy
As far as I know, Elon Musk has never commented directly on this. plug power (plug 0.31%) inventory. that haveBut much has been said about the potential of hydrogen energy. After all, Musk is the CEO. tesla (TSLA 3.47%) and SpaceX – two companies trying to reimagine how the world generates and uses energy. Understanding how alternative fuels like hydrogen fit into the overall environment is simply part of Musk’s job. And he’s investing billions of dollars in answers.
What does Musk think about hydrogen fuel and hydrogen-focused businesses like Plug Power? His historical commentary is very topical.
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Musk thinks hydrogen cars are “very foolish.”
Hydrogen fuel can be used in a variety of use cases. Automobiles and other transportation vehicles, which Musk is well aware of, are a major potential market for hydrogen fuel. But it’s clear that Musk doesn’t see hydrogen fuel as a potential answer, given how Tesla has positioned itself over the past few years. Tesla vehicles run on lithium-ion battery chemistry, and Supercharger network locations are often paired with solar power.
Simply put, Tesla has invested little in powering its cars with hydrogen. In fact, if you look at the specific words Musk has said about hydrogen over the years, this minimal investment makes a lot of sense.
“Hydrogen is very difficult to make, store, and use in cars,” Musk said in 2015. “The best hydrogen fuel cells can’t beat current batteries.”
Musk didn’t stop there. He added that hydrogen’s inferiority in the transportation sector “will become apparent in the next few years.”
In 2020, he tweeted “Fuel cells = idiot sales,” and later added, “Hydrogen idiot sales don’t make sense.”
But it’s important for hydrogen investors to understand that Musk is only talking about hydrogen-powered cars. There are many other potential use cases. Around the same time that Musk tweeted “Selling stupid” about hydrogen, Volkswagen “Green hydrogen is needed in the steel, chemical and aviation industries,” he tweeted, but agreed that it “should not be applied to cars.”
Image source: Getty Images.
Can artificial intelligence save hydrogen fuel?
When Musk and the Volkswagen CEO tweeted about hydrogen fuel in 2020, the AI revolution hadn’t even begun yet. The AI industry is now in desperate need of new fuel sources. There is a reason for the renewed interest in new approaches to energy, such as small modular nuclear reactors. Hydrogen fuel could also help power the $7 trillion buildout of data center infrastructure globally.
There’s just one problem: cost.
In most cases, hydrogen fuel has not been as cheap as conventional fuels or existing forms of renewable energy such as wind and solar. However, experts expect hydrogen costs to fall over the years as hydrogen adoption becomes possible. It didn’t materialize. At least it wasn’t on the scale that some experts had predicted.
Plug Power doesn’t report exact installed cost estimates for its systems, but looking at other industry standards can give you an idea of how economical its technology is. Plug Power primarily uses proton exchange membrane (PEM) technology for its electrolyzers. Several estimates place the total installed system cost of a PEM system between $1,500 and $2,500 per kilowatt. For comparison, the total installed cost of a natural gas system is often less than $1,000 per kilowatt.
Overall, hydrogen fuel is not viable for most industries. And cost competitiveness may take years, even decades. This leaves hydrogen stocks like Plug Power dependent on government regulations and subsidies to survive. In this regard, I would like to agree with Musk and other hydrogen critics. I’m not confident this fuel type will expand in any meaningful way in the near term, making the investment case for stocks like Plug Power difficult to argue.
