1.
The Case for Hydrogen Motorbikes in Vietnam
Presented by: Van Nguyen
1. Executive Summary
This report is an effort to develop and provide a thorough exploration of the
commercialization of hydrogen motorbikes in the Southeastern Asian country of
Vietnam. This report will first strive to examine Vietnam as a potential market, and
explore the political, economic, and social conditions that makes hydrogen
motorbikes a unique commercializable business model in Vietnam. After a firm
foundation for demand has been established regarding hydrogen technology in
Vietnam, this report will then provide a high level understanding of hydrogen fuel
cell technology, and its application the automotive industry. After establishing the
case for the technology behind hydrogen motorbikes, we will explore some current
challenges and limitations of hydrogen technology as it applies to our case. We will
use these analysis to develop recommendations to commercialize hydrogen
motorbikes in the vietnamese market. Once a thorough case has been presented, an
analysis of how social media can aid in the commercialization of hydrogen based
motorbikes will explored.
2. Introduction
“The first experimental fuel cell was developed in the nineteenth century, and a 6 kW
alkaline fuel cell in conjunction with a battery bank was used to power a small car as early
as 1966, would not be until major improvements in power density were made in the
1990's that major car companies took notice” (Lin 2014) As an emerging technology,
hydrogen fuel cells has been in development for a number of decades. Sponsored by
various governmental grants in different countries, the use of Hydrogen fuel cells is a
timetested technology that is ripe for commercialization.(Lin 2014) This report will start
with examining the Vietnamese Market, and then build the case as to why Hydrogen
fueled motorbikes could potentially be a profitable entry into that market. This
report will then work to provide a high level understanding of hydrogen fuel cell
technology, and its use in transportation. However before we drive into exploring
the demand for hydrogen motorbikes in Vietnam, we will introduce the use of
Stanford’s designthinking model as the main method in which we will use to
formulate and develop case hydrogen fuel cells.
3. Method: Design thinking and Stanford’s 5 stage design thinking process
For the purpose of developing the ideas and discussion points presented in this case,
we will use design thinking, as well as specifically the incorporation of the
designthinking model as developed by Stanford University. The Stanford design
thinking model has five different action stages that can be exactly define as
2. empathize, define, ideate, prototype, and test as seen in figure one below (Plattner
2014):
Figure 1 Stanford Design School (Plattner 2014)
For the empathize phase of the design thinking process above, which asks for the
designer to seek to better understand their consumer, we will look at why the
Vietnamese market is a favorable potential market for hydrogen motorbikes. During
the define phase of the process, the report will start to define hydrogen technology
and develop exactly the term of reference that we will use hydrogen technology in
our potential motorbike offerings. In the ideate phase of the process we will look at
how we would ideally implement the proposal and what characteristics our
recommendations should include. In the prototype stage, we will go deeper into the
implementation plan and provide details on how the idea can be initially marketed
for optimal success. In the testing phase, we will start to develop metrics that will
signal whether the recommendations presented later in this report are successful as
we move to implement and market the product to the Vietnamese market.
4. Empathize
4.1 Why Vietnam needs hydrogen Motorbikes (Social, Political, and Economical)
Following the research and thesis of a master's level engineering student at
Princeton University, Bruce Lin, who sought to develop a case for the
commercialization of hydrogen motorbikes in Taiwan, we will use parallel
arguments to assess social, political, and economical market conditions that make
Vietnam a favorable market for Hydrogen motorbikes. (Lin 2014)
4.1.1 Social
3.
Based on the the air quality and pollution measurements for the country of Vietnam,
and considering it’s two major cities Hanoi and Ho chi Minh City, we can start to see
that Vietnam is currently at a crossroads.
Figure 2 Vietnamese Air quality and Pollution measurements (ACICN 2016)
4.
Figure 3: Air quality and Pollution measurements meanings (ACICN 2016)
Selling itself as the new manufacturing destination of Southeast Asia, completing
directly with China and other countries in the region, Vietnam has to decide on such
current pressing issues as “ Do you choose between steel or fish?” (Tuoi Tre News
2016). The direct quote above is a brief insight into Vietnam’s current social issues
with pollution and industry. The background of the quote above can be briefly
explain as a dialogue in a Vietnamese legal situation where a foreign entity, in this
case Formosa steel, has demanded the Vietnamese people to choose between
aquatic food sources or contaminated ground water supplies due to increased steel
manufacturing. This case and many others similar situation forces the government
of Vietnam to make decisions that will shape Vietnam social corporate
responsibilities as it relates to the environment.
Based on Figure 1 and Figure 2 from Aqcin, we can see that both Hanoi and Ho Chi
Minh City was given 51 and 72 respectively. (ACICN 2016)While these two marks
are not of urgent nature and needs immediate environmental saving actions;
Vietnam must consider the environmental impacts that businesses produces in the
name of industrialization and profits, as it moves to increase its manufacturing.
Another area of environmental concern that Vietnam must also decide on in the
near future is the Vietnamese population’s dependence on high emission producing
petrol fueled two stroke engine equipped motorbikes. “A single twostroke engine
5. produces pollution equivalent to that of 30 to 50 fourstroke automobiles. With
roughly 100 million motorcycles in Asia—roughly half of them using twostroke
engines—that translates into as much as 2.5 billion cars’ worth of smog.” (Discover
Magazine 2016) From the quote above we can see that moving away from two
stroke engines will help Vietnam manage its air quality and decrease pollution.
4.1.2. Political
“Clearly, the overwhelming reason is a desire in Vietnam for closer relations with
the United States in the shadow of a China that is now flexing its muscles. “No
country had to do more to enter the TPP than Vietnam,” Zachary Abuza, a
Washingtonbased Southeast Asia analyst, said in an interview. Such political will
crystallizes “how far Vietnamese leaders are willing to go to secure a deeper
economic relationship with the United States,” (Dien Luong T 2016)
From a political aspect, we can see that that Vietnam, as evident from the facts
above, wants to join the TTP. However one of the keys aspects that Vietnam has to
improve on to join the TPP is it’s quality of corporate social governance. Corporate
social governance as it relates to Vietnam is inclusive of labor conditions,
governmental corporate regulations, and as well as environmental consciousness
and protection. Vietnam has an obvious political benefit, enhancing its standing and
partnership within the TPP, to increase its focus on increasing production standards
that minimizes environmental impacts. By moving away from two stroke engines for
motorbikes, and to alternative product such as hydrogen fuel cell motorbikes or
electric powered motorbikes, Vietnam will be successful in reducing the overall
impact of emission on air quality, pollution levels, and product quality. This will help
Vietnam transition easier into the TTP in the near future.
4.1.2 Economical
As we start to develop the case of the social and political benefit of moving away
from two stroke engine equipped motorbikes, we have to examine how
economically feasible a transition would be, and what alternatives currently exist as
well as their respective pricings. Direct from the master thesis written by Bruce Lin,
we can see this difference in relative terms in figure 4 below.
6.
Figure 4: Alternative fuel sources table from Princeton master thesis (Lin 2014)
From the table above and the Lin’s master thesis, we can see the four market
options, electric powered motors (Zincair hybird), regular petrol (keeping the two
stroke engines), and hydrogen fuel cell options (Pure Fuel cell or hybird). (Lin 2014)
As we can see from the table above, the tenyear cost of fuel for the hydrogen fuel
cell options is comparatively cheaper then the electric and petrol options. (Lin
2014) The table above as explained by Bruce Lin accounts for the initial cost of each
option taking into account the aggregate cost of cost ownership as it relates to fuel.
When we compare the longterm expected cost of hydrogen fuel cell scooters we can
start to see that once an initial investment has been made to establish the needed
infrastructure, Hydrogen scooters will be competitively priced against existing
petrol options, which range from seven hundred dollars to four thousand dollars
each. (Lin 2014)
Figure 5: Long term cost of hybrid fuel cell scooters from Princeton master thesis.
(Lin 2014)
7. Based on the figure and information discussed above, we can see that with proper
industry development and investment, hydrogen fuel motorbike can be an attractive
long term option compared to Electric and traditional petrol.
5. Define
5.1 Hydrogen fuel cell technology
Labeled as an emerging technology fuel cell technology has actually been in
development for over two centuries. Below is a timeline of fuel cell technology.
8.
Figure 6: timeline of the Development of Fuel Cell Technology (fuelcelltoday.com)
While some emerging technologies experiences rapid commercialization and
deployment, fuel cell technology can be seen as comparable to gorilla glass
developed by Corning. ( Pisano 2015)As with hydrogen fuel cell technology, gorilla
glass sat on Corning’s technology shelf for over 50 years before the technology was
eventually incorporated in the Apple’s iphone in 2007. ( Pisano 2015) With the
extensive history of fuel cell technology, as seen above and the growing number of
research within the last ten to fifteen years on fuel cell technologies, we can see that
the technology is proven and solid.
9.
5.2 Current uses in transportation
One particularly interesting use of hydrogen fuel cell technology is its application in
the transportation industry. With major players like Toyota recent market entry of
the Mirai, we can see that major players in the automotive industry is finally ready
to speculate on the promising hydrogen fuel cell technology segment. The basic
specs of Toyota’s market entry is seen below as collected from google.com.
Figure 7: Toyota Mass market Hydrogen fuel cell entry: Toyota Mirai (google.com)
The figure above allows us to see what current hydrogen fuel cell technology is at a
point of marketable feasibility, a point that even Toyota is willing to stake a bid on
the segment. The figure shows us that hydrogen fuel cell based on nickelmetal
hydride is the progress in Hydrogen fuel cell technology that is the first to be used in
massmarket commerization. So how is the application of hydrogen fuel cell
different compared to the use of current electric powered vehicles and petrol
10. powered vehicles? Based on Bruce Lin’s master thesis we can see the main
difference in figure 8.
Figure 8: Comparison of power Systems (Lin 2014)
How all the components listed above work together in the electric fuel cell systems
as compared to traditional petrol motorbikes and electric motorbikes is very
different.(Lin 2014) Figure 9 will help us understand how exactly a fuel cell work.
figure 9: Indivudal Fuel Cell (energystoragesense.com)
In figure 9 we can see that as compared to traditional petrol powered system, Fuel
cell systems are very efficient due to the fact that no combustion takes place and all
excess hydrogen can be fed back into the close looped system for use. Based on
11. using hydride as the hydrogen’s altered state, the fuel cell above produces energy in
the form of electrical power and heat, as well as water (H20), but no emissions.(Lin
2014) Compared to petrol alternatives from the figure above we can see that
electric and hydrogen fuel cells are the two potential propellers of tomorrow’s
transportation industry, displacing emission heavy alternatives such as petrol while
saving the customer money in the long term. (Lin 2014)
5.3 Hydrogen fuel cell technology limitation and assumptions
5.3.1 Assumptions
For the purpose of developing the proposal of the introduction of Hydrogen
motorbikes to Vietnam, we must make two assumptions for the developing the
recommendations for this particular technology.
The first assumption that we must make is that we must be sure that the fuel cell
technology to be incorporated in our proposed hydrogen motorbike use the latest
technologies, in that it must use refillable canisters of hydrogen stored in it’s
hydride form. This method of storage is currently the most efficient and profitable
use of hydrogen fuel cell technology. Uses of any other of hydrogen storage methods
are unreliable and potentially detrimental to the success of the product. (Lin 2014)
The second assumption we must make is that we must assume that in order for
hydrogen fuel cells motorbikes be successfully introduced to Vietnam that we must
also introduce the best methods of hydrogen production to the country. The
assumption is made that should hydrogen motorbikes become successful in
Vietnam, heavy investment should also be made in the efficient and clean
production of hydrogen hydride and its complementary products. Without these
assumptions, the product would potentially fail.
5.3.2 Limitations
One big limitation about the recommendation of hydrogen technology in Vietnam, is
the massive governmental assistance required to develop a strong enough initial
infrastructure to support the convenient and cost effective use of hydrogen powered
vehicles. Without this infrastructure, no matter how clean and better hydrogen
energy is compared to the alternatives, hydrogen fuel cell motobikes will not be able
to capture the market share needed to disrupt the alternatives currently on the
market that has better existing supporting infrastructure. For the purpose of this
report, we will give a very high level of the type of infactrustre that is needed to
achieve the desired market conditions needed to introduce hydrogen fuel
motorbikes. The three main components of infrastructure required are Hydrogen
chemical processing plants, hydrogen hydride canister refilling factories, and retail
locations in which hydrogen hydride canisters can be distributed. Without any of
the component listed above, we will not be able effectively introduce hydrogen fuel
12. cell motorbikes as a viable alternative to electric and petrol motorbikes. The main
reason for these key aspects is because as with all new technologies we must ensure
that potential customer switching cost and switching barriers are reduced to the
lowest possible level. Should we not be able to provide any three of the components
listed above, our success in launching hydrogen fuel cell motorbikes would be
severely limited.
6. Ideate
6.1 Solution Decision Criteria
Based on the research presented above and what we understand about hydrogen
technology, the solution decision criteria for the successful introduction of hydrogen
technology must satisfy the a range of key factors. These range of key factors makes
up the decision criteria for the introduction of hydrogen fuel cell technology to
Vietnam. The decision criterion for introducing hydrogen technology are as follows:
1. Initial hydrogen fuel cell motorbikes must employ the use of hydrogen
stored as hydrogen hydride in hydrogen canister
2. Initial design for hydrogen motorbikes must target a niche market
3. Initial deployment of hydrogen fuel motorbike must be introduced in a
manageable geographical area.
The use of hydrogen in its hydride form is a decision criteria because of the proven
safety record of hydride compared to other methods of distributing hydrogen as
detailed in section 5.2 of this report.
The focus on the design of the hydrogen fuel cell motorbikes mimics the path that
Tesla headed down during its early stages. In targeting a specific market segment,
our product will be able to deeply penetrate the targeted niche market and create a
loyal first adopter following. In targeting these “extreme users”, we will be able to
create a value position that can be easily leverage in branding our product offering.
Launching the first wave of hydrogen fuel cell motorbikes in a manageable
geographical area will help in the early development of the infrastructure needed to
support the technology. Strategically deploying the motorbikes in a region that can
support and encourage the consumption of the motorbikes will definitely help the
product’s launch. Staying close to hydrogen production facilities and building on a
network of friendly hydrogen canister distribution locations will help reduce
overhead costs and lower consumer switching costs.
6.2 Recommendations of Alternatives
13. Considering the decision criteria and their relative importance to the case of
Hydrogen fuel cell motorbikes in Vietnam, we will make two recommendations and
pathways on how to move forward with the introduction of the product.
6.2.1 Fully Hydrogen motorbikes
The first recommendation that we will present for this case is the introduction of
motorbikes that is built to only run on hydrogen. With this recommendation we will
focus heavily on accomplishing decision criteria one, two, and three. In this
recommendation we will attempt to perfect the production of hydrogen motorbikes
and its complementary product as quickly as possible to ensure that we are able to
efficiently attain economy of scale in the shortest amount of time. Once economy of
scale is achieved through strategically focusing on superior hydride canister
development and efficient upstream as well as downstream supply chain
management, we will be able to effectively satisfy cafeterias one, two, and three.
This recommendation incorporates the use of hydride canisters, uses design
oriented actions to target a niche market, and encourages us to be centrally located
to all related production inputs and potential channels of sales.
6.2.2 Electric hydrogen hybrid motorbikes
The second recommendation for the case of hydrogen motorbikes in Vietnam is to
initially introduce hydrogen technology in conjunction with existing electric
technologies. This recommendations for a initial product offering of a hybrid
hydrogen and electric moped satisfies design criterias two, and three. Introducing a
hybrid model during our initial product offering will ease new customers into the
hydrogen market with a moderately liberal product compared to the more liberal
product suggested in section 6.2.1. This will ease any switching hesitation that the
market might have toward hydrogen fuel cell motorbikes. While built as a hybrid,
this recommendation calls for the incorporating hydrogen hydride canisters as the
medium in which hydrogen will be provided. The motorbike that will result from
this recommendation should also be based on design and be launched in a centrally
located geographical region as in recommendation 6.2.1. This recommendation
centers around the introduction of a electric and hydrogen fuel cell motorbike that
incorporates use of hydride canisters, uses design oriented actions to target a niche
market, and encourages us to be centrally located to all related production inputs
and potential channels of sales. However as compared to the first recommendation
in section 6.2.1, this recommendation will not be able to achieve the full economy of
scale as it related to hydrogen based technologies.
6.3 Preferred Alternative
After careful consideration and review of the two recommendations above this
report will continue to detail why recommendation 6.2.2 Electric hydrogen hybrid
motorbikes is the preferred recommendation and alternative. Leveraging the
14. successes with electric based technology, we can use the hybrid platform to ease
potential customers into increased awareness and eventual acceptance of hydrogen
based technologies.
The reason that we would want to start with an hydrogen fuel cell and electric
hybrid in our initial offering is because as we develop the infrastructure to support
hydrogen based technologies, we want to ensure that our customer are never left
without fuel for their motorbikes. Just as Tesla’s fully electric automobile was the
successor to the United States’ move towards hybrid technologies between petrol
and electricity, we want to nurture hydrogen technologies during our initial public
offerings to ensure that we maximize our opportunities for success. Learning from
Tesla, producing the initial offering of a hybrid rather than a fully hydrogen power
motorbike will allow us to better focus on the customer development through the
easing of the adoption of hydrogen technologies.
Once we are successful with our initial product offering, we can actually come back
to this report and implement recommendation 6.2.1 Fully Hydrogen motorbikes.
Employing this recommendation will actually allow us to also have the advantage of
recommendation 6.2.1 Fully Hydrogen motorbikes in the run long. Should
recommendation 6.2.1 Fully Hydrogen motorbikes be employed before
recommendation 6.2.2 Electric hydrogen hybrid motorbikes, the later deployment
of recommendation 6.2.2 Electric hydrogen hybrid motorbikes will actually hurt the
brand image of hydrogen technology. The introduction of hydrogen technologies
should be a one way path, backtracking will actually harm the brand value in the
long term. Customer will see the later introduction of a hybrid as an admittance that
hydrogen based motorbikes doesn’t work. However this drawback is not as strong if
the hybrid offering were introduced before fully hydrogen powered motorbikes. In
that particular scenario, the customer would see the later introduction as an
improved product and will have increased faith in the brand and technology.
7. Prototype and Commercialization
As we begin to develop what our hybrid hydrogen and electric motorbikes will look
and feel like, we will start to develop details regarding how we should position our
offering as well as how we can use social mediums to increase the likelihood of
success for our product. To accomplish these two commercialization efforts, we will
look at the market position based on the design of our proposed hybrid hydrogen
motorbikes as well as how social marketing can be apply to our advantage.
7.1 Market positioning and Design
Taking a page from Apple’s success and innovation based on design, we will strive to
position our proposed hybrid motorbike as a design oriented product. Rather than
being designed based on current motorbikes frames in Vietnam, our proposed
motorbike will be marketed as a technology heavy product. The proposed Hybrid
hydrogen motorbikes will be built on a special frame that can be upgraded every
two to three years. Computing technologies will also be fitted on these motorbikes
15. to position the product as a niche luxury product during the first three to four years
of production. In establishing a niche market position, hybrid motorbikes will seek
to disrupt the current industry by clear differentiation as a technologically advanced
company. As seen in figure 10 below, our proposed motorbike will strive to look like
the motorcycle on the right more than the motorbike on the left. In creating this
proposed brand and market position for our hybrid hydrogen motorbikes we will
continue to differentiate our product from other existing offerings on the market.
Figure 10 Motorbike brand versus Motorcycle branding (California DMV)
7.3 Social Marketing
With good design and a clear value proposition as detailed above,
commercialization of the proposed motorbike will leverage social media tools as we
bring the product to market. In the commerization of our motorbike we will use
social media tools to fund, promote, as well as sell our product. Extensive use of
social media will not only allow us to bring our product to market, but also create
brand awareness along the way. Creating brand awareness through the heavy use of
social media tools will tremendously help our project in the long run.
In funding the developmental costs required for our product, we will start a
kickstarter campaign for five hundred thousand dollars on Kickstarter.com.
Kickstarter is a crowdfunding website that has helped over one hundred thousand
projects raise over two billion dollars. Using Kickstarter we will develop a funding
schedule that will allow early adopters to back our product with the ability to
prepurchase our motorbike as the highest tier of support. We will also develop low
tiers of funding support that is rewarded with company gear and special
merchandises. Funding through crowd funding and especially kickstarter.com will
help the brand awareness during the development and deployment of our hybird
hydrogen motorbike.
In the promotion of our motorbike we will use Twitter and Instagram to market the
lifestyle that is associated with our brand. Where Facebook should have been a clear
tool used, we will opt to not engage on facebook for the case of Vietnam. In light of
16. the censorship placed on Facebook, we will not include the social networking
platform to mitigate any potential business disruption resulting from periods of
heavy censorship that impacts access to the website.
In well designed twitter and Instagram updates we will portray the hybrid hydrogen
motorbikes as a luxury good that mirrors Apple’s branding of its products. Using
Twitter and Instagram we will reach out to our “extreme users”, another name for
passionate first adopters. We will use these online social networking platform to
directly target young technology savvy professional to adopt our product. Through
these platforms we will continue to work to develop and reinforce our brand in the
market.
In using social tools to sell our product, we will use online ecommerce platform such
as ebay or lazada to directly sell our motorbike to our customers. Following Tesla,
we will reduce dealership costs and overhead by not having a physical distribution
location, but rather a clean showroom like Apple. Having a showroom that can
educate the market regarding our motorbike will help the initial transition from
petrol based motorbikes. Employing ebay or lazada, will help us provide superior
customer service by only allowing customers to buy our motorbike directly through
us via those platforms. When the ecommerce transaction is completed by our
potential customer, we will deliver each motorbike to our end user and provide four
hours of training on how to use and operate our motorbike. In using these
ecommerce platform we transfer the cost that we would have otherwise spent on
an extensive network of brick and mortar locations to build one central store front
supported by a team of service oriented professional who will travel to the customer
to ensure each customer is happy with their purchase.
8. Testing
In the testing phase for hybrid hydrogen motorbikes, we will start to develop
metrics that will signal whether the recommendations presented are successful as
we move to implement and market the product to the Vietnamese market.
8.1 Success metrics
In testing for our prototype, we will focus on three metrics that we can measure as
we implement our product. These three metrics are low annual fuel cost, high
reliability, and high brand perception. Described in measurable terms, the table
below has been developed as goals for testing throughout the process of
implementing hybrid hydrogen motorbikes in the Vietnamese Market.
SUCCESS METRICS GOALS
17. Low Annual fuel Cost Fuel will cost no more than 90 dollars USD annually
High Reliability Motorbike will only required scheduled maintenance
once every year
High Brand Recognition Capture 5% of the market for motorbikes within the
first year of operation
During the implementation stage of our product we will look to these success
metrics to ensure that we are developing a product to meet the market’s
expectations. In keeping the annual fuel cost at a low level we can build the
perception that Hydrogen based technology is better the petrol based technology. In
ensuring that there is no hesitation to adopt hydrogen as an emerging technology,
we will strive to ensure that the proposed motorbike only needs servicing once
every year. This will help boost the perception of hydrogen technology as reliable
and a good replacement for petrol based technologies. Promotion of low cost to own
and high reliability will work in tandem to accomplish our third success metric of
high brand recognition. With high brand recognition we can measure the market
acceptance of our product through acquired market share or lack thereof. If proper
marketing is employed and the proposed motorbike has high brand recognition, but
sale does not reflect those facts then we can revisit why our product is not fairing
well in the market.
9. Conclusion
As an emerging technology, hydrogen fuel cells has been in development for a number of
decades. This report works to present how hydrogen can be implemented in motorbikes
for the case of Vietnam. Through design thinking and analysis, this report have defined
hydrogen technology and developed the exact the term of reference for application
in motorbikes, how to ideally implement the proposal and what characteristics our
recommendations should include, developed an implementation plan and provided
details on how the idea can be marketed, as well as developed metrics that will
measure success during implementation.
References
Appleby, J. and Foulkes. F. Fuel Cell Handbook (Van Nostrand Reinhold: 1989)
pp.193196.
aqicn.org. 2016. Air Pollution in Vietnam: Realtime Air Quality Index Visual Map.
[online] Available at: http://aqicn.org/map/vietnam/ [Accessed 15 May 2016].
