All roads lead to Suzhou

With its many canals criss-crossing the city, Suzhou is also known as the Venice of the East. While what was once the most important trading center for Europeans is now a tourist attraction, the modern industrial metropolis in eastern China is pulsating with life. Situated in one of the world’s most attractive economic regions a mere 100 kilometers to the west of Shanghai, the city is a major hub. These unique infrastructural conditions have led more than 2,000 companies from all over the world to make the move to Suzhou New District, with EKPO Fuel Cell Technologies GmbH (EKPO) doing likewise in 2022. Establishing the subsidiary EKPO China at its Suzhou site is the key step toward cultivating the Asian fuel cell market.

Asia – a growth market
The reasons for such an expansion are obvious, as Asia’s hydrogen industry is growing ever faster. The development of infrastructure for producing, storing, transporting, and using hydrogen is being followed by the creation of regional and international business ecosystems. In this context, the Asian market is of global significance. Nowhere in the world is demand for energy more buoyant, and nowhere are currently larger volumes of fossil fuels being consumed at the moment than in the far east.

Building a hydrogen-based economy is of strategic importance to China for decarbonization. As an industrial center, China has immense energy needs. At the same time, urban regions are severely affected by environmental pollution. Therefore, the country wants its CO₂ emissions to have peaked by the end of the decade and is aiming to achieve climate neutrality by 2060. China is the leading region in Asia in the field of fuel cell technology. Driven by climate, energy, and industry policy targets, hydrogen and fuel cell applications are being developed and promoted in the country as key technologies of the future. One particular area of focus is the mobility sector, where fuel cell vehicles, just like battery-electric vehicles, are classed as new-energy vehicles (NEVs) and given equivalent support. To this end, the government has launched an extensive support program in which the value chain for fuel cell vehicles has an important role to play. Besides China, highly promising growth markets can also be found in Japan, South Korea, and India, where more and more state-backed hydrogen and fuel cell schemes are launched that are making a major contribution to supplying green energy.

The growth prospects open to EKPO with its cutting-edge technology present a attractive opportunity that the company intends to seize in order to become a key player in China’s fuel cell industry. EKPO is a joint venture between two established international automotive suppliers, ElringKlinger and Plastic Omnium. It has operated in China ever since it was formed in 2021 and is able to draw on the existing infrastructure of its two parent companies in doing so. Investing in the Suzhou site and establishing EKPO’s Chinese subsidiary are the first two building blocks in a long-term strategy.

Local expertise
The first step toward expansion in Suzhou came at the start of 2022 and involved investing CNY 15 million (around EUR 2 million ) in a 1,000-square-meter testing facility and a hydrogen station. This fuel cell test bench can handle stacks up to 150 kW and will be upgraded to handle 250 kW by the midpoint of the year. The test lab for fuel cells meets the same quality standards as EKPO’s test benches at the company headquarters in Dettingen/Erms, Germany to offer the highest quality of series-ready fuel cell solutions worldwide.

The second step was the official incorporation of the Chinese subsidiary, the formal legal process for which was completed in June. This will initially see the company invest several million euros in its Suzhou site, a logical move in order to ensure value creation at local level for fuel cell technology in China. The next milestone was met at the end of 2022, with the first fuel cell stacks made locally in Suzhou rolling off the production lines.

EKPO China has full responsibility for the entire value chain, from product development, prototyping, and prototype testing through to manufacturing and supply chain management. As EKPO’s second global site, Suzhou is key to the company’s strategy for taking on the competition, as EKPO China General Manager Humphrey Chen explains: “The Asian and, in particular, Chinese market is well known for their fierce competition. It’s vital to win over potential customers at a local level with your technology, expertise, and production capacity. Thanks to its Suzhou site, these are precisely the qualities that EKPO can offer to the Asian fuel cell market.”

Making a key contribution to sustainable mobility
China is currently the world’s fastest-growing market for fuel cell applications. As early as 2025, four times as many cars and commercial vehicles are set to be manufactured with a fuel cell drive than in 2020, and many automotive manufacturers have spent years gearing up for this. Even as soon as 2030, more than one million new vehicles with fuel cell drives could be registered in China according to a forecast by the China Society of Automotive Engineers. Thanks to its market-leading stack technology, the company has some powerful products for this sales region in its armory that will allow it to make a decisive contribution to sustainable mobility in the world’s biggest automotive market. Being able to participate in the growth of the fuel cell segment hinges on offering Chinese customers solutions that are also produced in China.

EKPO’s environmentally friendly drive solution has met with great interest. Back in 2022, the NM5-EVO fuel cell stack powered the shuttles used at the Beijing Winter Olympics, where they demonstrated good cold-start properties even at very low temperatures. The company is currently still in the commercialization phase. The first customer projects set to enter series production in the near future. EKPO’s stacks are primarily in demand for passenger cars, vans and transporters, buses, and trucks.

Looking ahead with confidence
EKPO will gradually expand its business activities in China, which it sees as one market with great potential for the future. The next stages of expansion will see the vertical integration of fuel cell production in Suzhou gradually increased in order to manufacture components as well as stacks. Local production will also be ramped up step by step, and a local service organization will be created so as to guarantee fast response times and customizations at the highest possible technical level. Last but not least, local supply chain management will remain a priority at all times as a way of optimizing the costs of the product portfolio over the long term.

Humphrey Chen is confident about the company’s medium-term future: “From its base in Suzhou, EKPO China will bring its market-leading fuel cell technology to the Asian market so that it can actively drive forward the decarbonization of the mobility sector. We firmly believe that, if we at EKPO keep on working hard and put our innovative strength to good use, we’ll see our strategic plans through successfully and play a key role in China’s fuel cell industry.”