Fuel cell vehicles, like battery electric vehicles, produce zero tailpipe emissions. Unlike BEVs, however, which must be recharged via an external power source, FCVs use an on-board fuel cell to create their own power through a chemical reaction based on hydrogen fuel. Vehicles using fuel cells as the primary source of motive power can also be hybridized with a high-voltage battery, to improve vehicle performance and better optimize the cost and robustness of the fuel cell system. We are continuing to develop and demonstrate hydrogen fuel cell technology with our Focus FCV test fleet. The Focus FCV uses our third-generation fuel cell technology, called HyWay1, and is one of the industry's first hybridized fuel cell vehicles, meaning it has a battery as well as a fuel cell. A test fleet of 30 of our FCVs is currently in operation in cities throughout North America and Europe. In 2005, we placed Focus FCVs in Orlando, Sacramento, Southeast Michigan and Vancouver. In 2006, four more FCVs were placed in Berlin and Aachen, Germany. Before being placed with commercial test fleets, these vehicles underwent an extensive and accelerated testing protocol to ensure they could last 4.5 years and 65,000 miles without incident. While on the road, the vehicles are providing important information about the performance of hydrogen FCVs in a wide range of driving and climate conditions. The total fleet has thus far accumulated more than 700,000 miles of real world, on-road operation. The knowledge gained from this fleet will feed directly into Ford's next-generation hydrogen fuel cell program.

We have also developed a Ford Explorer FCV. This full-size SUV is powered by a fuel cell system and driven by two high-power motors. Like the Focus FCV, the Explorer FCV has a hybrid system with a secondary battery to augment power from the fuel cell system.

Based on the knowledge gained from these test fleets, we are currently in the final development stages of our next generation of fuel cell technology – HyWay2/3 fuel cell technology – which will likely be implemented on demonstration vehicles near 2010. We are also in the early stage of developing HyWay4 fuel cell technology, which will likely be on demonstration vehicles by 2012 to 2013.

In addition to proving out the use of FCVs as passenger vehicles, we are testing their high-performance capabilities. In August 2007, the Ford Fusion Hydrogen 999 set a land speed record for a production-based fuel-cell-powered vehicle, racing to 207mph at the Bonneville Salt Flats in Utah.

Even with the advances we have made in hydrogen technology over the past 20 years, we still have many challenges to overcome before hydrogen-fueled vehicles can replace current vehicle technology. The high cost of FCVs is a primary obstacle. The largest fraction of the cost of a fuel cell system is the fuel cell stack, and we must find a way to reduce the cost of materials in this component. Thus, we are investigating the reduction of precious metal catalyst loading of the electrodes and the use of alternatives to replace expensive materials. Simultaneously, we are working to increase current density, in order to improve the utilization of expensive materials. By optimizing the fuel cell stack's operating conditions, we will be able to further reduce the size and complexity of the system and ultimately reduce the overall cost of the system.

The robustness of fuel cell systems under real-world usage is another key metric that must be improved. Extensive research on materials characterization and design optimization is being conducted to help achieve robustness targets. For these efforts, we are developing methods such as model-based engineering.

Another key challenge is storing hydrogen fuel in vehicles to deliver competitive range without losing an unacceptable amount of passenger and cargo space. We are using the tools of nanotechnology to address this problem. Virtually all current hydrogen-powered vehicles, including Ford's fuel cell and H2ICE vehicles, use physical hydrogen storage. That is, hydrogen is stored on the vehicles in gaseous form in pressurized tanks. On-board storage of gaseous hydrogen limits FCVs' driving range and takes up significantly more room than regular gas tanks. To address these limitations, Ford is using nanotechnology to develop solid-state, "materials-based" hydrogen storage technologies. In these systems, hydrogen is stored in a host "hydride" material through a chemical reaction and released (via the reverse reaction) by changing the pressure or temperature. Compared to pressurized tanks, the host materials have the potential to hold a greater density of hydrogen and can be "refueled" on-board the vehicle at (future) hydrogen filling stations.

We are also using nanotechnology to improve the performance of the fuel cells themselves. For example, we are using nanotechnology in the exchange membranes within fuel cells that separate protons from electrons and produce electric power. Researchers are developing strategies to design these membranes at the nanoscale, to maximize their performance while improving their durability, reliability and cost-competitiveness.

Producing and distributing hydrogen fuel is another important hurdle on the road to implementing hydrogen-powered FCVs. As there is no widespread hydrogen fueling system, new infrastructure must be designed and executed throughout the country.

Working alone, Ford will not be able to overcome all of the challenges hydrogen vehicles face. That is why Ford is collaborating with a wide range of partners on the development of hydrogen vehicles, fuels and fueling systems. These partners include:

• The Freedom CAR and Fuel Partnership, a partnership between Ford, General Motors, Chrysler, five energy providers and the U.S. Department of Energy to develop vehicles andfuels that will provide freedom from imported oil and freedom from carbon-based fuel emissions
• The Clean Energy Partnership, a consortium of 12 corporate partners and the German government that is working to demonstrate the suitability of hydrogen as a fuel for everyday use
• The Hydrogen and Fuel Cells Canada Partnership, which is working to raise awareness of the economic, environmental and social benefits of hydrogen and fuel cell technologies