Why are fuel cells usually more efficient than internal-combustion engines?

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Fuel cells are generally more efficient than internal-combustion engines because of their fundamental method of energy conversion. While internal-combustion engines rely on burning fuel to create expanding gases that perform mechanical work, fuel cells convert chemical energy directly into electrical energy.1

This direct conversion allows fuel cells to achieve efficiencies as high as 60 percent, whereas internal-combustion engines are typically limited to efficiencies of 40 percent or less. Because internal-combustion engines function as heat engines, they are subject to the second law of thermodynamics, which dictates that a portion of the energy must be exhausted as waste heat to the environment. By bypassing the combustion process, fuel cells avoid the inherent thermodynamic limitations that constrain the efficiency of heat-based engines.123