China has been a leader in battery electric vehicles ( BEVs ), leveraging a complete value chain and lower manufacturing costs to drive their widespread deployment.

However, as the demand for clean transport continues to grow, hydrogen fuel cell electric vehicles ( FCEVs ) are fast gaining prominence, especially in sectors requiring long-range travel, fast refuelling, and high energy efficiency, such as heavy-duty transport. China, in partnership with Korean and Japanese automakers, is developing FCEVs for public transport and industrial use.

To promote the use of FCEVs, China’s Ministry of Finance on April 21 announced the allocation of 2.34 billion yuan ( US$321.5 million ) to 28 districts across 10 provinces. The funding marked the third year of the country’s national FCEV demonstration initiative and reflected a 44.2% increase over the previous year’s budget.

Leading recipients included Tangshan, Beijing, Shanghai, Zhengzhou, and Tianjin, which have collectively become central hubs in the nation’s hydrogen rollout. Over the past three years, total investment in the programme has surpassed 5.11 billion yuan, or over US$700 million, according to the finance ministry, highlighting China’s accelerating push to lead in hydrogen vehicle adoption globally.

The development of FCEVs goes through three stages, with the scale of application gradually expanding. According to the National Development and Reform Commission, China had achieved the initial commercialization of FCEVs in 2020, with the scale reaching 10,000 vehicles. The number of FCEVs is expected to reach 50,000 units this year, right on track to reach full commercialization by 2035.

Japan and Korea partnerships

Japan has been a global leader in hydrogen mobility, with a strong focus on passenger cars and buses. Toyota’s Mirai stands out as one of the first mass-produced hydrogen-powered vehicles. The Japanese government, in close coordination with industry, has implemented an ambitious hydrogen strategy, targeting 800,000 FCEV sales and 1,000 refuelling stations cumulatively by 2030.

South Korea has also made significant progress in hydrogen vehicle development. Hyundai, a key player in the sector, produces hydrogen-powered SUVs, trucks, and buses. The country continues to expand its hydrogen refuelling infrastructure.

China, despite having a dominant BEV market, has identified fuel cell technology as a strategic focus, particularly for commercial and industrial vehicles. Due to their unique capabilities, FCEVs are especially well-suited for buses, trucks, and other heavy-duty applications.

The Chinese government has actively promoted the development of this sector and has partnered with Japanese and Korean automakers to co-develop FCEV technologies domestically.

In 2023, Hyundai launched HTWO Guangzhou, its first overseas hydrogen fuel cell system production base, in the Huangpu District of Guangzhou. The facility has already deployed nearly 500 fuel cell systems in vehicles such as 4.5-tonne logistics trucks and sanitation vehicles, with plans to supply more than 1,000 units by 2025.

In November 2024, Hyundai, along with the local governments of Guangzhou and South Korea’s Ulsan city, signed a memorandum of understanding to promote cross-border cooperation in the hydrogen industry. This agreement includes a demonstration project for hydrogen-powered tractor-trailers, scheduled for launch in 2025, along with plans to expand hydrogen applications to ships, trams, forklifts, and power generation systems.

In October 2024, Japan’s Nissan and Dongfeng, its Chinese partner, launched a fleet of hydrogen-powered Venucia models for a 36-month trial in Guangzhou. These vehicles offer a driving range of 500 kilometres and fast refuelling – clear advantages over battery-powered counterparts for certain use cases.

Despite their potential, FCEVs face several significant drawbacks that hinder widespread adoption. One of the main challenges is the lack of refuelling infrastructure, as hydrogen stations are expensive to build and remain scarce compared to electric charging points for battery electric vehicles. In addition, producing, storing, and transporting hydrogen is energy-intensive and costly, particularly when sourced from non-renewable methods, which can offset the environmental benefits. The high cost of fuel cell systems and limited model availability also contribute to their relatively low market penetration.