Toyota warns hydrogen car future threatened by China’s dominance

Toyota’s hydrogen chief urges global investment as China surges ahead in hydrogen truck infrastructure and exports.

A Toyota Hilux hydrogen fuel cell prototype is displayed at the IAA Transportation fair in Hannover, Germany, on September 16, 2024. Photo by Krisztian Bocsi/Bloomberg

By Anna Fadiah and Hayu Andini

Toyota’s top hydrogen executive has warned that the Toyota hydrogen car future could be jeopardized unless countries outside China dramatically increase their investment in hydrogen technology. Mitsumasa Yamagata, president of Toyota’s hydrogen division, cautioned that the green fuel’s future might mirror the trajectory of battery-electric vehicles, where Chinese companies have rapidly built dominance through control of supply chains and aggressive infrastructure expansion.

Yamagata highlighted how China’s coordinated national strategy — including converting key logistics corridors into hydrogen truck routes — is helping it significantly lower hydrogen fuel costs and expand vehicle deployments. “China is the most advanced in the world for hydrogen trucks,” he said. “Their government mandated the creation of hydrogen highways across major logistics routes.”

In 2024, China’s sales of hydrogen-powered buses and trucks reached 7,069 units, exceeding the combined total of all other regions. This surge aligns with broader zero-emission goals, including a record 230,000 commercial vehicles sold globally in the same year, according to the International Council on Clean Transportation.

Infrastructure and costs key to hydrogen’s viability

Hydrogen fuel cells — which generate electricity via a chemical reaction between hydrogen and oxygen, emitting only water vapor — are seen as a promising alternative for long-haul transport. Compared to battery-powered vehicles, hydrogen systems offer faster refueling times and longer ranges, particularly for heavy-duty trucks.

Asian automakers, including Toyota and Hyundai, have long positioned hydrogen as a central component of future mobility. However, real-world deployment has lagged. A trifecta of challenges — high hydrogen production costs, limited refueling infrastructure, and expensive vehicles — continues to restrict market expansion.

In Japan, hydrogen fuel costs hover around ¥2,000 ($13.50) per kilogram, while in China, the price ranges from ¥500 to ¥1,000 ($3.50 to $7), largely due to the byproduct production of hydrogen in the steel industry. This disparity is widening China’s lead and placing added pressure on nations with less developed hydrogen strategies.

Yamagata stressed the importance of coordinated investment, noting, “All stakeholders moving at once is the most important thing for bringing the cost of hydrogen down.”

Global hydrogen strategies face setbacks

While Toyota pushes forward, other global initiatives face headwinds. In the United States, funding for hydrogen-related projects is under review, with potential cuts under President Donald Trump’s administration. In Europe, the ambitious goal to produce and import 10 million tonnes of renewable hydrogen by 2030 has been labeled “unrealistic” by auditors due to logistical and budgetary concerns.

Japan’s national plan — which includes building its own network of hydrogen highways and offering subsidies for hydrogen imports — has progressed slowly. Delays and bureaucratic red tape have undercut momentum, especially compared to the rapid pace of development seen in China.

Even within China, hydrogen’s long-term role in commercial transportation isn’t guaranteed. Battery-electric buses and trucks are gaining traction due to falling battery prices and growing support for EV charging networks. Still, the current balance of power clearly favors China in the hydrogen race.

Toyota pivots strategy toward commercial vehicles

Toyota, the world’s largest carmaker by sales, has been a pioneering force in hydrogen vehicle development, having sold 28,000 units of its Mirai fuel-cell car since 2014. However, with consumer adoption lagging behind expectations, the company is now doubling down on hydrogen-powered commercial vehicles.

Earlier this year, Toyota revealed its third-generation hydrogen fuel-cell system, which matches the longevity of diesel engines and can be integrated into heavy-duty vehicles as a single, cost-efficient unit. The aim is to lower the total cost of ownership and make hydrogen trucks and buses more competitive against battery-electric and diesel options.

“We don’t have much time left — it’s important to accelerate quickly,” said Yamagata, stressing that Toyota’s strategy now centers on truck and bus markets rather than passenger vehicles alone.

China as a proving ground for global expansion

To refine its hydrogen technology, Toyota has turned to the world’s most competitive market. In 2023, it opened a joint-venture factory in Beijing with SinoHytec, capable of producing up to 10,000 fuel-cell systems annually. The company views this venture as a crucial step in enhancing its engineering and manufacturing capabilities.

Yamagata described the Chinese market as a “dojo,” or training ground, for Toyota’s fuel-cell ambitions. “By refining our products in China’s tough market environment, we will release competitive products in Japan, Europe and the US afterwards,” he said.

Toyota’s battle to secure its hydrogen car future will not be easy, especially as global competition heats up. BMW, Honda, and Hyundai are all investing in hydrogen technologies, and Chinese companies are increasingly targeting exports of fuel-cell trucks and buses to international markets.

A race against time for global players

While the Toyota hydrogen car future faces significant obstacles, industry observers note that China’s lead is not yet insurmountable. But time is of the essence. A failure by other major economies to step up their investments could leave them permanently reliant on Chinese hydrogen technology and infrastructure.

For now, Toyota’s faith in hydrogen remains unshaken. The company believes its decades-long investment in fuel-cell research — much like its bet on hybrid vehicles with the Prius — will eventually deliver returns, especially as decarbonization pressures intensify in global transport sectors.

“Hydrogen is not a silver bullet,” said Yamagata, “but it’s a necessary piece of the puzzle. For trucking, for logistics, for commercial fleets — hydrogen is where the battle will be decided.”

As governments weigh the costs of supporting hydrogen infrastructure against the rapid rise of electric vehicles, Toyota’s push could prove pivotal. The next few years will determine whether hydrogen can live up to its promise — and who will lead the charge.