Energy Hot Take | Guangdong’s hydrogen energy industry can’t hold on any longer!

The stall of hydrogen‑powered vehicles in Foshan, Guangdong, has sounded an alarm for the hydrogen energy sector: without a viable commercial loop, “green” initiatives will ultimately remain nothing more than an expensive experiment.

Recently, a photo showing “dozens of hydrogen‑powered buses abandoned on a grassy field” has gone viral on social media—its location is Foshan, Guangdong, once hailed as China’s “Hydrogen Energy Capital.” These vehicles, clad in sky‑blue exteriors and each costing several million yuan, have been collectively scrapped or taken out of service after exhausting their subsidy‑eligible mileage, owing to “exorbitant hydrogen‑refueling costs” and the phasing out of subsidies.

It’s not just Guangdong. From Germany’s closure of numerous hydrogen refueling stations, to tepid sales of Toyota’s Mirai in Japan, and to several domestic hydrogen‑energy startups mired in losses, the once-booming hydrogen industry is now facing an unprecedented downturn.

Nanhai District in Foshan, Guangdong, was once one of the most aggressive regions in China when it came to hydrogen‑energy policies, offering subsidies as high as 20 yuan per kilogram for hydrogen at refueling stations and even more generous purchase incentives—up to 800,000 yuan per fuel‑cell bus. However, according to an on‑the‑ground investigation by Caixin, the primary reason these vehicles have been abandoned is their extremely high operating costs. As the number of hydrogen‑powered vehicles has grown, even a financially robust city like Foshan—whose GDP exceeded 1.4 trillion yuan in 2025—has found itself unable to sustain such massive subsidy programs.

The operational viability of hydrogen‑fuel‑cell buses is heavily reliant on government subsidies. As both national and local subsidies gradually phase out, and with the retail price of hydrogen—around 40 to 60 yuan per kilogram—remaining far higher than the cost of electricity for equivalent mileage, local governments and operating companies have found that the economics simply don’t add up. “Losing money on every kilometer driven” has become a stark reality for many hydrogen‑powered bus fleets.

The biggest challenge facing the hydrogen energy industry today is cost, particularly for “green hydrogen,” which has been widely hailed as a promising solution.

Industry analysts once predicted that 2025 would mark the “death cross” of gray and green hydrogen costs—when green hydrogen achieves cost parity. However, in reality, despite sharp declines in the costs of solar and wind power, bottlenecks in electrolyzer efficiency and transportation infrastructure keep end‑use hydrogen prices stubbornly high at around RMB 48.6 per kilogram, with intermediate transport and refueling costs accounting for nearly 40% of the total.

Hydrogen is highly prone to leakage and has a low density in the gaseous state, limiting the transport radius of tube‑trailers to just 200 kilometers. Until a large-scale “West-to-East Hydrogen Pipeline” is completed, hydrogen‑demand centers such as Guangdong must rely on expensive industrial by‑product hydrogen or locally produced hydrogen at high cost.

A recent article in the internationally renowned journal Nature conducted an in-depth review of nearly 2,000 hydrogen-energy projects worldwide and reached a highly compelling conclusion: wherever electricity is available, hydrogen should absolutely be avoided.

In the transportation sector, pure electric vehicles (EVs) boast a significantly higher energy utilization efficiency than hydrogen fuel cell vehicles (FCEVs). From power generation to the drive wheels, the overall efficiency of an electric system stands at roughly 70%–80%, whereas the total efficiency of a hydrogen‑based system—encompassing electricity–hydrogen–storage–transport–electricity—is less than 30%. This article underscores that hydrogen’s true potential lies not in passenger cars or short‑haul buses, but in hard‑to‑decarbonize heavy industries such as steelmaking, chemical production, and long‑distance shipping.

Currently, global annual hydrogen consumption has exceeded 90 million tons, yet the vast majority is “black hydrogen” or “gray hydrogen.” According to an article in Nature, replacing all existing industrial hydrogen use with green hydrogen would already constitute a monumental contribution to humanity. Forcibly promoting hydrogen in the passenger‑car sector, by contrast, would be like climbing a tree to catch fish.

The stall of hydrogen‑powered vehicles in Foshan does not signal the end of hydrogen energy; rather, it marks the industry’s return to rationality after a period of overheated hype.

This case demonstrates that the approach of forcefully promoting public‑transport and logistics vehicles through subsidies is becoming increasingly unsustainable. Going forward, the next major breakthroughs will likely emerge in steel decarbonization, green ammonia production, and large‑scale, cross‑seasonal energy storage.

The hydrogen energy sector is undergoing a brutal phase of technological‑route淘汰. In 2024, domestic sales of fuel‑cell vehicles fell short of 10,000 units; even with a modest rebound in 2025, it is clear that capital is becoming extremely cautious. For companies, at this juncture of conflicting dynamics, the top priority is to define clear boundaries and safeguard cash flow.

The suspension of hydrogen‑powered vehicle operations in Foshan, Guangdong, is an inevitable growing pain in the industry’s exploratory phase. It serves as a wake-up call: without a viable commercial closed loop, “green” initiatives will ultimately remain nothing more than an expensive experiment.