Energy Blog: Hydrogen’s Uncertain Future in California’s Clean Energy Transition

By Sean Miki

Program Manager, Energy Policy and Technology

Hydrogen technology has the potential to play an important role in meeting California’s clean energy and transportation goals, but recent data shows that the state’s hydrogen light-duty vehicle market has struggled to grow.

Earlier this year, the California Energy Commission announced that California had reached a milestone of 2.5 million cumulative new zero-emission vehicle sales in 2025. The news came amidst a nationwide drop in EV sales in the fourth quarter following the ending of federal tax credits for ZEVs in September 2025. California saw 79,066 EVs sold in Q4 2025, down from 124,755 sold in the previous quarter. This represented an in-state EV market share of new car sales of 18.9% in Q4, down from 25.1% in Q3.

Source: California Energy Commission

While the news indicates continued ZEV interest among car buyers, digging deeper into the data reveals a technology struggling to capture mass adoption. Hydrogen fuel cell vehicles have significantly lagged behind battery electric and plug-in hybrid electric vehicle sales with only 14,128 FCEVs registered in California according to the latest evaluation report from CEC and the California Air Resources Board.

One of the biggest challenges is the lack of infrastructure. There are currently about 50 hydrogen fueling stations across California, far short of the state goal of having 200 stations by 2025. The state’s annual report notes slow project timelines and developers facing difficulty in securing financing leading to further delays. Among the limited stations, FCEV drivers deal with an unreliable fueling network due to hydrogen supply disruptions or equipment issues (As of March 23, 2025, roughly 60% of the hydrogen fuel stations in California are out of service).

In recent years, hydrogen prices at the pump have skyrocketed, often making the cost-per-mile significantly higher than both electricity and gasoline. The 2025 Annual Assessment of the Hydrogen Refueling Network in California found the average cost of retail hydrogen to be $36 per kilogram, equivalent to about $14.40 per gallon of gasoline. The report attributes the sharp rise in costs to inflation and lower value of Low Carbon Fuel Standard credits.

Source: California Energy Commission

Taken together, the future of hydrogen fuel cell passenger vehicles looks murky and is at risk of becoming a technological niche in a state where battery electric vehicles are rapidly dominating the zero-emission transition. However, this does not signal the end of hydrogen’s role in decarbonization as it continues to show promise in certain use cases such as heavy-duty transportation, port operations, and industrial sector applications.

NEDO has been supporting a demonstration project at the Ports of Los Angeles and Long Beach, which utilizes hydrogen to power port container handling equipment and drayage trucks. The project highlights areas where regardless of how the FCEV market evolves, hydrogen can support California’s carbon‑neutrality goals and that the technology will remain critical for segments where electrification is more challenging.