Milestone spurs calls to fix subsidy rollout and speed up hydrogen charging network
The domestic cumulative sales of Hyundai Motor(005380)‘s hydrogen fuel cell vehicle (FCEV; hydrogen electric vehicle) have surpassed 50,000 units, according to estimates. It has been 13 years since the launch of the world’s first mass-produced hydrogen electric vehicle, the Tucson ix FCEV, and about eight years since the launch of the NEXO, a hydrogen electric vehicle dedicated model, in 2018.
A hydrogen electric vehicle is a car that uses electric energy derived from hydrogen as its power source. Like a battery electric vehicle (BEV), it is driven by an electric motor and emits only pure water instead of exhaust gas. However, unlike a BEV that uses stored energy, the onboard fuel cell generates energy through an electrochemical reaction between oxygen and hydrogen, so hydrogen fuel must be supplied.
As of the 26th, according to the finished car industry, Hyundai Motor sold a total of 50,262 hydrogen electric vehicles in Korea through last month. Hyundai Motor sells the NEXO, a hydrogen electric sport utility vehicle (SUV); the Xcient, a large hydrogen electric truck; the Elec City, a hydrogen electric bus; and the Universe, a large hydrogen electric bus.
Hyundai Motor views hydrogen as a sustainable and stable energy source and has continued related technology development since 1998. Starting with the establishment of a Hydrogen Fuel Cell development organization, it succeeded in localizing the fuel cell system in 2005, and in 2020 it began mass production of a large hydrogen electric truck for the first time in the world.
Based on these achievements, Hyundai Motor has expanded the supply of hydrogen electric vehicles. In 2019, in line with the government’s eco-friendly conversion policy for municipal buses, the commercial segment grew significantly, reaching a cumulative 10,000 units sold in 2020, 20,000 in 2022, and 30,000 in 2023. It also gained an edge in the global market, accounting for about 70% of global hydrogen electric vehicle sales in the first half of this year.
This expansion in vehicle adoption is also leading to growth in the materials, parts, and equipment industries and job creation. About 20,000 parts are used in a hydrogen electric vehicle. Because it has more parts than a battery-centric BEV, internal combustion engine parts corporations can apply their accumulated precision machining, assembly, and materials technologies to the hydrogen vehicle supply chain.
The domestic sourcing rate of core parts for the NEXO is over 90%, and it has a stable supply chain with more than 60 partner companies. According to the Korea Hydrogen Association, as of 2024, about 37,000 people are employed in Korea’s hydrogen businesses, and there are about 3,000 related corporations.
Industry analysts say that to further invigorate this hydrogen electric vehicle market, it is necessary to improve the efficiency of executing support budgets, which play an important role in vehicle distribution, and to expand charging infrastructure, a key precondition for the user environment.
Hydrogen electric vehicle subsidies consist of central government funds and local government funds, and if local funds are insufficient, vehicle distribution is delayed. Of the 6,000 units of central funds allocated for hydrogen electric passenger cars this year, the number matched with local funds as of the end of last month was 5,093 units (84.9%), and for hydrogen electric commercial vehicles it was 1,270 out of 1,800 units (70.6%).
With local funds lacking, central funds are left unused, and when the central fund execution rate falls, it leads to budget cuts the following year, reducing distribution capacity. In fact, in the 2027 draft budget, hydrogen electric vehicle subsidies were cut by 23%, from 576.2 billion won to 445.7 billion won, citing poor execution rates and other reasons.
For charging infrastructure, the government aimed to expand to 310 stations nationwide by 2022, but due to difficulties in securing sites and challenges in ensuring business viability, only about 250 stations have been installed to date.
An industry official said, “Selling 50,000 hydrogen electric vehicles in Korea is the result of combining industry innovation with government policy to grow the hydrogen ecosystem,” adding, “To carry this momentum into the next phase of market takeoff, not only passenger cars but also commercial vehicles and the charging network must develop in balanced three-part harmony.”
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