Shell Exits California’s Hydrogen Fuel Market: Closes 7 Stations and Axes Expansion Plans

Shell has announced the closure of seven hydrogen refueling stations in California, sending shockwaves through the hydrogen fuel cell electric vehicle (FCEV) market, and highlighting significant challenges in the sector.

In an email announcing the closure sent to customers last week, which you can read in full at the bottom of this article, Shell Hydrogen Vice President Andrew Beard said the company will no longer be operating “hydrogen light duty passenger fueling stations” in California, citing “supply complications and other external market factors” as the reason leading to the decision.

That decision is the latest blow to California’s hydrogen market, after Shell previously announced the cancellation of plans to build an additional 48 stations, despite previously securing $40.6 million in government grants for the initiative.

Shell’s exit from the California hydrogen refueling scene is emblematic of the broader struggles facing the hydrogen-powered car market. In California, a state with over 14 million automobile registrations, and the largest market for electric vehicles (EVs) in the US by a wide margin, the market for FCEVs remains minuscule in comparison. This disparity is further exacerbated by the high cost of hydrogen fuel, which has seen significant price increases, making FCEVs less economically viable compared to their BEV counterparts.

The challenges are not limited to Shell or California. Canada has just six hydrogen refueling stations across the entire country, with five of them in British Columbia, and another in Quebec. We has also previously reported that Hyundai has only been able to lease 29 hydrogen fuel cell electric vehicles (FCEV) between 2015 and 2021.

All of these developments cast a shadow over the future of hydrogen as a fuel for light-duty vehicles. However, despite these setbacks, the automotive industry appears committed to hydrogen. Automakers and energy companies continue to invest in hydrogen technology for heavy-duty transport and industrial applications, where hydrogen’s energy density and rapid refueling capabilities does offer advantages.

However, the closure of Shell’s stations and the scaling back of hydrogen infrastructure development for passenger vehicles suggest a recalibration of expectations for hydrogen’s role in the light-duty automotive sector.

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