As the government sharply cut the budget for supplying hydrogen fuel cell electric vehicles (hydrogen cars), automakers seeking to expand the market are facing deeper concerns. Hyundai Motor has continued investing in hydrogen cars, launching the new The All New Nexo this year for the first time in seven years since 2018, but growth is expected to be limited without government support.
According to the industry on the 26th, Hyundai Motor and other hydrogen car-related companies have recently conveyed concerns to the National Assembly over the government's cuts to next year's hydrogen car budget. The Ministry of Environment finalized a budget plan to reduce the number of recipients of hydrogen car purchase subsidies from 11,000 to 6,000 per year, deciding to cut about 145 billion won. With next year's hydrogen passenger car supply reduced by 112.5 billion won and hydrogen bus support down by 32.5 billion won, companies' plans to expand new car sales and infrastructure inevitably hit a snag.
Hyundai Motor pushed to expand hydrogen car sales by rolling out a new Nexo with improved design and performance in Jun., but if subsidies are reduced, consumer price burdens will grow and dampen demand. The new Nexo starts at 76.44 million won, and with government and local government subsidies, it can be purchased in the high-30 million won range.
Hydrogen cars account for a mere 0.1% of all completed cars in Korea, but the number in operation has steadily increased over the past five years. The number of registered hydrogen cars, which surpassed 10,000 for the first time in 2020 with 10,906, rose to 19,404 in 2021, 29,623 in 2022, 34,258 in 2023, and 37,557 in 2024, and reached 39,140 in the first half of this year. With the launch of the new Nexo, the total is expected to surpass 50,000 by year-end.
The reduction in government support has also heightened uncertainty for investments by corporations involved in hydrogen car core parts and materials, hydrogen fuel cells, and charging stations. ILJIN Hysolus produces hydrogen tanks and modules, key components for hydrogen cars, and Kolon ENP develops composite materials for hydrogen vehicles. In the fuel cell field, Doosan Fuel Cell has drawn attention, while in the liquefied hydrogen production, storage, and charging station construction segments, Hyosung Heavy Industries and Hanwha Impact have been in the spotlight.
Japan, Korea's biggest rival in the global hydrogen car market, is increasing government-led investment in the hydrogen industry. Japan plans to inject 3 trillion yen (about 2.83 trillion won) in subsidies into the hydrogen industry—covering transport, storage, and power generation—over the next 15 years.
China, which lagged Korea and Japan in hydrogen car development, is also seen as ramping up government support in earnest. China is expanding its influence in the global hydrogen car market by leading with commercial vehicles. Last year, Korea's share of the global hydrogen car market was 28.7%, similar to 2023 (28.2%), while China widened its lead from 46.1% to 55.3%. Having overtaken Korea in 2023, China claimed more than half the market share in just one year.