Despite slower-than-expected progress in fuel cell vehicle promotion during the "14th Five-Year Plan" period and a remaining gap from targets, China's hydrogen energy strategy remains clear. The fuel cell industry currently faces challenges such as weak growth, poor profitability, and accumulating receivables. Although short-term pressures persist, anticipation for new supportive policies and the continuous expansion of application scenarios may help the sector gradually overcome current difficulties, with significant long-term growth potential. The medium-to-long-term outlook for the fuel cell industry is positive, with recommendations to focus on leading fuel cell system manufacturers such as SINOHYTEC (02402) and REFIRE (02570).
Key observations include a year-end rush for fuel cell vehicles in the fourth quarter of 2025, though sales still fall short of the 2025 target. Since 2024, sales growth momentum has weakened, influenced by policy window periods. On the pricing front, the average price of fuel cell systems has dropped nearly 90% since 2018, posing substantial profitability challenges for manufacturers, with the industry still in a bottoming phase.
Three major bottlenecks continue to hinder the adoption of fuel cell vehicles: cost disadvantages amid subsidy reductions and intensified competition from electric vehicles; slower-than-expected construction of hydrogen refueling stations, leading to accessibility issues and insufficient investment incentives due to high costs; and extended subsidy disbursement cycles, which increase receivables pressure and may constrain manufacturers' R&D and expansion capabilities.
Despite near-term headwinds, China positions hydrogen as a key component of its future energy system and a crucial pathway to decarbonize non-electric sectors. Policy support continues with regional hydrogen industry plans, toll exemptions, and the development of "hydrogen corridors." Application scenarios are expanding beyond transportation into power generation, energy storage, and rail transit, promising a second growth curve and supporting the industry's medium-to-long-term development.
Key risks include potential delays in policy implementation, slower-than-expected cost reductions for fuel cells and hydrogen, and intensifying industry competition.