Amid the vigorous expansion of battery electric vehicles (BEVs), which has intensified competitive pressures, market confidence in the hydrogen fuel cell vehicle (HFCV) sector has dwindled to nearly negligible levels.

The Oranges Capital Institute has been monitoring hydrogen fuel cell advancements for almost ten years. After two years of bearish outlooks, starting from June 2026, we have adopted a bullish perspective on the future of HFCVs. We foresee that HFCVs will commence a trajectory of large-scale development from this juncture onward.

1

China’s Hydrogen Fuel Cell Vehicles Identify Key Application Scenarios

Following years of demonstration projects, the application scenarios for China’s HFCVs have progressively narrowed and become well-defined.

While BEVs have expanded from passenger vehicles into the commercial vehicle sector, with electric heavy-duty trucks gaining scale advantages in short-haul transportation (reaching a 30.2% penetration rate for new energy heavy-duty trucks in April 2026 and achieving complete substitution in medium- and short-distance, fixed-route scenarios), electric heavy-duty trucks face inherent limitations in long-distance, high-speed scenarios exceeding 600-700 kilometers. These constraints include reduced cargo efficiency due to battery weight (with a daily mileage of approximately 300 kilometers), limited operational efficiency due to charging times, and significantly reduced range in cold weather. Although battery swapping technologies partially mitigate these issues, no effective solutions are currently available for long-distance, high-speed scenarios.

Adhering to the principle of “using electricity where suitable, hydrogen where appropriate,” scenarios that BEVs cannot effectively serve create opportunities for hydrogen energy development.

On June 12, 2026, eleven departments, including the Ministry of Transport, the National Development and Reform Commission, and the Ministry of Industry and Information Technology, jointly issued the Implementation Plan for Promoting Large-Scale Application of New Energy Heavy-Duty Trucks. The plan sets targets for 2030: a 40% penetration rate for new energy heavy-duty trucks, with a fleet exceeding 1.6 million units, accounting for approximately 20% of the market. While the policy primarily promotes electric heavy-duty trucks, it strategically mentions hydrogen-powered trucks.

The policy underscores that while the state is advancing the new energy transition for heavy-duty trucks, it remains vigilant for the maturation of hydrogen energy, particularly in long-distance, high-speed scenarios exceeding 600-700 kilometers—a key advantage area for hydrogen trucks—thus leaving strategic room for development.

2

Comprehensive Policy Support: From Raw Materials to Toll Subsidies

It is widely acknowledged that the total cost of ownership (TCO) for hydrogen-powered heavy-duty trucks encompasses vehicle purchase costs and operational expenses. While purchase costs are a one-time expenditure, operational expenses accumulate over the vehicle’s lifecycle. With purchase costs under control, fuel costs become the primary determinant of economic viability.

Raw Material Side: Clear Hydrogen Price Targets

On March 16, 2026, the Ministry of Industry and Information Technology, the Ministry of Finance, and the National Development and Reform Commission jointly issued the Notice on Conducting Pilot Programs for Comprehensive Hydrogen Energy Applications. The notice explicitly sets targets: by 2030, the average terminal hydrogen price should drop below 25 RMB/kg, with some advantageous regions aiming for approximately 15 RMB/kg—compared to the current domestic average of around 35 RMB/kg.

Based on field operation data from hydrogen-powered heavy-duty trucks, when hydrogen prices fall below 25 RMB/kg, the TCO of a 49-ton hydrogen truck approaches that of diesel trucks.

Zhao Feng, Director of the Energy Power Division at Dongfeng Commercial Vehicle’s Product Center, stated to the media: “Currently, the operational cost per kilometer for fuel-powered heavy-duty trucks is about 2.5 RMB, while for electric trucks it is approximately 1.5 RMB. Dongfeng aims to reduce the operational cost per kilometer for hydrogen trucks to below 1.5 RMB.”

Highway Toll Exemptions: Policies Covering 11 Provinces

Highway tolls account for 20%-30% of mainline logistics costs. As of May 2026, 11 provinces and regions, including Hubei, Henan, and Sichuan, have introduced policies offering toll exemptions or subsidies for hydrogen-powered trucks.

Zhang Guoqiang, Chairman of SinoHytec, revealed through the media that toll exemptions can reduce unit transportation costs by about 20%, saving approximately 200,000 RMB annually per vehicle.

Subsidy Side: 352,000 RMB Subsidy for 280kW Systems

To enable hydrogen trucks for highway operations, fuel cell systems generally require power ratings above 280kW.

To encourage the market to develop high-power, long-range products for highway mainlines, the three ministries raised the maximum subsidy power cap for fuel cell systems from 110kW to 280kW in the Notice on Conducting Pilot Programs for Comprehensive Hydrogen Energy Applications.

A hydrogen fuel cell heavy-duty truck equipped with a 280kW system can receive a maximum first-year subsidy of 352,000 RMB (with gradual reductions, still eligible for 211,200 RMB in the fourth demonstration year).

3

Hydrogen Fuel Cell Vehicles Approaching Commercial Viability

With well-defined application scenarios, comprehensive policy support, and industry efforts, China’s HFCVs have achieved economic viability, with a commercial closed loop gradually taking shape.

Currently, a 49-ton diesel heavy-duty truck costs approximately 450,000 RMB, while a 49-ton hydrogen truck equipped with a 150-200kW system costs around 1 million RMB (with pricing variations based on market strategies). If equipped with a 280kW system, prices increase by 10-20%.

With four more years of national subsidies, the cost of high-power fuel cell systems is expected to decline from the current 2,000 RMB/kW, approaching BEV purchase costs by around 2030.

However, the core decision-making metric for commercial vehicle users is TCO. The reduction in hydrogen costs, combined with toll exemption policies for hydrogen trucks, enables operational cost savings that offset the initial vehicle purchase premium.

The industry is expected to transition from policy-driven subsidies to market-driven self-sufficiency, with a clear path toward large-scale development.