The German government, together with the Bavaria, is investing approximately €273 million to support BMW’s development of hydrogen fuel cell technology for passenger cars. This substantial funding is intended to foster “technology openness” and strengthen the competitiveness of Germany’s automotive industry. The centerpiece of this initiative is BMW’s upcoming hydrogen-powered X5 model, planned to debut in series production by 2028 as part of the HyPowerDrive project.
Despite official enthusiasm, industry experts express significant skepticism about the future of hydrogen vehicles in the passenger car market. Ferdinand Dudenhöffer, an automotive expert and founder of the CAR Institute, argues that hydrogen-powered cars will remain a niche product. He points to Toyota’s experience as a cautionary tale: since launching the first Mirai in 2014, global sales have remained under 20,000 units out of a global fleet exceeding 800 million cars – a minuscule fraction. Dudenhöffer believes this market dynamic underscores the limited potential of hydrogen cars in everyday passenger transport.
Dudenhöffer acknowledges that hydrogen and fuel cells could find lasting viability in commercial vehicle segments, particularly for trucks. For passenger cars, however, he considers the government’s current funding strategy misdirected. Instead, he suggests research programs should incorporate truck manufacturers, reflecting the segments where hydrogen’s advantages may materialize. He also notes BMW itself concentrates heavily on battery electric vehicles (BEVs), which he describes as the “golden path” for future automotive propulsion.
Not all experts share this doubt. Beatrix Keim, director of the Center for Automotive Research in Duisburg, highlights BMW’s two decades of practical work with hydrogen technology, including small series of roadworthy models. She stresses that the effort is not about early-stage theory but about keeping alternative drive technologies operational and ready. Keim argues that even if hydrogen remains a niche, it is an available and valuable technology.
Keim also warns against ceding ground to foreign rivals – particularly China – in hydrogen development. According to her, China’s New Energy Vehicle policy maintains strong support for hydrogen technologies and plans substantial investments in renewable energy infrastructure, including large hydropower projects. Keim urges the German automotive industry not to let China dominate this emerging field.
However, legal and infrastructural challenges persist. The number of hydrogen refueling stations in Germany has recently declined, contradicting the heavy government spending on hydrogen projects. For everyday use, a much broader fueling infrastructure would be required, representing a significant barrier to widespread hydrogen car adoption.
Within the automotive sector, hydrogen remains a marginal focus. BMW stands out as the only major German automaker committed to hydrogen propulsion, while most competitors have shifted toward electric vehicles powered by batteries. Global automakers like Toyota and Hyundai continue modest hydrogen vehicle production, but their sales volumes remain very limited. Unlike the rapidly expanding lineup of electric cars, hydrogen models lack variety and accessibility.
Moreover, hydrogen is energetically less efficient in passenger cars. The entire chain from hydrogen production to fuel cell conversion loses a substantial share of energy. In contrast, battery electric vehicles operate with significantly higher efficiency. As battery technologies advance and electric vehicle prices decline, this efficiency gap increases, further favoring battery EVs over hydrogen fuel cells.
Despite these arguments, German policymakers defend their hydrogen strategy as a measure of technological diversity and global market readiness. Federal Transport Minister Patrick Schnieder described hydrogen not only as an energy carrier but also as a key element for transportation’s future, contributing to Germany’s automotive competitiveness.
Similarly, Bavarian Minister-President Markus Söder emphasized that Germany should not abandon the car industry or rely on a single technology. Although he acknowledged that electric drives will dominate in Europe, he highlighted the need to accommodate diverse technologies – including high-tech internal combustion engines and hydrogen – to meet varied global demands. Söder also opposed the EU’s planned 2035 ban on new combustion engine cars.
From an industrial policy perspective, however, questions remain whether focusing publicly funded support on hydrogen passenger cars is a wise move. BMW itself is pouring billions into electric vehicle architecture, new battery cell chemistries, and the “New Class” EV platform launching in 2025, which aims to define a new era of corporate electric mobility. Meanwhile, other major players such as China and the United States are rapidly scaling up manufacturing capabilities and supply chain control, intensifying competitive pressure on Germany.
The support for BMW’s hydrogen initiative could be seen as a strategic gamble – or a detour. While political leaders advocate for technology openness to cover various future scenarios, industry experts warn that funding should follow realistic market prospects. Whether BMW’s project becomes a transformative breakthrough or a costly niche experiment remains uncertain.
In conclusion, the German government’s €273 million subsidy to BMW reflects a high-stakes bet on hydrogen technology’s automotive future. The debate pits the promise of technological diversity and global market positioning against the hard realities of infrastructure, market demand, and energy efficiency. As Germany navigates the transition to sustainable mobility, how it balances innovation support between hydrogen and battery electric technology will shape the fate of its automotive industry in the coming decades.
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