South Korea’s Ministry of Environment recently announced a plan to deploy 21,200 hydrogen buses by 2030, which undoubtedly boosts confidence in the country’s hydrogen vehicle market. According to official government statistics, as of August this year, South Korea had a total of 1,185 hydrogen fuel cell buses, a figure that is only 6% of its 2030 target.

Soaring sales of hydrogen fuel cell buses

After the peak in sales in 2022, the market for hydrogen fuel cell vehicles in South Korea saw a significant downturn in 2023. The number of registered fuel cell passenger cars dropped sharply to 4,326 units, marking a 57% year-on-year decline. This drop was attributed to several adverse factors, including decreased government subsidies and increased hydrogen prices. In contrast, registrations of fuel cell commercial vehicles rose from 154 units in 2022 to 381 units (97% of which were hydrogen buses) in 2023. From January to August of this year, the sales of fuel cell passenger vehicles in South Korea remained stagnant, with only 2,058 units sold, while deployments of hydrogen commercial vehicles already exceeded total sales units for 2023, reaching 545 units (98% of which were hydrogen buses). However, due to the small volume, the growth momentum of fuel cell buses can’t offset the loss of fuel cell passenger vehicles.

Fuel cell commercial vehicles registrations are growing but have not offset a decline in sales of passenger vehicles.

Since the deployment of the first hydrogen fuel cell bus in Changwon City, Gyeongsangnam-do in 2019, South Korea has seen continuous growth in sales. And the South Korean government has continued to roll out favorable policies for the adoption of fuel cell buses. For instance, the government announced a hydrogen fuel subsidy of 3,500 Korean won/kg ($2.8/kg) for fuel cell buses in 2021. This purchase subsidy for fuel cell buses was significantly increased in 2023, while the government budget allocation for hydrogen bus subsidies was also raised in 2023. These measures have driven a continuous increase in hydrogen bus deployments, with more than 1,100 units registered from 2022 to August this year, accounting for 94% of the total population of hydrogen fuel cell buses in South Korea.

Accelerated expansion of hydrogen refueling infrastructure for commercial vehicles

According to our Global Hydrogen Refueling Stations report, South Korea had 180 operating hydrogen refueling stations (HRS) in operation as of the first half of 2024. The country has surpassed Japan to become the second-largest hydrogen refueling station market in the world, just behind China.

With the rapid adoption of hydrogen fuel cell buses, construction of commercial vehicle hydrogen refueling stations is also accelerating. Since 2022, the proportion of newly built hydrogen refueling stations in South Korea that are commercial vehicle HRS has continued to increase. In 2023, newly-built hydrogen refueling stations serving commercial vehicles exceeded those dedicated to passenger vehicles for the first time, and the proportion in the first eight months of this year further increased to 79% (Note: commercial vehicle HRS including those for commercial vehicles only, and those serving both commercial and passenger vehicles).

The proportion of HRS serving commercial vehicles has been steadily increasing.

In addition, the development of the HRS investor KOHYGEN accelerated the rate of South Korea’s commercial vehicle hydrogen refueling station construction. KOHYGEN was officially established in 2021, focusing on the construction and operation of hydrogen refueling facilities for commercial vehicles. Its first hydrogen refueling station commenced operation in 2023 and KOHYGEN had 7 HRS in operation as of the first half of 2024, with another 15 stations under construction.

Final Thoughts

If South Korea can achieve its 2030 target, the average annual registrations of hydrogen fuel cell buses will need to reach 4,000 units in next five years (without consideration of the sales for the remaining months of 2024 and replacement of retired fuel cell buses). This figure is almost equal to total registrations of fuel cell passenger cars in South Korea in 2023 and means growth of the hydrogen commercial vehicle market will greatly compensate for the decline in South Korea’s hydrogen passenger car market. In addition, it also means that South Korea will become the world’s largest hydrogen bus market, ahead of China, which is currently the world’s largest hydrogen commercial vehicle market but has seen annual hydrogen bus sales of fewer than 1,500 units in the last three years.

Driven by favorable policies, Hyundai (currently the only manufacturer of hydrogen buses in South Korea) recently announced an expansion plan to increase annual production capacity of hydrogen buses at its Jeonju factory from 500 units/year to 3,000 units/year in 2024. Doosan’s Hyaxium Motors is expected to start producing hydrogen buses in South Korea in the second half of this year. This increased activity is expected to accelerate the promotion of hydrogen buses from the supply side.

In the end, the potential for the South Korean hydrogen bus market largely hinges on the government’s ability to offer complementary policies and initiatives aligned with the 2030 objectives. It remains to be seen whether these conditions will be met.

For more information about the Hydrogen Refueling Stations report, download the report brochure here, or get in touch with Shirly Zhu.