In the automotive sector, two technologies have emerged as frontrunners in the race to replace internal combustion engines: battery electric vehicles (BEVs) and hydrogen fuel cell electric vehicles (FCEVs). While EVs have taken a commanding lead in consumer markets, hydrogen is gaining traction in specific industrial and heavy-duty transport segments. In June 2025, the European Commission moved to enforce the Renewable Energy Directive (RED III), mandating that 42 percent of industrial hydrogen be sourced from renewables by 2030 and 60 percent by 2035, signaling a strategic shift toward “green” hydrogen in Europe. For comparison, in 2022, less than 2 percent of Europe’s hydrogen came from renewable sources, making these targets a near 60-fold scale-up in just over a decade. The mandate is part of a broader push to decarbonize transportation and manufacturing, as governments race to meet climate targets and reduce reliance on fossil fuels. It could accelerate demand for electrolysis-based hydrogen production, putting pressure on renewable electricity supplies, electrolyzer manufacturing, and water resources, especially in energy-constrained regions.
This article examines how recent policy developments are shaping the trajectory of both technologies, highlighting not only where public support is flowing but what’s at stake in the growing divergence between electric and hydrogen mobility.
How the Technologies Work
Electric Vehicles: EVs operate using energy stored in rechargeable lithium-ion batteries, which power an electric motor to drive the wheels. These vehicles draw electricity from the grid, typically charged at home or public stations. EVs are highly efficient, converting 70–90 percent of stored battery energy into motion. They produce zero tailpipe emissions, though charging times vary from 30 minutes (fast charging) to several hours (standard home charging), and driving range typically spans 150 to over 400 miles.
Hydrogen Fuel Cell Vehicles: FCEVs use a fuel cell that combines hydrogen gas from onboard tanks with oxygen from the air, generating electricity, heat, and water vapor through an electrochemical reaction. The electricity powers the vehicle’s motor, resulting in zero tailpipe emissions aside from water. Refueling is rapid (3 to 5 minutes for a 300–400 mile range) but requires specialized hydrogen stations, which remain scarce.
The EV Surge: A Well-Known Option Already Expanding
Incentives and Subsidies
Governments worldwide have made EVs central to their decarbonization strategies. In the U.S., the Inflation Reduction Act (IRA) offers up to $7,500 in tax credits for eligible EV purchases, alongside manufacturing incentives to localize battery production (pending the outcome of budget negotiations in the Senate, which may reshape funding priorities). The European Union will require all new cars sold from 2035 to emit zero CO2 and is generally paired at a national level with subsidies that aim to reduce upfront costs for buyers. China, the world’s largest EV market, is heavily subsidizing its EV industry to drive adoption through its car trade-in subsidy scheme and other industrial measures that have injected at least US$231 billion into China’s EV sector from 2009 to 2023, twice the US federal support (~$100 billion through IIJA & IRA). These subsidies do more than stimulate demand. They serve as industrial policy, reshaping supply chains and locking in geopolitical advantages in EV technology and battery manufacturing.
Infrastructure Mandates
To support adoption, governments are investing heavily in charging infrastructure. The U.S. National Electric Vehicle Infrastructure (NEVI) program, although currently paused, aimed to allocate $7.5 billion to build a national charging network along highways and in underserved communities. According to a 2025 Harvard study, cutting NEVI could save $12 billion but would likely reduce EV sales and slow adoption. A 2024 review article from professors of engineering at the University of Texas at Arlington identified that the “lack of charging stations and their limited driving range” are the most cited barriers to EV adoption globally. In the EU, the AFIR regulation adopted in April 2024 mandates chargers every 60 km on major roads by 2025, eliminating range anxiety and facilitating long-distance EV travel. If implemented effectively, this regulation could remove one of the most significant psychological and practical barriers to adoption.
Private Sector Alignment
Policy incentives have spurred automakers to commit to full electrification within the next decade. Companies like Ford, GM, Volkswagen, and Mercedes-Benz are transitioning their lineups to electric, while Tesla continues to expand production and has now opened its Supercharger network to other brands. This alignment reflects more than a simple policy response. It also reflects a strategic market calculus: automakers increasingly view EVs as a path to long-term profitability, especially given tightening emissions rules and declining battery costs.
Hydrogen: A Niche and Early-Stage Technology with Emerging Promise
Policy Support
While EVs dominate headlines, hydrogen fuel cell vehicles (FCEVs) are attracting targeted policy support, especially for hard-to-electrify sectors. The European Hydrogen Strategy adopted in 2020, envisions up to €470 billion in investments by 2050, emphasizing “green hydrogen” produced from renewable energy. In the U.S., the $8 billion Hydrogen Hubs program (still active despite DOE’s recent intention of cutting those fundings) aims to create regional hydrogen ecosystems. Asian countries like Japan and South Korea already have detailed hydrogen roadmaps, with early investments in vehicles, fueling stations, and industrial-scale applications, making them lead the HFCV market. Unlike Western countries, these governments are leveraging hydrogen not just for decarbonization, but to reduce imported energy dependency, especially given their limited fossil fuel reserves.
Use Case Prioritization in Policy and Infrastructure
Unlike EV policy, hydrogen initiatives rarely focus on personal vehicles. Instead, governments are focusing on heavy-duty applications such as long-haul trucking, buses, trains, and shipping, where hydrogen’s fast refueling and high energy density make it more practical than batteries. For example, Germany’s H2 Mobility initiative (H2 is a consortium founded by Air Liquide, Daimler, OMV, Linde, Shell, and TotalEnergies) supports fueling stations along major freight corridors. California’s focus on fuel cell buses is also a good illustration of this trend, with infrastructure investments targeting freight corridors and fleets rather than private vehicles. This corridor-focused strategy reflects a pragmatic approach: targeting freight and commercial fleets with predictable, centralized fueling needs, rather than spreading infrastructure thinly across consumer markets. Yet, these initiatives remain limited to a few established companies that have historically led hydrogen vehicles or fueling infrastructure efforts. Most rely on public co-financing, which raises questions about long-term commercial viability.
Private Sector Alignment
Hydrogen is gaining traction among companies operating in heavy-duty transport and energy infrastructure. Toyota and Hyundai continue to develop FCEVs like the Mirai and NEXO, while firms like Cummins, Nikola, and Daimler Truck are exploring hydrogen-powered trucks through prototypes or even producing models. Meanwhile, energy companies including Korea Gas Corporation, Shell, and TotalEnergies are investing in hydrogen production and refueling networks, often as part of national or EU-backed consortia. These moves suggest growing confidence in hydrogen’s role in a diversified decarbonization strategy. Yet, unlike the EVs, these hydrogen initiatives remain pilot-scale (with fewer than 13,000 FCEVs registered worldwide in 2024) and heavily dependent on joint public-private funding, signaling a more cautious level of industry commitment.
Challenges and Geopolitical Considerations
Mineral Dependencies and Upstream Emissions
While EVs produce zero tailpipe emissions, their upstream environmental footprint remains a concern. Extracting and refining battery minerals like lithium, cobalt, and nickel is often carbon-intensive and can fuel environmental and social injustice in mining regions. As a figure for reference, producing one ton of battery-grade lithium can require between 400,000 and 2 million liters of water, depending on the extraction method and region, which has significant local ecological consequences. Policymakers are beginning to address this by funding battery recycling programs and encouraging more sustainable supply chains, but dependence on a few, and often politically unstable, countries for key materials (such as the Democratic Republic of Congo for cobalt and Zimbabwe for lithium) poses long-term risks. This concentration of supply creates price volatility and exposes EV supply chains to disruption during geopolitical conflicts, trade disputes, or local unrest, as seen recently in the DRC. The global challenge will thus be to build diversified and ethically sourced supply chains fast enough to meet surging battery demand.
Hydrogen’s environmental benefit depends on how it is produced. Over 95 percent of hydrogen is currently “gray,” made from natural gas and emitting significant CO₂. This means that, for now, hydrogen-powered vehicles may offer little climate benefit over diesel trucks unless policies accelerate green hydrogen deployment alongside vehicle adoption. Scaling up “green” hydrogen (produced via renewable-powered electrolysis) requires vast investments – estimated at $11 trillion by Bank of America – as well as clean energy and water resources. Until then, hydrogen’s climate advantage remains theoretical.
Technology-Specific Limitations
Each technology faces practical challenges. For EVs, charging time and range anxiety still inhibit adoption in some regions, particularly where fast-charging infrastructure is sparse. Heavy-duty applications (like long-haul trucking) remain a technological stretch for batteries due to their weight and limited range. For long-haul trucks, batteries add significant weight and can reduce cargo capacity by up to 5 – 10 percent, while current ranges typically max out at 300 miles (compared to over 600 for some hydrogen prototypes). Hydrogen’s key advantage lies in its quick refueling times and extended operational range (critical factors for heavy-duty transport applications), but infrastructure is nearly nonexistent in most countries. Building out hydrogen stations is capital-intensive and complex, especially when compared to EV chargers, which can often be integrated into existing electrical infrastructure with lower upfront costs.
Diverging Trade and Standards
A lack of international alignment on definitions of “clean” technologies and fuel standards complicates the picture. The EU is moving aggressively to establish strict emissions standards and traceable supply chains for both EVs and FCEVs. The US, while supportive through programs like the IRA and Hydrogen Hubs, has adopted a more flexible and decentralized approach to eligibility and enforcement. This divergence makes it harder to certify vehicles, components, and fuels for use across markets. It complicates efforts by automakers and fuel producers to operate globally and scale up investment. Without common definitions of clean hydrogen or EV battery standards, a car approved in Europe might not qualify for subsidies in the US, or a hydrogen refueling station might be incompatible with vehicles from another region. Therefore, global agreements on lifecycle emissions accounting or common certification of clean fuels could unlock cross-border infrastructure and trade. Although doing so would require politically difficult compromises on standards and enforcement.
The Rise and Role of China
Any assessment of clean mobility policy must account for China’s central role. China dominates battery manufacturing by accounting for more than 75 percent of global lithium-ion battery manufacturing, controls much of the world’s refining capacity for critical minerals, and is home to leading EV companies like BYD and CATL. Through a combination of industrial policy and market scale, China has positioned itself as the indispensable player in the EV supply chain. At the same time, China is investing in green hydrogen pilot zones, especially in the industrial sector. This dual-track strategy ensures China maintains leverage regardless of which technology dominates globally.
Verdict
Battery electric vehicles are on track to become the primary alternative to internal combustion engines, especially for passenger cars in the near term. Hydrogen, while still niche, is strategically important for sectors that batteries struggle to serve, such as heavy trucking and buses. The key challenge for policymakers will be to integrate both technologies into national energy and mobility systems, maintaining flexibility without prematurely locking into a single solution.
Conclusion
As of June 2025, the policy landscape is clear: battery electric vehicles are leading the transition for passenger cars, while hydrogen is carving out a role in commercial and heavy-duty sectors. The road ahead will require policymakers to balance incentives, invest in complementary infrastructure, and remain adaptable as technology and geopolitics evolve.
Reader Questions
But with limited public funding and mounting pressure to decarbonize quickly, should governments continue investing in hydrogen infrastructure for road transport, or concentrate resources entirely on accelerating EV adoption across all sectors?