Honda and General Motors are ending their joint production of fuel cell systems in the US. The FCSM joint venture in Michigan is being shut down because demand fell significantly short of expectations. Fuel cells played a central role in the original business model, but a lack of customers prevented the necessary ramp-up. Honda and GM had anticipated increasing volumes, and hydrogen was also expected to gain a foothold more quickly in industry and transportation. These assumptions did not materialize, rendering the project economically unviable. (electrive: 21.01.26)
Fuel Cells Fail to Sell – Mass Production Fails in the Market
FCSM, short for Fuel Cell System Manufacturing, was founded in 2017. Honda later described the plant as the automotive industry’s first joint venture for advanced systems of this kind. Mass production didn’t begin until early 2024, but sales remained low. While the systems were used not only in vehicles but also in data centers and power generation, reliable orders in sufficient quantities were lacking.
Without stable demand, industrial costs cannot be covered. This was precisely the deciding factor in the project’s demise. Honda speaks of positive technical results, but technology alone cannot replace a market. The fuel cell demonstrated performance, but there was a lack of customers willing to commit to long-term orders. This deprived the joint venture of its economic foundation.
GM’s withdrawal underscores the demand problem
General Motors had already distanced itself from the technology earlier. In October 2025, the company also halted the development of a new generation under the name Hydrotec. This move followed the same logic as the end of FCSM. The market for hydrogen applications grew more slowly than expected, making investments no longer justifiable.
For GM, the focus was less on technical feasibility and more on the lack of market momentum. Without fleet customers placing larger orders, scaling is impossible. The joint venture thus lost a partner who was originally intended to contribute to cost sharing. This further exacerbated the economic risk for Honda.
Honda Remains Committed to Hydrogen, But Reduces Capacity
Honda continues to view the fuel cell as part of its core identity. The manufacturer is considered a pioneer in alternative drive systems, but lags behind in battery-electric vehicles. At the end of 2024, Honda announced its intention to develop hydrogen into a core business, specifically mentioning passenger cars, commercial vehicles, stationary power plants, and construction equipment. Honda continues to offer a production model with this drive technology, the CR-V e:FCEV.
At the same time, the company reacted to weak demand as early as 2025. Honda announced plans to scale down a production facility in Japan. Initial capacity will be reduced, and the start of series production will be postponed. Honda cited “recent changes in the global hydrogen market” as the reason. This wording primarily describes a demand problem, not a technological regression.
Strategic ambitions clash with economic reality
Behind the scenes, Honda is constantly weighing ambition against feasibility. The company points to 30 years of research and development, but industrial production requires volume. Without sufficient demand, the fuel cell remains a cost factor rather than a growth driver. Even government subsidies have so far failed to compensate for this deficit.
The end of production in Michigan is therefore a clear signal. The market is not currently adopting the technology widely. As long as hydrogen projects hesitate and customers postpone investments, profitability remains fragile. Honda continues to focus on its own next-generation systems, but their success depends less on engineering prowess than on actual orders.