On a quiet lot behind Nanhai’s Danzao bus terminal, more than 20 sky‑blue hydrogen buses stand in neat rows with notices on their windscreens reading that they have “reached subsidised mileage and are to be parked.” Drivers and station staff say the vehicles are mechanically sound but uneconomic to run: high hydrogen prices and shrinking passenger numbers have turned many of the city’s flagship clean‑tech buses into idled assets.
Foshan is not a small player in China’s hydrogen experiment. Under a 2018–2030 municipal plan the city set out to use demonstration fleets to seed an industrial cluster, aiming to reach 1,000 hydrogen buses on its streets and to spur production, services and investment around fuel‑cell technology. Between 2018 and 2019 local governments bought hundreds of buses at roughly RMB1.7–1.8m each (about $230,000–$260,000), and national and local purchase subsidies together covered a substantial portion of the upfront cost.
The demonstration objective has succeeded in one obvious respect: Foshan — and Nanhai district in particular — now host a thriving hydrogen ecosystem. Officials point to a local “hydrogen valley” with some 160 companies and hundreds of billions of yuan of industrial investment, and firms have flocked to the city to test and scale fuel‑cell components and refuelling infrastructure.
Yet the operational economics tell a different story. Hydrogen buses cost roughly twice as much as equivalent battery electric buses did at the time of procurement, and fuel costs remain high. In districts where hydrogen is sold at market prices (about RMB50/kg), operators say the break‑even point relative to diesel is nearer RMB35/kg; even in Nanhai, subsidised prices have hovered in the low thirties, with per‑bus daily fuel bills commonly above RMB330–429 after subsidies. Faced with those running costs and weaker post‑pandemic ridership, some operators purposely rotate buses so that individual vehicles meet subsidy mileage thresholds and then sit idle to avoid further fuel expense.
The result is a paradox: large public investment, meaningful industrial clustering and political backing on one hand; on the other, fleets that are underused, expensive to operate and dependent on ongoing fiscal support. Municipal records and industry sources show that purchase subsidies for the roughly 1,000 buses in Foshan amount to several hundred million yuan, and separate fuelling subsidies — if continued at past rates — will cost local treasuries hundreds of millions more over the coming years.
Foshan stopped buying hydrogen buses after 2021 and transport officials say operators have been optimising fleets toward models that best match demand and cost. That pullback mirrors a broader national reality: dozens of Chinese cities have trialled hydrogen buses, but Foshan remains the single largest deployment by scale. For the national hydrogen industry the city is therefore both a success story in cluster formation and a cautionary tale about the limits of subsidy‑led deployment when fuel economics and ridership diverge from planners’ expectations.
The stakes extend beyond municipal accounts. Hydrogen is a strategic technology in China’s low‑carbon ambitions, promoted both as an industrial opportunity and a decarbonisation pathway for heavy transport. But the Foshan experience underscores two essential preconditions for commercial viability: sharp falls in hydrogen production and distribution costs, and more robust, predictable financing arrangements that align local budgets with industrial policy goals. Without those, fleets risk becoming demonstration relics rather than self‑sustaining public services.