The future of hydrogen-powered passenger cars—which use a fuel cell to convert hydrogen gas into electricity—in California is in question after Shell USA decided to cease offering such refueling stations in the state.

Seven of its eight car refueling stations in the state have already closed, and the company is now considering closing its Torrance, California station, a Shell spokesperson told The Epoch Times by email Feb. 14.

Citing unspecified market forces and economic conditions in the state, the energy company said it will continue to develop in other areas across the country and around the world where operations are more conducive to profitability.

The spokesperson did not cite specific reasons for pulling out of the state but said the company intends to invest up to $1 billion a year in hydrogen fuel projects in 2024 and 2025, in areas where it will have a competitive advantage and can build on its existing business.

“Shell’s aim is to be more disciplined in our delivery, focusing on value over volume, and prioritizing capital investment in areas where we have distinct competitive advantages,” the spokesperson said.

The decision—first announced last October—has cut the number of fuel stations for hydrogen-powered passenger cars by 12 percent in California, according to Forbes, leaving the state with only 55 locations currently.

The news comes as an abrupt shift from the company’s stated goal of building 48 more hydrogen stations in the state.

Some believe hydrogen-powered cars are better for the environment than gas- or diesel-powered vehicles because the only byproduct when used for fuel is water. However, critics point to inefficiencies related to the technology and safety concerns, as hydrogen is highly flammable and must be stored appropriately.

Costing approximately $2 million to $3 million to build, which would have been partially financed by the state, some have questioned whether hydrogen stations would ever pay for themselves, given the limited number of consumers choosing the fuel source.

Once a priority for the state, hydrogen vehicles haven’t caught on since their 2012 introduction. Of the more than 14 million automobiles on the road in California in 2023, according to the California Energy Commission, approximately 12,000 were hydrogen-powered.

With such stations primarily located near Los Angeles and San Francisco, many drivers can’t buy hydrogen fuel nearby and have instead chosen traditional fuel, hybrid, and electric-powered cars, according to experts.

Others point to rising hydrogen prices, increasing nearly 300 percent from 2021, as a factor.

Shell additionally cut 200 hydrogen-related jobs late last year.

Some facilities that provide hydrogen fuel for commercial trucks, buses, and trains, among others, will remain open in Southern California, according to the company.

“We maintain that hydrogen is an important low-carbon energy solution for the future and will continue to invest in hydrogen in a disciplined manner, with a focus on sectors that cannot be fully electrified, like heavy industry and transport,” the spokesperson said.