In a significant development, a California court has taken a major step forward in a civil fraud case against a Norwegian company at the heart of the state's failed attempt to build functional hydrogen fueling infrastructure. This has left thousands of car owners in a difficult situation.

Unraveling the Web of Hydrogen Fueling Infrastructure Fraud

Introduction to the Case

The case involves allegations of fraud against Oslo-based Nel ASA. It is set to go to trial in October 2026 after a California judge upheld the core claims brought by Iwatani Corporation of America, a subsidiary of one of Japan's largest industrial gas companies. The allegations center around Nel allegedly duping Iwatani into buying faulty hydrogen fueling stations. This has provided a window into the extent to which these same stations were provided to and promoted by major players like Toyota and Shell, only to be abandoned or shut down later.The judge's ruling last month has put Nel and its top executives, including current and former CEOs Robert Borin and Håkon Volldal, in a precarious position. Iwatani claims that Nel, under pressure to sell a money-losing product, knowingly induced them into purchasing untested hydrogen fueling stations with false assurances of the technology's real-world readiness. Nel, however, denies the allegations and has put forward procedural arguments to get the case thrown out, claiming that California does not have jurisdiction over the company or its executives.

Core Claims and Rulings

In separate rulings, Judge James Selna of the Central District of California sided with Iwatani on the core claims while dismissing several others. The judge ruled that there was "active concealment" by Nel. For example, Nel did not disclose that it had never built a working model of the H2Station nor sufficiently tested it in real-world conditions, and had no actual data to support their H2Stations' performance claims.After the lawsuit was filed in January, Nel abandoned the seven Iwatani hydrogen fueling stations and executed a corporate spinout of its fueling division, which Iwatani claims is a way to shield those assets from a potential court judgment. Nel's spokesperson, Lars Nermoen, stated in response to an email seeking comment that the deliveries in question were from a company now called Cavendish Hydrogen and that Nel no longer has any business in hydrogen fueling.The failure of novel technology in real-world settings is not uncommon. But for the hydrogen car industry, it came at a particularly bad time. In 2019, California was heavily investing in hydrogen refueling infrastructure, attracting global automakers and oil and gas majors. Toyota was pushing for more fueling infrastructure to support the uptake of the Toyota Mirai, one of the earliest light-duty consumer hydrogen fuel-cell cars. Toyota partnered with Iwatani and Shell to build more fueling stations. Shell brought on Nel as the station provider, and both Iwatani and Chevron partnered with Nel soon after. Representatives from Shell and Iwatani did not respond to requests for comment.Lewis Fulton, the director of the Energy Futures Program at the University of California, Davis, believes that the equipment failures in the passenger segment have led to a "near collapse of the system" in California. In addition to the abandoned Iwatani stations, Shell completely shut down its seven California hydrogen refueling stations and canceled plans to build 48 stations in the state. Chevron had contracted Nel to create 16 stations but did not provide a response on the status of those stations. The extent to which Nel provided the technology for these major players has not been previously reported.Meanwhile, Toyota, which has since de-prioritized the California market for the Mirai, is facing a class-action lawsuit from many drivers who have already bought the hydrogen-powered vehicle. The lawsuit claims that, contrary to Toyota's promises, hydrogen fuel for their cars is becoming more difficult to obtain, making the Mirai "unsafe, unreliable, and inoperable." Toyota did not respond to a request for comment.According to the Hydrogen Fuel Cell Partnership, there are 55 hydrogen fueling stations in California, but many of them experience frequent downtime. None of the hydrogen fueling stations provided by Nel are currently operating. Iwatani's only functioning refueling stations were built by Linde, a large industrial gas company.

Shifting Focus to Heavy-Duty Vehicles

In the meantime, Fulton says California has shifted its focus to building infrastructure for heavy-duty vehicles like trucks and buses. The hope is that the passenger market can reboot with the help of a growing freight market. By focusing on the heavy-duty market, California can, in theory, create a stronger supply of clean hydrogen that brings costs down and increases availability. Fulton, who is also an advisor to ARCHES, the California hydrogen hub that has won $1.2 billion of conditional funding from the US Department of Energy, believes that "ARCHES is targeting 50 to 60 truck-oriented stations around the state by 2030, and with different fueling islands and pressure systems, those could also service light-duty vehicles."

Lessons from the Crisis

California's difficulties with hydrogen vehicle infrastructure have highlighted some important lessons about the wider use of the technology. "The problem is, they're expensive, and they require enormous amounts of maintenance," says Jim Bowe, a Washington, D.C.-based partner at King & Spalding. "Fleets that have been looking at the possibility of hydrogen buses often balk when they realize how much more maintenance, not only for the refueling facilities, but also for the vehicles themselves, is required relative to internal combustion engines or batteries."California-based FirstElement Fuel, another hydrogen fueling station provider, is seen as a potential winner in the midst of the crisis. Operating under the name True Zero, it currently has the most operating hydrogen fueling stations in California but is still working to become profitable. (FirstElement executives did not respond to requests for an interview.)According to Iwatani's lawsuit, Nel was able to hide the fact that the stations it installed were not operational until early 2023 when continual failures led Iwatani to launch its own investigation. Nel achieved this by requiring Iwatani to enter into an exclusive maintenance contract with Nel, shifting the cost of testing the stations to Iwatani.Nel's current CEO, Håkon Volldal, acknowledged the failings around the same time. In an earnings call last year, he said of the hydrogen fueling stations, "I think it's fair to say that the technology that was installed was immature, and that the quality was not good enough, and we struggle with all the work we have to do in order to keep these stations running, to fix issues, to send personnel out on site."

Inside the Investigation

In its investigation, Iwatani workers claimed they found shrapnel inside the fueling stations and concluded that parts of the fueling apparatus were routinely exploding, spraying debris inside the station box. (Nel blames outside companies for installation failures.) Iwatani also claimed it found valves from third-party manufacturers that were never intended for use in a hydrogen fueling station.The lawsuit details a months-long back and forth between Iwatani and Nel, where Iwatani attempts to get Nel to fix the broken stations. Nel either won't or can't fix the stations, triggering the lawsuit.These Iwatani allegations were echoed by Kasey Hawk, who worked as a technician for Nel in California starting in 2021. An Army veteran who drove an Abrams tank in combat, Hawk was one of several veterans hired by Nel to service the California fueling stations. Despite having a strong mechanical background from his military experience, Hawk claims he received only minimal training on the particularities of hydrogen fueling stations. (Hawk is not involved in the ongoing lawsuit and Nel has not commented on his allegations.)"It was a little strange because it's actually dangerous work—working with high-pressure gasses and the potential for explosions," he says in an interview with WIRED. When he showed up to conduct the first repairs at Shell-owned stations in the Sacramento area, it appeared they hadn't been maintained since commissioning, and there was already a backlog of work to be done. "I saw that the stations weren't set up right from the beginning," he says. He noticed, for example, that the pipes weren't properly insulated, which would cause ice buildup within the fueling nozzle since liquid hydrogen is stored and pumped at cryogenic temperatures.A team of Nel technicians arrived from South Korea to help. But those technicians didn't speak English, limiting what Hawk could learn from them. And since Nel's hydrogen fueling subsidiary was based in Denmark, the schematics for the stations were only available in Danish. In addition, ordering new parts often took weeks, meaning similar amounts of station downtime. "We were in situations every day where we did not know what to do next."