Honda Motor has scaled back plans to begin manufacture of a new hydrogen fuel cell citing changes in the global hydrogen market and uncertainty around future demand.

The company had previously announced plans to develop land and buildings at a former Honda Powertrain Unit Factory in Moka City, Japan, in order to establish a new facility dedicated to the production of its next-generation fuel cell module. Preparation for this project was already underway, with an aim to begin operation of the plan in the fiscal year ending March 31, 2028 (FY2028) with annual production capacity of 30,000 units.

Following a reassessment Honda says it has elected to reduce initial production capacity and delay the timing of full production.

Honda has further opted out of a government subsidy offered by the Japanese Ministry of Economy, Trade and Industry to support the establishment of supply chains related to sustainable energy. In a news release Honda said its withdrawal from the program reflects its announcement to delay the commencement of operations, and pursue lower production volumes.