A California court has advanced a civil fraud case against a Norwegian company at the center of the state’s failure to build workable hydrogen fueling infrastructure, which has already left thousands of car owners in the lurch.
A case involving allegations of fraud against Oslo-based Nel ASA is moving toward a trial in October 2026 after a California judge left intact the core claims brought by a major player in the rollout of hydrogen infrastructure in the state, Iwatani Corporation of America, a subsidiary of one of Japan’s largest industrial gas companies.
The allegations center on a lesser-known aspect of the blundered roll-out: Iwatani is claiming that Nel duped it into buying faulty hydrogen fueling stations. And the case has provided a window into the extent to which these same stations were provided to and promoted by major players like Toyota and Shell—stations that have since been abandoned or shut down.
The judge’s ruling last month leaves Nel and its top executives—including current and former CEOs Robert Borin and Håkon Volldal—in the crosshairs. Iwatani’s central claim is that Nel, under pressure to sell a money-losing product, knowingly induced Iwatani into purchasing untested hydrogen fueling stations with false assurances of the technology’s real-world readiness.
Nel denies the allegations, and has put forward procedural arguments to get the case thrown out, saying that California does not have jurisdiction over the company or its executives.
In separate rulings, Judge James Selna of the Central District of California sided with Iwatani on the core claims, while dismissing several others, finding that California does in fact have jurisdiction and that the allegations go beyond a simple breach of contract and into the realm of fraud in selling the equipment, known as H2Stations.
The judge ruled that there was “active concealment,” citing examples including that Nel did not disclose the fact it 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 means of shielding those assets from a potential court judgment.
“The deliveries you are referring to were from a company now called Cavendish Hydrogen,” says Lars Nermoen, Nel’s spokesperson, in response to an email seeking comment, referring to the spun-off entity. “Nel no longer has any business in hydrogen fueling.”
The failure of novel technology in real-world settings is not unheard of. But for the hydrogen car industry, it came at one of the worst times: In 2019, California was investing heavily in hydrogen refueling infrastructure, attracting global automakers and oil and gas majors to the state.
At the time 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 to hit the market.
So Toyota partnered with both Iwatani and oil major 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, says 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 in February 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 on.
Meanwhile Toyota, which has since deprioritized the California market for the Mirai, is facing a class-action lawsuit from many drivers who 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.
In the meantime, Fulton says California has pivoted to building infrastructure for heavy-duty vehicles like trucks and buses, with the hope 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, says 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.
“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,” he says.
California’s difficulties with hydrogen vehicle infrastructure have driven home some stark 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, an international law firm. “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 positioned as a potential winner amid the crisis for the sector. Operating under the name True Zero, it currently has the most operating hydrogen fueling stations in California, but is still working to become profitable, according to sources familiar with the company. (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 subterfuge by requiring Iwatani to enter into an exclusive maintenance contract with Nel, essentially shifting the cost of testing the stations to Iwatani, the lawsuit claims.
Nel’s current CEO, Håkon Volldal, an individual defendant in the case, 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.”
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, in which Iwatani attempts to get Nel to fix the broken stations. Nel 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. Though he alleges he had a strong mechanical background stemming 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.
Hawk claims 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, he says. 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, he explains. “We were in situations every day where we did not know what to do next.”
Source : Wired
