From 2028, the assembly area at BMW's Steyr plant in Austria that built V8 petrol engines will produce the fuel cell system for the iX5 Hydrogen. Test benches are already installed, production equipment is being adapted, and the carmaker is developing the manufacturing processes for the third generation of its hydrogen drive system. The next prototype phase is under way in parallel.

The conversion is less radical than it sounds. Steyr already builds petrol, diesel and electric drive systems side by side, adding series production of electric drives in summer 2025. Around 4,700 employees produce more than 1.2 million drive systems per year at the site. The fuel cell extends that range rather than replacing an existing line outright.

Josef Hochreiter, Head of Hydrogen Vehicles at BMW Group, said: "The current testing shows how successfully the fuel cell system, high-voltage battery and electric drive are already working together and how consistently we are developing the technology towards series production."

Helmut Hochsteiner, head of electric drive production at Steyr, added: "The particular strength of our site lies in the direct interplay of development and production. This recipe for success has shaped Steyr over decades and today also makes us a strong competence centre for new drive technologies."

From test procedures to series processes

BMW has reached the stage where the fuel cell system must prove more than technical performance. Test procedures must transfer into series production, processes need stabilising, and the system requires validation across operating conditions. Teams in Steyr are adopting methods from BMW's Hydrogen Competence Centre in Munich and adapting them for industrial production. Employees are training for the new processes.

The stakes rise with the next X5 generation. BMW plans five powertrain variants in a single model line: petrol, diesel, plug-in hybrid, battery-electric and fuel cell. Each variant adds parts, testing requirements and supply chains. BMW's answer is to limit differences at vehicle architecture level, using standardised geometric specifications for energy storage and drive components so different powertrains integrate into the same production structure.

That logic drives the hydrogen tank design. Instead of a few large pressure vessels, BMW uses a flat storage system of seven interconnected 700-bar carbon-fibre composite tanks in a metal frame, controlled through a central main valve. The system stores at least seven kilograms of hydrogen. Its geometry matches BMW's new Gen6 high-voltage battery, allowing the hydrogen version to run through the same production structure as other X5 variants while preserving interior space. Development board member Joachim Post calls the concept "installation space Tetris".

The economics matter as much as the packaging. Demand for the fuel-cell X5 is hard to predict. The more dedicated equipment the variant requires, the higher the volumes needed to justify the investment. BMW is therefore industrialising the fuel cell system with as little additional production infrastructure as possible, keeping differences largely confined to powertrain-specific components.

Thin market to absorb the output

The market context is sobering. Germany's Federal Motor Transport Authority counted 1,575 fuel cell passenger cars on the road as of 1 January 2026 — 12.6% fewer than a year earlier — against roughly 2.03 million battery-electric cars, up 23.2%. The European Alternative Fuels Observatory reported March 2026 that 2025 fuel cell passenger car sales across Europe sat more than 70% below the 2022 peak, a dip partly attributed to the Hyundai NEXO generational changeover. In a 2026 survey of 933 potential buyers, 1% named hydrogen as their preferred next powertrain; battery-electric reached 21%.

BMW does not position hydrogen as a replacement for battery-electric customers. Hydrogen expert Jürgen Guldner told AUTOMOBIL PRODUKTION in 2025: "There are female and male customers for whom battery-electric mobility is not practical - for example because of long distances, charging infrastructure or usage behaviour." That framing shapes production planning: if the fuel-cell X5 serves specific use cases rather than the mass market, low-volume economics take priority.

Product targets reflect that positioning. BMW aims for up to 750 kilometres of range and refuelling in under five minutes. Final WLTP consumption figures are not yet available, and Germany's Federal Environment Agency notes a fuel-cell car on green hydrogen needs roughly two to three times the electricity per kilometre of a comparable battery-electric vehicle.

Suppliers face scalable-investment demands

The supplier picture follows the same constraint. Fuel-cell systems need cooling components, valves, sensors, air supply systems and power electronics; the tank system demands composites and high-pressure expertise. At limited initial volumes, investments must scale — starting small and expanding later beats maximising output from day one.

Infrastructure remains outside BMW's control. H2 MOBILITY closed older passenger-car-focused filling stations in 2025 and is steering investment toward buses and commercial vehicles, citing a passenger car market below expectations. Regional clusters offer a partial answer: a hydrogen station has operated at Memmingen Airport since April 2026, with a five-megawatt electrolyser planned to produce green hydrogen on site.

Steyr now serves as a test case for flexible powertrain production. A new operation is going into space vacated by V8 engines, transferring existing process expertise to fuel-cell technology while the vehicle itself is designed so a fifth powertrain does not require a fifth production system. Watch the milestones between now and the planned 2028 launch: the additional investment BMW commits, the share of equipment common across powertrains, and the volumes at which the hydrogen variant breaks even.