Schaeffler Shifts Hydrogen Production Focus to China, Launches Shanghai Subsidiary

In a bold strategic pivot, Germany’s Schaeffler AG has pulled the plug on new hydrogen investments in Europe and is all-in on China. On January 6, 2025, they set up Schaffler Hydrogen Energy Technology (Shanghai) Co., Ltd. right in the heart of the Jiading Hydrogen Energy Port. By planting their R&D and production hub there, they’re hoping to fast-track the commercialization of hydrogen production tech—especially since Europe’s been dragging its feet while China’s government-backed hydrogen boom is in full swing. It goes to show that sometimes clear policies and a massive market beat sheer tech muscle when it comes to industrial decarbonization.

From Europe’s Stagnation to China’s Hydrogen Surge

Everyone’s been talking up Europe’s hydrogen economy as the crown jewel of its net-zero plans, but turning lab breakthroughs into real-world projects? That’s been tough. Sky-high capital costs, patchy policy support and skittish buyers have left lots of European electrolyzer initiatives collecting dust. Western hydrogen players have struggled to scale from bench to factory, thanks to market jitters and inconsistent incentives. Meanwhile, China’s been busy rolling out industrial hydrogen hubs—none more famous than Shanghai’s Jiading District—buoyed by clear “dual carbon” targets and generous state subsidies. “China offers a more coordinated policy framework and a dynamic market,” says Klaus Rosenfeld, CEO of Schaeffler AG.

Inside the Shanghai Hydrogen Hub

The new subsidiary is based in Anting Town, Jiading District—the epicenter of one of China’s slickest hydrogen infrastructure zones. With nearly 400,000 locals and a rent-per-capita around $29,000, the area’s become a magnet for hydrogen investments. Thanks to a framework agreement with Jiading officials, Schaeffler gets first dibs on pilot slots, sweet land leases and fast-tracked permits. The plan is to tap into local supply chains and team up with partners to crank out PEM and AEM electrolyzer stacks, plus precision-made metal bipolar plates. As Dr. Zhang Yilin, CEO of Schaeffler China, puts it: “This facility will anchor our integration into China’s hydrogen value chain, from prototype to commercial deployment.”

Technical Deep Dive: Electrolyzers and Bipolar Plates

At its core, Schaeffler’s Shanghai hub is all about three key technologies:

• PEM Electrolyzer Stacks: These use a solid polymer electrolyte to split water into hydrogen and oxygen, delivering high efficiency and a quick response to fluctuating renewable power.
• AEM Electrolyzer Stacks: By swapping in an anion-permeable membrane, AEM stacks blend the cost perks of alkaline electrolysis with the dynamic performance of PEM systems—meaning lower capex and tougher durability.
• Metal Bipolar Plates: The unsung heroes of fuel cells and electrolyzers, these plates spread gases, electric current and cooling evenly. Schaeffler’s precision forming and special coatings are designed to boost lifespan and efficiency at scale, with advanced anti-corrosion treatments cutting down on upkeep.

Why China Makes Sense

It’s not just about chasing volume. In Europe, Schaeffler was stuck with slow off-take deals, rising part costs and a patchwork of incentives across different countries. China, on the other hand, has woven green hydrogen directly into its national decarbonization roadmaps—handing out subsidies, off-take guarantees and fast-track approvals for infrastructure. Demand’s set to skyrocket as sectors from steelmaking to heavy transport hunt for low-carbon solutions. Schaeffler figures they’ll see quicker go-to-market cycles, fatter returns and the chance to put their hydrogen fuel cells to the real-world test.

Strategic Impacts on the Hydrogen Race

This isn’t just a company making a move—it’s shaking up the whole hydrogen scene. Shifting their R&D and production muscle to Shanghai gives China’s clean energy ambitions a serious boost, and it could leave European competitors scrambling. Analysts say it’s part of a bigger Western exodus from Europe’s hydrogen labs, driven by red tape and inconsistent national support. If that trend keeps up, Europe might lose out on key supply chain segments—from electrolyzer manufacturing to membrane production—unless policymakers hurry up and harmonize incentives. Meanwhile, co-locating with Chinese stack integrators can slash lead times for critical materials and spark fresh collaboration.

Other Western firms are watching closely. Schaeffler’s leap to China could pull in more foreign investment, sparking a wave of component makers and stack integrators setting up shop in the country’s hydrogen parks. That clustering effect might supercharge local innovation, drive down costs and cement Shanghai’s status as a global hydrogen powerhouse.

First Commercial Deployment in Shanghai

Just weeks after opening its doors, the Shanghai arm rolled out its first commercial-grade PEM electrolyzer to a zero-carbon hydrogen storage pilot in Jiading. This setup meshes renewable power with on-demand hydrogen supply, proving how on-site generation, storage and distribution can bolster urban energy resilience and industrial decarbonization—talk about hitting the ground running.

Of course, it’s not all smooth sailing. Schaeffler will need to guard its IP, align with local quality standards and juggle currency swings. And if China’s policy winds shift—anything can happen—the company could end up battling geopolitical headwinds or stuck if incentives vanish.

Looking Ahead

With its Shanghai home base locked in, Schaeffler is already eyeing more spots across China and scouting joint ventures in electrolyzer manufacturing. They’ll keep pushing downstream too, from automotive fuel cell modules to industrial green steel projects. Back in Europe, policymakers might see Schaeffler’s exit as a wake-up call to fast-track unified frameworks and funding for homegrown electrolyzer projects. If Brussels can level the playing field, some of that manufacturing magic might head back. But right now, the momentum is Eastward. And if this Chinese chapter delivers on cost and performance, we could see green hydrogen cost curves bend downward faster than anyone guessed—leaving rivals to rethink their playbooks or risk being left behind.

About Schaeffler AG

Founded in 1946, Germany’s Schaeffler AG is a global leader in automotive and industrial tech. They make engine, transmission and chassis components, plus industrial systems. Lately, Schaeffler has shifted its hydrogen production focus to China, launching a wholly-owned Shanghai subsidiary that’s all about electrolyzer and fuel cell component manufacturing.