The development of hydrogen fuel cell cars is "10 to 15 years behind" that of battery vehicles, BMW CEO Oliver Zipse said.
BMW, however, remains committed to the technology as it looks to meet demand for zero-emission vehicles in markets where sales of electric cars are lagging because of the lack of a charging infrastructure, Zipse told journalists during the company's third-quarter results call.
BMW has begun a limited rollout of hydrogen fuel cell versions of the X5 large SUV as it explores use of a drivetrain that Zipse called the "missing part of the puzzle" in the shift to zero-emission technology.
"Our narrative has always been that there will have to be a drive form that is emission-free when there is no charging infrastructure," Zipse said, before admitting development is significantly trailing that of battery electric vehicles.
BMW has a partnership with Toyota, a fuel-cell pioneer, and uses the Japanese company's stack in the hydrogen X5.
Zipse said his view that BMW must have a hydrogen fuel cell alternative was reinforced on a recent visit to China and Japan, where BMW participated in the Tokyo auto show.
"Our trip to Asia reinforced our view in considering hydrogen as the missing fifth element in our drive technology strategy," he said, referencing the scale of investment in China into hydrogen technology as well as the number of hydrogen fuel cell taxis in Beijing.
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Japan has lagged the rest of the world on battery-electric sales and as yet doesn't have a comprehensive charging infrastructure.
The country has championed hydrogen as a low-emission fuel source in place of electric partly because it imports much of the fossil fuel that generates the bulk of its electricity, although Toyota more recently shifted its focus toward battery electric technology to power cars.
The growth of hydrogen fuel-cell cars has been limited in Europe due to both the cost of the drivetrain and the slow development of infrastructure.
Automakers also have to package 700-bar high-pressure fuel tanks to store the hydrogen, as well as including a small hybrid battery pack to boost output from the electric motor.
Stellantis and Renault both see a future for the drivetrain for commercial vehicles rather than cars, although sales have been limited by cost.
Stellantis is now selling fuel cell versions of the Citroen Jumpy, Peugeot Expert and Opel Vivaro midsize vans, but it is finding it tough to lure customers.
"We are bit slower than we suspected," Xavier Peugeot, head of Stellantis' van unit, told journalists in October.
The fuel cell van sells for more than 100,000 euros without incentives, Peugeot said.
"It's more expensive, so companies take more time to decide [on purchasing]. But we are on track," he added.
Peugeot also referenced the slow rollout of the refueling network. Germany has by far the largest network with 87 stations, according to the H2.LIVE online map, part of the H2 Mobility Deutschland hydrogen infrastructure company funded by suppliers such as Shell and Total.
The Netherlands is next with 16 hydrogen stations.
Toyota remains the largest seller of fuel cell cars in Europe, but it managed to sell just 46 units of the Mirai sedan through September, according to figures from market researcher Dataforce. Hyundai has stopped sales of its Nexo fuel cell SUV.
BMW rival Mercedes-Benz halted development of the fuel cell GLC SUV in 2020.
Zipse said BMW's continued development of the fuel cell drivetrain will give it an edge as others back away.
"This is segment where nobody else is going at the moment," he said. "Fewer competitors is an advantage."
Zipse has previously said the new Neue Klasse electric vehicle platform can be adapted to fit a hydrogen fuel cell drivetrain.
