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I found the answer, and it looks like they are getting it very close to being cheap enough to work:
"Two things have prevented major production of hydrogen-powered cars until now: the cost, and producing the hydrogen in the first place. Until recently, the platinum catalyst that splits the hydrogen into an ion and an electron has been prohibitively expensive.
Up to a few years ago, hydrogen fuel cells cost around $1000 for every kilowatt of power they generated – or around $100,000 per car. There were various avenues of research into how to bring the cost down, including work at Lawrence Berkley Laboratories on replacing the platinum catalyst with a platinum-nickel alloy that was 90 times more efficient.
By last year, US Department of Energy reported that it had got the cost down to $61 per kilowatt – far closer to the target cost of $30. One further possibility being explored by Ballard Power Systems is enhancing the platinum with carbon silk. This is expected to bring a 30% reduction in cost with no loss of performance."
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