Metal hydrides are serious contenders for materials‐based hydrogen storage to overcome constraints associated with compressed or liquefied H2. Their ultimate performance is usually evaluated using intrinsic material properties without considering a systems design perspective. An illustrative case with startling implications is (LiNH2+2LiH). Using models that simulate the storage system and associated fuel cell of a light‐duty vehicle (LDV), the performance of the bulk hydrides is compared with a nanoscaled version in porous carbon (PC), (LiNH2+2LiH)@(6‐nm PC). Using experimental material properties, the simulations show that (LiNH2+2LiH)@(6‐nm PC) counterintuitively has higher usable gravimetric and volumetric capacities than the bulk counterpart on a system basis despite having lower capacities on a materials‐only basis. Nanoscaling increases the thermal conductivity and lowers the desorption enthalpy, which consequently increases heat management efficiency. In a simulated drive cycle for fuel cell‐powered LDV, the fuel cell is inoperable using bulk (LiNH2+2LiH) as the storage material but completes the drive cycle using the nanoscale material. These results challenge the notion that nanoscaling incurs mass and volume penalties. Instead, the synergistic nanoporous host‐hydride interaction can favorably modulate chemical and heat transfer properties. Moreover, a co‐design approach considering application‐specific tradeoffs is essential to accurately assess a material's potential for real‐world hydrogen storage.