This paper deals with the design of a nonlinear state observer for parameters within the gas transfer part of a fuel cell stack and its implementation on a small-scale embedded system. The fuel cell stack is of a proton exchange membrane type, with parameters specific to vehicle applications. The observer is afterwards applied on a small scale embedded board. In order to validate the embedded observer, a real time hardware in the loop testing is done using a co-simulation between the embedded observer and the professional simulation software AMESim, linked with Simulink on a Windows platform. To act upon the nonlinear character of the system, a Takagi-Sugeno approach is implemented, where the premise variables are unmeasurable. The procedure applies Lyapunov stability theory and by demanding bounded stability instead of asymptotic one, the algorithm manages to eliminate the need for Lipschitz constants