Fuel cell bus production at Foshan Feichi, China, © Ballard

A new megatrend needs time to develop. The last 15 years established the foundation for the coming breakthrough of fuel cells and a steadily growing interest in their use. Here’s why: Historically, technological revolutions often needed 15 years before a breakthrough was achieved. But once you’re past that point, everything goes very quickly, since no market actor wants to remain on the sidelines. This is exactly what’s happening to the fuel cell across all markets and applications. And the production of “green hydrogen” is becoming ever less expensive and more efficient; even infrastructure development is starting to catch up. Considering the above, I expect the first milestone to be reached in 2020. The stock markets will anticipate the coming era by pricing it into the shares of industry stakeholders.

Japan wants to show the world in 2020 that it is on its way toward a hydrogen society. And Apple might think about using the opportunity offered by …

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I think by 2020, China will see the first signs of a boom for fuel cell use in buses, cars, trucks and other vehicles, e.g., trains and streetcars. The one profiting from these developments will be Ballard Power. Additionally, the U.S. military has begun to discover the enormous potential of fuel cells. Here, it is again Ballard – through its subsidiary Protonex – which will benefit from market development, as the subsidiary has important expertise in this field (see below).

Progress made

At the end of 2016’s third quarter on Sept. 30, Ballard had grown revenue by 29 percent to USD 20.6 million compared to the same quarter the year prior. The gross profit margin jumped to 31 percent, an increase by over 6 percentage points, and compared to all of 2015, it rose from 17 to 27 percent. This means that the first nine months saw Ballard’s revenue surge by more than 50 percent to USD 54.6 million. Third-quarter cash flow added up to an impressive USD 68.1 million, with no debt to repay.

Additionally, it was expected that Toyota …

I believe that Toyota, through Tsusho, will use Ballard’s know-how, for example, to integrate fuel cells into forklift trucks (see Plug Power Goes to China). And the bus stacks that Ballard partner Synergy manufactures in China could be delivered to Toyota through Ballard. We will see. In any case, the partnership will be sure to produce some more positive news and announcements.

USA – China – Japan – World

The views of the new president of the United States, Donald Trump, could make for a lot of troubling times ahead. There is the planned border wall, which would put U.S. businesses operating in Mexico at a serious disadvantage. Costs for serving the North American market would go up if the project were realized. Ballard Power has a production facility in Mexico, although I think as a Canadian company, it would have less to deal with than an American business.

As protectionism is on the rise in the United States, Ballard’s strategic focus on Asia is becoming increasingly …

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Recently, Ballard received its first booking based on a partnership agreement. The order by Polish bus manufacturer Solaris entails stacks for 10 fuel cell buses and is expected to be the first of many bookings from Europe. London’s mayor announced at an industry conference that the city government intends to pour a lot of money into this field. Ballard is also a serious contender in several European bid invitations, albeit the number of stacks will be pretty “tame” compared to orders from China. But it’s a way for the company to show its global ambitions and find the perfect market position.

“We are at an inflection point. The demand for fuel cell buses and modules that go into them is about to explode.”

Christopher Johnson, Ballard’s North American sales manager

In short: Ballard has laid the foundation for sizeable …

Risk warning

Investors must understand that buying and selling shares is done at their own risk. Consider spreading the risk as a sensible precaution. The fuel cell companies mentioned in this article are small and mid-cap ones, i.e., they do not represent stakes in big companies and the volatility is significantly higher. This article is not to be taken as a recommendation of what shares to buy or sell – it comes without any explicit or implicit guarantee or warranty. All information is based on publicly available sources and the assessments put forth in this article represent exclusively the author’s own opinion. This article focuses on mid-term and long-term perspectives and not short-term profit. The author may own shares in any of the companies mentioned in this article.

Author: Sven Jösting (written Dec. 2016)