Garth: Your point #4 points out the distinction between Ballard, which will continue to make the fuel cells, and the Ballard/Daimler joint venture, which will make the engines from the fuel cells that Ballard supplies. Accordingly, you say, Ballard did not give up 2/3 of potential automotive profits, because it will still make lots of money providing the fuel cells, and then some more (1/3 of the total) on the engines that Daimler uses, and another half of the profits of selling those engines to other manufacturers.
There is no way of knowing for sure now how things will develop, but I think you have made a fine distinction that will turn out to not make a difference. Maybe I am wrong, but my sense of the auto business is that Daimler will not let Ballard make a dime on supplying the fuel cells to the joint venture until the JV is clearly chugging away in a profitable mode.
Obviously it depends on a transfer price that the two agree on, but in the year 2005 or so, when the first car is planned to be introduced, Daimler will probably point out that it is necessary to be as competitive as possible on price to establish a solid foothold in the market, which means a very low transfer price for the fuel cells. Given that Daimler controls everything now, I will stick to my interpretation that Ballard has just given up most of its potential profits to get more financing that they previously claimed wouldn't be necessary.
You would think that all this extra money and effort would have moved up the timetable for introduction, but it really hasn't. Although skeptics like me were saying 10 years or more, others were saying 2005 even before this announcement. Actually, the deal probably has shortened the development time, but management was just not being honest before.
I also wonder how many of these engines will be sold outside Daimler. Can you imagine BMW wanting to sell a car with a Mercedes engine? No, I don't think so.
Instead, this deal will be a great boon to Ballard's competition. Car companies will now make a serious effort to look at other technologies, whether other brands of fuel cells, hybrid battery/gas designs, or pure electric vehicles. No one wants to be in a position where they are forced to buy their engines from competition.
If Ballard had stayed independent, dealing with all car companies equally, they might have sold to all of them. Now, watch them all look elsewhere, rather than work with Ballard and indirectly help Mercedes. So more and more, Ballard will be at Daimler's mercy.
Nevertheless, all this is great for us as consumers, in that we will end up with choices of much lower polluting and more efficient cars than we would have, had this deal not taken place. |
