Their was an article in today's Globe and Mail as well as this on Bloomberg...
Bloomberg
business
Fri, 26 Nov 1999, 10:07am EST
Investors See Ballard Fuel Cell as Heir to Internal Combustion
Investors See Ballard Fuel Cell as Heir to Internal Combustion
New York, Nov. 26 (Bloomberg) -- Ballard Power Systems Inc. is losing money
and its stock has fallen 26 percent since May, yet some fund managers are
betting on the company and its non- polluting fuel cell engines.
British Columbia-based Ballard isn't the only company trying to develop fuel cells
to power cars and trucks, but investors say it has the best chance of making an
alternative to the internal combustion engine that will be accepted by
consumers.
Winning this competition will be ''the equivalent of finding a cure for cancer,''
said Simon Baker, who manages 53 million pounds ($86 million) in U.K.-based
Jupiter Asset Management's Ecology Fund. The fund owns 243,300 Ballard
shares, which represent almost 7 percent of its holdings.
Fuel cells generate electricity by combining hydrogen atoms from fuel with
oxygen atoms from the air, creating water and heat as byproducts. Electricity
from the cells can be used to power a car, without the limited range and speed
of electric vehicles that have to be plugged in and recharged every few hours.
''They are not toy vehicles,'' said Ballard Chairman Firoz Rasul. ''Our objective
is to be mainstream.''
Ballard's rivals include Danbury, Connecticut-based FuelCell Energy Inc., which
has a market value of about $139 million, and United Technologies Corp., a $27
billion company that makes Pratt & Whitney aircraft engines and a variety of
other products.
Fuel cells are currently too expensive to make sense for the average Taurus or
Mercedes. Ballard declined to say how much it costs to make a fuel cell engine,
though analysts estimate the price tag at about $35,000. Ballard hopes to
reduce that figure to $3,500, which would be competitive with existing engines.
Third-Quarter Loss
The expense of overcoming this hurdle has hurt Ballard's earnings. Earlier this
month the company said its third-quarter loss more than doubled to C$22.2
million (US$15.1 million) as spending on research and development jumped to
C$20.4 million from C$9.4 million a year earlier. ''We don't usually invest in
companies that aren't making money,'' said Jupiter's Baker. ''Ballard is an
exception,'' because investments by companies such as DaimlerChrysler AG
and Ford Motor Co. have given the company's technology a ''stamp of approval.''
DaimlerChrysler owns 20 percent of Ballard and Ford has a 5 percent stake.
''Blue chips will buy a sample from everybody on the planet,'' said Marko
Pencak, a Toronto-based analyst for Credit Suisse First Boston, who has a
''buy'' rating on Ballard. ''But the question is, where is the follow-up?''
Pencak said he believes carmakers have this type of continuing interest in
Ballard, which according to its chairman, makes about 75 percent of the fuel cell
prototypes ordered today.
Regulators
Glenn Ray, a Ford spokesman, calls the fuel cell ''the most promising
technology right now to displace gas power.'' Ford is ''committed to deliver
commercially viable fuel cell vehicles by 2004.''
Carmakers are being pushed by regulators who are looking to curb air pollution.
California, for instance, requires that beginning in 2003 at least 10 percent of the
cars sold in the state by any single company must produce no air pollution.
Signals from consumers are mixed.
A telephone survey of 1,000 registered voters by American Green Network, an
environmental organization, found that 97 percent favored improved fuel efficiency
and energy conservation. More than half support action to combat global
warming.
At the same time, gas-guzzling sports utility vehicles and light trucks are
increasingly popular. Trucks jumped to 46.7 percent of all vehicles registered in
1997 from 34.4 percent in 1990, according to Ward's Automotive Yearbook.
Transit Experiment
The Chicago Transit Authority has been testing three buses powered by Ballard
fuel cells since March 1998. Chicago paid about $1.4 million for each of the
busses, compared to $300,000 for a diesel bus.
The vehicles accelerate faster than diesel buses and reach comparable speeds,
the agency said. ''To the passenger, the bus is exactly the same,'' said Craig
Lang, who is in charge of technology development for the transit authority.
The fuel cell buses can go about 200 miles before refueling, versus about 300
miles for diesel buses, Lang said. Filling the tanks with liquid hydrogen takes
about 20 minutes.
Lang said he plans to buy more fuel cell busses when they go into commercial
production. ''We anticipate this will be the technology of the future for the transit
industry,'' he said.
Lightweight
Made from materials such as Teflon, fuel cell engines should eventually be
lighter and smaller than internal combustion engines made of steel and
aluminum, and should become cheaper to produce at similar volumes.
''Manufacturing a car is going to be more akin to putting together something like
a TV,'' said Christopher Taylor, who manages $920 million at London-based
Fuji-Lord Abbett International Ltd. His 520,300-share investment in Ballard
accounts for about 4 percent of the fund's holdings.
Fuel cells run on hydrogen. They can also extract hydrogen atoms from fuels
such as methanol or even petroleum.
Methanol is considered the front-runner for private and individual use since
existing gas stations could be used to dispense the fuel with minor adjustments.
Fuel Neutral
Ballard has declared itself fuel-neutral, as has the U.S. Department of Energy.
''We'd like to get away from petroleum,'' but there is little incentive to do so as
long as gasoline remains relatively inexpensive, said Steven Chalk, energy
conversion team leader in Energy Department's transportation division.
Given the remaining challenges of cost and finding the most appropriate fuel,
Lord Abbet's Taylor doesn't expect mass production of fuel cell vehicles until
2010, and he said the internal combustion engine will be around for another 25
years, Still, he is confident of Ballard's prospects. ''It's just a matter of being
patient,'' he said. ''We're sort of in there for as long as it takes.''
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