Auto Stocks Insider: Fuel Cells Fuel Excitement about This Company
November 19, 1999 10:56 AM EST
By William Diem
Columnist
When fuel cells replace internal combustion engines as the power source for cars in ten to 15 years, a $200 billion market will emerge. My advice is to accumulate Ballard Power Systems' (BLDP: Nasdaq) stock for the next decade, then one day tell your grandkids how you got in early.
Ballard Power Systems is at the center of development activity in the emerging technology and development of fuel cells. Fuel cells started becoming realistic sources of energy about five years ago, and in the past two years the technology has become the clean winner for a clean-burning cars of the future.
Ballard's not alone in the industry, but the number of players is small and getting smaller. European carmakers PSA and Renault just combined their operations. Forget them.
Honda (HMC: NYSE ADR) is developing its own version, as usual, but it's also buying Ballard technology. General Motors (GM: NYSE) and Toyota (TM: NYSE ADR) have formed a team of formidable power.
And Ford (F: NYSE) and DaimlerChrysler (DCX: NYSE) have a team, with Ballard. They are shareholders in Ballard, and in several associated companies.
A top Ford executive who has been working with electric cars for 15 years told me in September that in the end, all the automakers will use either the Toyota-GM system or the Ballard-Ford-DaimlerChrysler system.
He wasn't exaggerating. In October, Akira Kijima, the deputy corporate general manager for research at Mitsubishi Motors, called for Ballard to open its technology to everyone for the good of the planet. He said a third party, such as a government or association, should have control of Ballard's patented ideas.
"This knowledge should be shared by the world, or there is no future for the world," he told a journalist at the Tokyo auto show.
The Details
Ballard Power Systems makes a proprietary zero-emission proton exchange membrane at the heart of the fuel cell. In November Ballard got a $3 million order for fuel cell stacks from its Dbb Fuel Cell Engines affiliate, which turns the stacks into fuel cell engines.
The engines Dbb makes will go to Ford and two other automotive customers. Ballard has supplied fuel cells to Ford, DaimlerChrysler, General Motors, Honda, Nissan (NASNY: Nasdaq ADR) and Volkswagen (VLKAY: OTC ADR) as well as non-automotive companies that make power equipment and generators.
BMW, Honda and DaimlerChrysler have promised to put fuel cell vehicles on the road in 2003. Honda and DaimlerChrysler showed prototype fuel cell vehicles at the recent international motor shows in Frankfurt and Tokyo.
Honda and Volkswagen have joined Ford and DaimlerChrysler in the California Fuel Cell Partnership, which will put 55 demonstration fuel cell vehicles on the road starting next year.
"This increasing level of activity by manufacturers is reflected in the orders we received from Dbb," said Ballard Chairman and Chief Executive Officer Firoz Rasul.
Ballard has been selling for around $25 on Nasdaq. Earlier this year it was selling at around $40. Its third-quarter loss reported November 1 was double last year's, as were research expenses, which has pressured the price. That's good news for long-term investors looking to buy the stock now.
William Diem, former managing editor of Automotive News Europe, is an independent journalist based in Paris covering the automotive industry. |
