A.J.: You are right on. As far as the fuel cells go, it should be fairly quiet in terms of anything big for a while yet. I know that Daimler (which owns 10% of ERC and, at least so far, has spent more as a licensee of ERC's patents than it has on Ballard's technology) this summer is going to be testing a very tiny (on the order of 250 kW) stationary mcfc power plant of its own design, using ERC's fundamental technology. If that works (ERC is not totally confident that it will) then Daimler will go full blast at the European market (earning royalties for ERC) and perhaps go after the US market, with ERC's permission (i.e., more royalties.)
But as for ERC itself, it is busy designing the next generation power plant, which is much smaller, more powerful, more efficient, etc., etc., than Santa Clara. All well and good, but that doesn't generate big headlines.
That doesn't mean the stock isn't a great buy, especially compared to Ballard, from a long term point of view. This is a potential multi-billion dollar company five plus years down the line, so its current market cap of $45 million or so leaves room to multiply your money many fold. And with Corning chugging away on the batteries, there is room for fuel cells to be a complete failure, and still have the stock go up many times. But I can't give you any reasons why it will go up tomorrow.
I am not too worried about competition from other people making fuel cells. There is just too much know-how and patents in ERC's corner. Natural gas powered turbines are the real competition that ERC must worry about, although they must be relatively large (25+ mW) to be reasonably efficient. But that technology is fairly advanced and continues to make progress.
You've read my Ballard notes, so you know that I don't think the world is standing still and waiting for any company. The internal combustion engines that Ballard's technology will be competing with eight years from now will be vastly better than they are today, with the pace of improvement stimulated by the threat of fuel cells and other new technologies.
ERC should expect the same, so it is not a done deal that ERC will be to the next century what G.E. was to this one. But given the huge efficiency advantages of fuel cells over conventional power generating methods, and given the advantages of having a product that is highly efficient at relatively small sizes, this is a plausible outcome.
Would I pay US $700,000,000 (Ballard's market cap) for a piece of that action, should it happen? No. $45,000,000? Yes. |
