To all: SID's in'SID'dious and ill-con'SID'ered in'SID'nuations...
(apologies in advance...this is rather long...)
1. The market for stationary power, ERC's target, will be huge if ERC can sell its product for a capital cost per kilowatt of $2000 or less. Reaching that goal is a much easier job than the figure of a few hundred dollars per kW that Ballard has stated it must achieve for a fc car engine to be competitive with an internal combustion one.
True, but don't forget that ERC (and Ballard) are still only talking about niche staionary power markets, such as remote areas, need for reliable, clean signal power, etc. They still have to compete with hydro (which is DIRT cheap), wind, solar, etc. for the rest. Ballard, on the other hand, is after the *mainstream* mobile power market.
2. Accordingly, ERC expects to have a commercial product for sale within three years. Although not guaranteed, this expectation is reasonable, given the money ERC has invested thus far and has lined up to complete the project. Taking BD at its word, commercial introduction of fc cars is not scheduled for eight years.
BLD has a commercial product in trial right now - the buses. This is also a very big market, though not the size of cars. CTA bought the 3 buses for $8 million. If all goes well in Chicago, CTA has stated they will consider converting their entire 2000 bus fleet to Ballard buses, starting in 1999.
3. Ballard is betting the farm on fc vehicles. It has no other technology, and its PEM cells are ill suited for stationary power. ERC, independent of its work on fuel cells, also has developed an extremely promising rechargeable battery technology. Corning Glass is a prime licensee and is spending substantial sums to turn it into a major product line. DB, Audi, Sanyo, and others are trying it out for electric vehicle applications. This technology addresses markets worth billions, so even if ERC's fuel cell technology doesn't pan out commercially, the company still has impressive earnings potential.
(ahhh, I see, sort of like how Exxon is "betting the farm" on oil.... ;-)
Wrong. Ballard also has marine, stationary, portable power, (180 + patents granted) and ...surprise! battery technology (non-fuel cell). Subsidiary Ballard Battery Systems Corp., the predecessor to the current BlueStar Battery Systems (see Annual Report 1996, pg. 25). They chose to spin this off into the separate co. (in which Ballard maintaions an equity interest) in order to focus on its "core competency".
By the way, for an example of excellent "rechargable alkaline" technology, cheeck out TSE:BTI. Excellent technology, big name alliances, but as I have previously mentioned, that is not enough. Anyone I know who has their "Pure Energy" or "Renewal" products swear by them...there is no contest. Still can't gain market share.
4. Despite these points in its favor, ERC's market cap is not even US $50 million. Ballard's is around US $700 million. Most development stage battery companies have market caps of $75 to $150 million, despite having technologies that address a much smaller potential market than does ERC's. These valuations, IMO, are completely wrong.
I think that ERC's market cap should be the same or more than Ballard's;
Ballard has a bigger potential market than ERC. They are both targeting the stationary power market, and Ballard is also targeting mobile. Opinions may differ on who will win what share of the stationary market. NB: This does not take into account ERC's battery market, but see previous point re: BLD battery interest.Besides, I think we all agree that the FC car market is bigger than the rechargeable battery market.
...successful, at least on high end cars. But even that goal involves cutting the costs to less than 1% of current levels.
Old info. I asked Firoz Razul this question directly at the last AGM. He made it very clear - the 100 to 1 reduction was based on the inital cost of the BLD fuel cell. They have already reduced it to 1/10th original cost. They must reduce costs another factor of 10, not 100.
So DB will have to make sure that there are a lot of fc powered cars on the road, to get gas station owners to invest in methanol, which in turn will further encourage the sales of fc cars.
As Michael Rowe pointed out, owners won't need to invest - Methanex will do it. My guess is they will either lend the equipment for free - like oil co's building pipelines to open up new markets - and use a royalty arrangement, so the station will not be at risk financially, or else negotiate directly with the parent oil co. for a blanket deal.
Why, in its latest news release, does DB say that availability of methanol will be a problem?
Because even for free, infrastructure is not instantaneous. There will be a lag here similar to the development of FC automobiles, although some early incentive could be given to oil co.'s, e.g. in providing methanol fuel services for buses at their depots.
It the trade press, however, it is a different story. Power Engineering, for example, and Chemical Engineering have all had articles about fuel cells in the last few years, where ERC got all the attention and Ballard was relegated to a few lines at the end. But that is because those magazines are aimed at a knowledgeable audience.
"Yeah...so all you stupid, rich, Ballard shareholders will just have to get over it...didn't make it into Chemical Eng.....nah nah!....Barrons? WSJ? Financial Post? Aww, who reads those rags anyway?"
Those who remember (or care to review) the postings around the time of the D-B deal will recall that Sid also did several about-faces, e.g. first claiming that it was a bad deal for Ballard, then in a later posting that it was a good deal after all....
Having said all (ALL!) that, I must still point out that I do appreciate Sid's thought provoking comments. He is not always perfectly accurate, but he usually is. He provokes more discussion of real issues on this thread than anyone else.
Garth. |
