Garth: It is funny. I assert that fuel cell cars will not be profitable to DB or Ballard for some number of years after they are introduced. Everyone here attacks my viewpoint. I have to spend lots of time defending my scenario. What I should have done was just wait a few days, and I would have seen Ballard and DB publicly state that I am right!
Here is the link to where they do so: biz.yahoo.com
The part confirming my view is where, after saying that DB expects to sell 100,000 cars in 2004, it goes on to point out that "the new engine needed sales volume of around 250,000 a year to be competitive on a cost basis for the manufacturer. Before the critical sales mass is reached, Daimler is likely to have to subsidise the cars in the early days." Well, you heard it here first.
As to the delay in Chicago, it is immaterial. I mentioned it just to point out that there is a Ballard cult that has certain beliefs about the company that aren't shaken, regardless of reality. One of those beliefs is that the company has never, ever, ever missed a deadline. That is verifiably not true, yet I feel very comfortable in predicting that somebody, in the next few dozen posts on this thread, will repeat that assertion.
Cult members see what they want to see. Cult stocks always have market caps wildly above anything that can be justified by objective analysis. When stock cults lose faith, as they often do in bear markets, what happens to the stock isn't a pretty sight.
I continue to feel that buses are Ballard's best opportunity, and they could possibly turn a small profit on them. But if DB needs 250,000 cars per year to breakeven, and the entire bus market is maybe 15,000 per year, what percentage of that market will Ballard need to make a profit? And what eps could one possibly generate from that level of sales - a couple of dimes per share, perhaps?
Since Paul Lancaster thinks I am dead wrong in my pessimism about PEM technology to be viable in stationary power, could he please explain why? Ballard's patents show that it is using the same old chemical process that has been around for decades to extract pure hydrogen out of natural gas. This is the part of IFC's phosphoric acid fuel cell product that keeps it so expensive, and PEM cells require much more processing equipment than phos acids. What am I missing?
I say Ballard will make no money in stationary power, maybe some money in buses, and have to pay its share of a lot of R&D for cars. If there are any profits at all, they will be marginal until car production gets well up above 250,000 per year. That is a long time from now.
BTW, what did you think of my methodology for looking at development stage stocks, and comparing them? |
