CHICAGO BUSES... Jim, during the past several weeks a variety of opinions have been expressed about what exactly is going on with the Chicago buses. I have been invested in Ballard since 1995 and have been following it very closely since that time. I have no concerns whatsoever about the research and development process with regard to the Chicago and Vancouver test sites...but I will elaborate on that a little more at the end of this post.
My Investment Advisor has been in recent contact with the Investor Relations people at Ballard in an attempt to obtain clarification on the progress of the Chicago Buses. Following is the response from Ballard's Investor Relations department.
This is a response I received from Ballard.----------
Subject: Ballard Power Systems Inc.
Date: Tuesday, December 15, 1998 1:37PM
Thank you for your recent e-mail and your questions regarding the Chicago Transit Authority and BC Transit bus demonstration
programs. As you may already know, the buses use Ballard Fuel Cells and have fuel cell engines which were developed by dbb fuel cell
engines. dbb was formed in August 1997, when Ballard finalized its alliance with Daimler-Benz, to develop fuel cell engines for buses,
cars and trucks. In April 1998 Ford also invested in dbb when it joined the alliance. When dbb was formed, responsibility for the bus
programs was transferred to dbb in line with its focus on fuel cell engines. Ballard and dbb work closely together to ensure that the bus
programs are, and continue to be, a success.
As you requested, we would like to provide you with information regarding the status of the program. We would also like to clarify an
inaccuracy in the December 1998 issue of the Hydrogen and Fuel Cell Letter which incorrectly implies that the Chicago demonstration
bus fleet has been out of service since July.
The purpose of the 2 year fuel cell bus test and demonstration programs in Chicago and Vancouver is:
1. To assess the public's reaction to fuel cell vehicles and vehicles fueled with hydrogen.
2. To gain insight into the requirements of fuel cell bus users (transit authorities), including vehicle operating and maintenance
requirements, refueling station issues and purchasing process.
3. To gain information on the fuel cell system performance and maintenance from drivers and mechanics and to incorporate this
learning into the design of dbb's next generation fuel cell engine for buses.
4. To gather test information on the components in the fuel cell system and on the design of the system with a goal of identifying
component and design improvements and incorporating this information into the design process to develop a fuel cell engine for buses
that meet the reliability for urban transit operators.
Through the 11 months that the buses have been operated by the CTA and the 4 months that they have been operated by BC Transit,
Ballard and dbb have collected a vast amount of information covering all four purposes for the program. Specifically, dbb has collected
a significant amount of information related to the serviceability and design for maintenance of the fuel cell engine (purpose 3). We
have also identified component, system design and configuration improvements in the fuel cell engines as originally designed and built
in 1996-97 (purpose 4).
To both incorporate improvements into the test buses and to test dbb's improvements to the fuel cell engines, the buses are
periodically taken out of service to install system modifications. dbb is currently performing the second such modification.
The CTA buses were taken out of service during part of August and September to install the first of these modifications. (The buses
delivered to BC Transit had these changes made to the engines prior to their delivery to BC Transit.) Following this first upgrade, two
of the buses re-entered service until November when one engine and one bus from the CTA program were shipped to Vancouver to
allow the engine layout to be changed to provide for improved access and servicing of the various system components (purpose 3).
One bus remained in service in Chicago to allow us to continue to gather operating test data while the other two engines were
modified.
As the modifications are completed and the bus and engines are returned to Chicago the bus which is currently in revenue service will
be replaced in service by the modified buses and it will then have the modifications done to it. The current modifications to all of the
CTA buses are planned to be completed by the end of January. At that time, the same modification will be made to the buses in
operation with BC Transit. As I am certain you are aware, the fuel cells and fuel cell systems in the CTA and BC Transit buses are not
of a commercial design. Therefore, this periodic process of modifications to the buses will continue throughout the test and
demonostration programs.
In addition to the bus test and demonstration program activities, the information we are gaining from the bus programs is being
integrated by dbb into the design of the next generation fuel cell engine for buses. This design will utilize more advanced fuel cells
from Ballard (the CTA and BC Transit fuel cell buses use a fuel cell design that Ballard developed in 1993) and a much simplified design
and packaging.
So far our experience during the test and demonstration programs has been what was expected and contemplated when the programs
were established. The amount of test data that we are receiving is invaluable to both Ballard and dbb as fuel cells and fuel cell engines
for bus applications are developed and commercialized. We are also able to report that our partners in the programs, the Chicago
Transit Authority and BC Transit, are satisfied with the results of the programs to date and that the fuel cell powered buses have been
very positively received by their ridership and the general public in both Chicago and Vancouver.
We appreciate the opportunity to respond to your questions.
Yours sincerely,
Michael J. Rosenberg
Manager, Investor Relations
(HarveyO...my comments)
I think much of the concern expressed in the past few weeks stems from the fact that people forget that the research and developement on the Chicago and Vancouver buses is an ongoing project...and will continue until the buses are ready for the retail market. Both Chicago and Vancouver cities are "Beta" sites; which simply means that both cities have agreed to be the testing ground for this new technology. One of the disadvantages of being a beta site is that you are using a product that is not yet fully developed or "debugged" so you expect problems to arise. Of course there will be frustration by the users, but that's to be expected. However, we as investors, need to be more global in our outlook. We should view the process as an essential step in bringing a new product to market. Please remember that every time something goes wrong with any aspect of the buses, Ballard fixes it and improves the technology.
Does anyone remember the problems Microsoft experienced with Windows 95 and more recently Windows 98...and this was after the product hit the retail market. If an organization as large as Microsoft misses a few things or fails to iron out all the problems before their product goes to retail market, should we not a little more tolerant and patient with Ballard, especially in view of the fact that the buses are still in the research and development stages. |
