In terms of the future, that's what investors do (or should do, anyway). And the beginning of a new year is a natural moment to consider the future. So, what better stock to consider now than a state-of-the-art company such as the hydrogen fuel cell manufacturer? Ballard Power Systems (NASDAQ: BLDP)?

Hydrogen fuel cells like Ballard and Take power (NASDAQ: PLUG) have had difficult years, as battery technology has dominated the race for the electrification of vehicles. In fact, neither are currently profitable. Nevertheless, Ballard plans to roll out a series of "new generation" chimneys in 2019. It is also working with Chinese partners to increase production. But will these movements be enough to generate big gains for investors? We will dig a little deeper to find out.

Stacks of increasingly tall pieces with small plants above the ground.

The green energy industry is growing. But will investments in fuel cells be more efficient? Source of the image: Getty Images.

State of play

At present, electric batteries are the main green technology used in automotive applications. Car manufacturers, including You're here (NASDAQ: TSLA) and General Motors mass-produced battery-powered cars. Many others are developing their own versions, and battery – powered buses and delivery trucks are also running on the roads. The half-batteries powered by the battery seem to be about to debut rather quickly.

On the other hand, nobody produces mass fuel cell cars; With regard to vehicles, the technology is currently only used in a few niche applications such as forklifts and airport vehicles. But Ballard and Plug are trying to expand the market. Plug Power recently delivered a delivery truck powered by a fuel cell to FedExand Ballard Power has announced plans to address the trucking market with its new Chinese joint ventures and next-generation fuel cells.

Fuel cells can jump on fuel cells, but given the market share of vehicles other than gasoline vehicles, it is not impossible that fuel cells will make substantial progress.

The climb

Fuel cell manufacturers still have some way to go if they hope to push the adoption of their technology to the point of making it almost rival that of batteries for the dominance of the alternative energy sector . But that's what Ballard needs to make his millionaires investors. Let's see how that could happen.

Ballard CEO Randall MacEwen rightly calls fuel cells "disruptive technology". When calling the company's third quarter results for 2018, he stressed that "long distance, rapid refueling, heavy payloads and flexibility of routes" were areas in which vehicles powered by cells could challenge the batteries

It has one point: Most battery-powered vehicles have limited battery life and long charging times. Even Tesla's superchargers take 75 minutes to charge a Model S battery from zero to 100%, which is far from being a "heavy payload". On the other hand, refueling with a hydrogen fuel cell would be equivalent to a visit to the gas station: pump some fresh hydrogen and you're ready to go. The range of fuel cell vehicles is also longer than that of most battery-powered vehicles of similar size.

Ballard's next-generation fuel cells promise a 33 percent improvement in power density, a 40 percent reduction in total cost of ownership, and a 50 percent improvement in durability. But as there are so many other components in a finished fuel cell vehicle in addition to the cells themselves, it is really impossible to say for the moment how such a vehicle could compare to a similar model powered by drums.

However, if vehicles equipped with Ballard's new-generation fuel cell batteries prove to have significantly longer battery life and favorable economic conditions compared to similar battery-powered vehicles, it is possible they are achieving considerable success. However (as we have seen with Tesla), such an economy usually accompanies a long ramp-up. For fuel cell vehicles, this means significant production and the construction of hydrogen refueling stations. After all, the ability to make a long-haul trip does not mean much if there is nowhere to go to refuel after you've arrived at your destination.

BLDP graph

BLDP data by YCharts

The ball and the chain

At the present time, the main obstacle to Ballard Power's strategy is also its greatest opportunity: China. MacEwen predicts that 50% of Ballard's revenues will come from the Asia-Pacific markets (read: China) over the next few years. But until now, the Chinese plans of the company have not come to fruition as expected. The evolution of government subsidy rules and delays in certification resulted in a slower than expected sale of one of the company's joint ventures, which completely hindered the company's third quarter revenues.

MacEwen also frankly admitted that the commissioning of service stations in China was "a bit difficult". "In a few cases, you encounter situations where the refueling station is built, but it takes a lot of time to get the licenses or they are somehow allowed to test …[s]o It is difficult to know exactly when these projects will evolve. "Ballard currently has only 16 service stations in operation throughout China, and another 69 are in the planning or construction phase, given the delays the company has experienced so far. do not exactly indicate that the adoption of the mass market is imminent: there are 1,386 Tesla Supercharger stations in the world, including more than 180 in China.

A projection that MacEwen issued at the announcement of the results was that large volumes could arrive in China in "2025 or 2030". So in about 10 years, unless there are additional delays like the ones we've seen before. Given the speed with which battery technology is evolving and the number of companies working on it, it seems more like a Hail Mary pass than a certainty.

What could happen

Could Ballard Power be a Millionaire Shareholder? Of course, if things in China change suddenly, with the rapid adoption of fuel cell technology, the acceleration of the construction of hydrogen refueling stations and the acceleration of the production of viable vehicles that can pull part of the infrastructure. But in the best case, it should be close to a decade.

Investors interested in this technology would better wait until the fuel cell sector shows that it can become competitive with the battery sector – or at least, that it can create a viable product viable for heavy vehicles and the corresponding support. system. Otherwise, this once promising technology (and its shareholders) could be left to dust.