So far, the world version of Elon Musk is winning. Although electric vehicle sales are starting to skyrocket, fuel cell vehicles remain a small niche market. Hydrogen-powered fuel cells may have advantages in battery-powered electric vehicles, but they are expensive, lack charging infrastructure, and have never had a Tesla-esque advance with the public. A few years ago, Musk called them “stupid cells.”
Where have the fuel cells impacted? For example, in the “material handling business” led by the success of Plug Power with forklifts; in specific on-site locations where commercial and industrial customers need reliable and safe energy (think of research facilities); and occasionally, with buses, driven by Ballard Power, and long-range trucks, despite Nikola’s high-profile trips.
But despite all the promises of “hydrogen” energy, fuel cell games have largely disappointed investors. Even this year, with DC working on tons of new clean energy tax aid, Plug Power is down 21%, Bloom Energy is down 32%, Ballard is down 34% and Fuelcell, a company that went public almost thirty years. –it has dropped 40%. Meanwhile, Nikola went on to trade around $ 37 last June and today is trading below $ 11.
Plug Power has gotten an overweight update to Piper Sandler today, though that’s partly because the stock’s performance has been so disappointing that the stock “offers an attractive entry point”. To its credit, Plug Power is advancing with new “green” hydrogen plants powered by renewable energy; Ironically, one of the defects of hydrogen has been the natural gas that is normally needed to produce it. (For more information, check out Forbes’ deep dive into last year’s Bloom struggles.)
But the other obvious trend working against the growth of more energy from fuel cells is the falling cost of solar and wind power, as we have been discussing. Even those Renewable source suppliers struggle to provide strong financial returns to investors, let alone for fuel cell technology, which is a relatively mature industry that is still trying to grow its front-line line.
The first enthusiasm around Nikola suggests that there is still an opportunity to re-attract the public with fuel cell technology, and it can be a resounding success, albeit a niche one. But now the burden of proof lies with these suppliers directly. And investors are right to wait on the sidelines in the meantime.
See you at 1pm!