Car Makers Shift Fuel-Cell Strategy
As the fuel-cell industry begins shifting from research to commercial development of zero-emission successors to today’s internal-combustion engines, three of the biggest companies said Tuesday that they are realigning their businesses to create a single powerful player.
Ford Motor Co. and DaimlerChrysler said they would swap their interests in a pair of fuel-cell and electric drive-train joint ventures with partner Ballard Power Systems Inc. in return for increased stakes in the Canadian firm.
The $345-million stock transaction, scheduled to close later this year, would give Ballard direct control over businesses in Canada, the United States and Germany that are among the leaders in developing fuel cells for automotive use and stationary power generation. Ford and DaimlerChrysler would boost their stakes in Ballard to a combined 43.1% from 31.5%.
“We are increasing our commitment to Ballard,” said DaimlerChrysler Director Juergen Hubbert. “Fuel cells are becoming a competitive technology.”
Consolidating the two research and development businesses, Xcellsis and Ecostar Electric Drive Systems, under Ballard “is the fastest and most efficient way to take this technology to market,” said Wayne Booker, a Ford vice chairman.
The companies were careful to say they do not believe the consolidation would hasten commercial production of fuel-cell autos. The timetable--demonstration models between 2003 and 2005, with limited retail production not expected until the end of the decade--depends on development of an infrastructure to supply the hydrogen on which fuel cells depend.
But the consolidation would enable Ballard to speed development of both automotive and power-generating systems, said Firoz Rasul, Ballard’s chief executive.
California is requiring major auto makers to begin producing zero-emission vehicles for retail sale in the state beginning in 2003. Competitors include General Motors Corp., Toyota Motor Corp. and United Technologies Corp.
“This is a new company” with the addition of the Xcellsis and Ecostar assets and personnel, Rasul said. “Our goal is growth from the new markets and technology” the consolidation brings.
Fuel cells are generators that use hydrogen to produce electrical current through a noncombustible chemical process. In automotive use, the current drives an electric motor that propels the vehicle.
The hydrogen can be derived, or “reformed,” on board the vehicle from hydrocarbon fuels, such as gasoline or methanol, or can be produced elsewhere and delivered to refueling stations much as gasoline is refined and delivered today.
Though systems that extract hydrogen from other fuels create low levels of emissions in the reforming process, the only exhaust emission of the hydrogen-powered fuel cell itself is distilled water.
Under terms of Tuesday’s deal, Ballard would become exclusive fuel-cell supplier to Ford and DaimlerChrysler for the next 20 years. Ford also would give Ballard all of its electric drive-train business.
The auto makers also would pump $69 million in cash into Ballard in the next three years.
Most of the work at an Xcellsis facility in San Diego County would be moved to the company’s headquarters in Stuttgart, Germany. Rasul said it is too early to say how many of the 100 employees there would be offered other positions.
Vancouver-based Ballard reported a loss of $26.7 million last year and has not posted a profit in six years. Its volatile stock--which has traded as low as $14.01 and as high as $112 in the last year--jumped 21.25% in Nasdaq trading Tuesday to close at $22.94, up $4.02.
Ballard would issue 9.4 million shares to DaimlerChrysler and 9 million to Ford to acquire their stakes in Xcellsis and Ecostar.
