Ballard Power Systems has long been the leading global supplier of proton exchange membrane (PEM) fuel-cell technology for manufacturers of buses, trucks, trains and ships. But it appears Cummins, best known as a leading maker of heavy-duty diesel engines, has quickly become a significant competitor to Ballard in the soon-to-surge heavy-duty mobility space.

“We currently see a very dynamic and evolving competitive landscape, and the Cummins acquisition of Hydrogenics a couple years ago makes them a good example,” Guy McAree, Ballard’s director of investor relations, tells Hydrogen Economist.

“Cummins has the size, global footprint and history to successfully scale and refine fuel-cell technology to achieve performance and cost parity with incumbent technologies” Westbroek, Cummins

Cummins acquired Mississauga, Ontario-based Hydrogenics, a near-quarter-century-old developer and manufacturer of PEM fuel cells and electrolysers, in September 2019. French industrial gases giant Air Liquide holds a 19pc stake in Cummins’ new subsidiary.

Ballard estimates the global market for hydrogen fuel-cell power components for trains will reach $4bn annually by 2030 compared with $13bn for marine transportation, $14bn for buses and coaches, and $100bn for medium and heavy-duty trucks, including ultra-class haul trucks for open-pit mining.

Cummins

Cummins has been preparing for a zero-emissions future for half a decade, while laying out a comprehensive hydrogen strategy on the company’s Hydrogen Day on 16 November. On the mobility front, it has big plans for hydrogen-electric systems, according to Amy Davis, vice president of the overarching company and president of the firm’s new power business. Cummins is the number-one maker of diesel engines for 18-wheelers in North America.

“Cummins has the size, global footprint, and history to successfully scale and refine fuel-cell technology to achieve performance and cost parity with incumbent technologies,” Wido Westbroek, the company’s general manager – fuel cells, tells Hydrogen Economist.“We have well-established relationships with key OEMs, and fully understand the work our customers need to do with their equipment. In addition, we understand the hydrogen value chain and have well-developed industry-leading expertise in electrolysers.”

Cummins produces a line of containerised alkaline electrolysers for on-site hydrogen production, while making the world’s largest PEM electrolyser, commissioned at an Air Liquide hydrogen plant in Becancour, Quebec in late January.

The sale of alkaline and PEM electrolysers benefits Cummins’ foray into PEM fuel cells in three ways: by leveraging electrolyser sales to fund investment in fuel-cell technology; through technological synergies between PEM electrolysers and fuel cells, since they simply perform the reverse function (water to hydrogen and vice versa); and by building additional scale across its supply chain. Cummins is projecting revenue of $400mn from electrolyser sales by 2025.

Ballard

In contrast, Vancouver-based Ballard, a pure-play PEM fuel-cell company—and a much smaller company than Cummins—has taken a very different strategy to achieve leadership in the heavy-duty mobility space, and potentially thwart its up and coming competitors such as Cummins. In particular, Ballard has forged a large number of partnerships and strategic alliances to give the company greater heft, while funneling large sums of capital into developing cutting-edge PEM fuel-cell technology.

$100bn – Annual fuel-cell market in medium and heavy-duty trucks by 2030, according to Ballard

“Ballard’s competitive advantages include a number of important differentiators,” says McAree. “Our company has a deep level of fuel-cell expertise and talent; leading PEM technology and IP, including 1,400 patents and patent applications; a rich and vertically integrated product portfolio; unparalleled field experience, including powering vehicles for more than 75mn km on the road; strong customers and industrial partnerships; a powerful brand; and a fortified balance sheet.”

In terms of its balance sheet, after being cash-starved since its inception in 1979, Ballard now has cash reserves over $1.2bn and zero debt. In addition, the company has regulatory approval to sell up to $1.5bn of additional stock over the next two years to further benefit from the jump in prices for ‘all things hydrogen’ since the beginning of last year.

Ballard is likely to make a significant acquisition in fourth quarter of this year or first quarter of next, according to Paul Dobson, senior vice president and CFO, during the company’s first quarter earnings call on 4 May. In February, McAree told Hydrogen Economist that Ballard is looking at acquiring a company that makes electrolyser technology in the relatively near future.

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Author: Vincent Lauerman