Fuel cell producer Ballard Power Systems Inc. BLDP announced that it has signed an agreement with Toyota Tsusho Corporation (“TTC”), a unit of the Toyota Group, to expand its operations in Japan. This strategic tie-up will help Ballard market it fuel cell products in the country.
Details of the Agreement
Per the agreement, Toyota Tsusho will act as a distributor for Ballard-powered fuel cell products in Japan. The product distribution agreement will runs up to Dec 31, 2020, unless the parties decide to extend it further.
The President and CEO of Ballard Power, Randy McEwen is visibly optimistic about the agreement. He believes that the company will be able to leverage Toyota Group’s extensive network across a wide range of end-markets to distribute its fuel cell products.
The Future of Fuel Cell Energy in Japan
After the Fukushima nuclear accident, Japan has persistently steered clear of nuclear energy, instead focusing on fossil fuels and alternate sources for generating electricity. The decision to shut down all nuclear power plants post the incident has been driving the demand for fossil fuels and alternate sources of energy in Japan.
Referring to hydrogen as an ‘energy of the future’, the Japanese government has revealed ambitious plans involving expenditure of more than $100 million on the development of hydrogen infrastructure and other initiatives over the next five years.
Thus, the scope of hydrogen-powered fuel cells in literally massive in Japan and the latest deal will enable Ballard Power to explore untapped opportunities.
Ballard’s Presence in Asia
Last month, Ballard and China-based Guangdong Nation Synergy Hydrogen Power Technology Co. Ltd. formed a joint venture to produce fuel cell stacks at a facility in the city of Yunfu, located northwest of Hong Kong. The five-year deal has a potential to generate total revenue of $168 million for Ballard Power.
Positive Investor Reaction
The news of Ballard Power’s tie-up with Toyota Group has gone down quite well with investors, with the company’s shares gaining 9.6% yesterday to finally close the trading session at $2.16.
Zacks Rank & Key Picks
Ballard Power Systems currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the same industry include OSI Systems, Inc. OSIS, AU Optronics Corp. AUO and BWX Technologies, Inc. BWXT. All these stocks carry a Zacks Rank #2 (Buy).
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