Is it Time to Invest in Hydrogen Fuel Cells Again?
In a market dominated by battery electric vehicles, hydrogen fuel cell technology continues to make some headway.
Earlier this week, Hyundai announced that it had reached an agreement with Audi to collaborate on hydrogen car technology.
Under the terms of the new agreement, the two companies will share intellectual property and components in an effort to bring down costs to make the technology profitable.
That's good news for hydrogen fuel cell proponents. Both automakers are leaders in the fuel cell industry. Audi leads fuel cell development within Volkswagen, the world's largest automaker, and Hyundai was among the first (after Toyota) to introduce a hydrogen fuel cell vehicle to the retail market.
Hyundai most recently unveiled its latest generation of hydrogen fuel cell vehicles, called the Nexo, at CES back in January. The Nexo — the latest evolution of Hyundai's ix35 FCEV, which is essentially just a fuel cell-powered Tucson — first began very limited production in 2013.
For the past few years, car manufacturers such as Toyota have promoted the benefits of hydrogen cars, which require less refueling time than battery electric vehicles. Right now, however, hydrogen vehicles are still significantly more expensive and suffer from a lack of infrastructure.
There are currently 39 publicly available hydrogen refueling stations in the U.S. — 35 are in California, two in South Carolina, and two in the Northeast.
Globally, there are only around 500 hydrogen refueling stations. But the industry is working to add more all the time.
Earlier this week, the first retail hydrogen fueling station opened in Canada as part of a collaboration between Hydrogen Technology & Energy Corporation (a private Vancouver-based firm) and Shell. The station is the first of a network of eight hydrogen stations planned to be open in British Columbia over the next two years.
Other Canadian provinces are also expecting to open hydrogen fueling stations and testing vehicles. The Quebec government plans to soon begin testing a fleet of 50 Toyota Mirai fuel cell cars.
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For the time being, though, it's likely battery electric vehicles will continue to dominate the low-emissions car market.
Last year, the global battery electric vehicle market was valued at $17.4 billion. In the next eight years, that number is expected to be closer to $100 billion.
Meanwhile, the global hydrogen fuel cell vehicle market lags far behind.
Estimates put the current fuel cell vehicle market at less than $2 billion. Reports show that by year-end 2017, fewer than 6,400 hydrogen fuel cell vehicles had been sold globally since 2013.
Still, the hydrogen fuel cell market is growing. By 2022, the market is estimated to be worth over $12 billion. And that should be noteworthy to investors.
Even though the hydrogen fuel cell vehicle market still lags far behind BEVs, any growing market can provide a good investment opportunity.
Maybe it's time again to take a look at the big two fuel cell players: FuelCell Energy (NASDAQ: FCEL), Plug Power (NASDAQ: PLUG).
Over the past few months, shares of all three stocks have taken a beating. Ballard is down almost 50% since hitting a 52-week high in November 2017. But most of the excitement and newness surrounding hydrogen fuel cell technology is all but gone.
Large automakers continue marketing the technology, but the mainstream and social media are no longer adding false value through hype. So now might be a great time to start looking back into fuel cells.
Until next time,
As an editor at Energy and Capital, Luke’s analysis and market research reach hundreds of thousands of investors every day. Luke is also a contributing editor of Angel Publishing’s Bubble and Bust Report newsletter. There, he helps investors in leveraging the future supply-demand imbalance that he believes could be key to a cyclical upswing in the hard asset markets. For more on Luke, go to his editor’s page.
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