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BLDP: Its Strategy in China

IN FOCUS: BALLARD POWER SYSTEMS AND ITS CHINA STATEGY

The alphaDIRECT Insight

The China fuel cell market presents a tremendous growth opportunity and the country has one of the world’s most aggressive plans to eliminate fossil fuel-powered vehicles and pollution. We believe that Ballard is well positioned with its strong competitive advantages, including high-performance and durable products, which is demonstrated by Ballard’s ~70% market share of the 2,500 fuel cell electric vehicles currently deployed in China. This momentum and dominance in China is likely to be strengthened further by its strategic collaboration with Weichai Power. Weichai Power has Tier 1 relationships with many of the vehicle OEMs in China and is one of the world’s largest suppliers of diesel engines for heavy-duty trucks. As part of this agreement Ballard expects its joint venture with Weichai to be commissioned by the end of 2019. In the interim Ballard recently announced the closing of a $44M sales agreement with the JV, with delivery anticipated to start during Q4. The components will be assembled in China to meet a portion of Weichai’s initial commitment to power at least 2,000 fuel cell electric vehicles by 2021. In summary, we believe China will remain the largest market in the world for fuel cell electric vehicles in the years to come and Ballard looks to be very well positioned to leverage this growth opportunity.

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Shawn Severson: First, I would like to thank you, Alfred, for taking the time to speak with us today. The last time that we spoke with Ballard Power Systems, we discussed the evolution of the European Market for fuel cells. Today, our focus will be on your strategy for one of the biggest addressable fuel cell markets, namely China. Before we get started, could you give us a brief introduction of yourself and what brought you to Ballard?

Alfred Wong: Sure, thanks for having me here today, Shawn. My name is Alfred Wong and I am the Managing Director, Asia Pacific for Ballard Power Systems. I have been at Ballard for 19 years now and originally started as an engineer in the technology R&D department, after which I moved into business development in 2008.  I relocated to China in 2017 to start  our first foreign Ballard office there. When I started this initial China market entry 11 years ago, things were very different and with very little awareness for the fuel cell technology. However, I knew that over time our technology would have tremendous potential, and I’ve been fortunate to have the opportunity to lead the growth of this business from zero to one of our most strategically important markets today.

Shawn Severson: Thank you, Alfred. Firstly, we know that the China market is a great growth opportunity and as an introduction to this discussion, can you talk a bit about China’s development plan to eliminate fossil fuel-powered vehicles?

Alfred Wong: China has one of the world’s most aggressive plans to eliminate fossil fuel-powered vehicles and it all started back in 2017 when Beijing first announced their plans to eventually phase out petrol vehicles across the national in favor of NEVs, or New Energy Vehicles, which include fully electric, hybrid, and fuel cell vehicles. In January 2019, China stopped allowing new fossil-fueled vehicle factories to be built by banning investments into new companies that only make such vehicles and imposed strict restrictions and conditions on existing factories that are looking to increase production capacity.

At a regional level, city governments of Shenzhen, Foshan, amongst others have put plans in place to use only zero emission public transit buses powered by battery electric or fuel cell electric technologies going forward.  The province of Hainan took that one step further by becoming the first region to announce that it will completely ban sales of all fossil-fueled vehicles starting in 2030. I expect we will see an accelerated pace to such announcements going forward as more provincial and local governments, including Shandong, Guangdong and Shanghai,  introduce their own initiatives to address air quality and other emission related issues.

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