Ballard views on China’s new policy regarding Fuel Cell Electric Vehicles (NASDAQ:BLDP)

China’s government announced a new official policy to support the adoption of Fuel Cell Electric Vehicles in selected demonstration regions in China.

“With a target to achieve 1M Fuel Cell Electric Vehicles on China’s roads by 2030, this new fuel cell policy sets a framework for the scaled adoption of FCEVs,” said Randy MacEwen, Ballard (NASDAQ:BLDP) President and CEO. “We believe this new policy signifies the strategic importance China places on FCEVs both from a decarbonization perspective as well as a competitive industrial perspective. The new policy comes just as the Weichai-Ballard joint venture has been recently commissioned in Shandong Province with annual manufacturing capacity in excess of 1 Gigawatt of fuel cell stacks. We believe the Weichai-Ballard joint venture is well positioned to become a leading fuel cell stack and module platform in China – the world’s largest market for commercial trucks and buses.”

The policy framework is set for the next four years.

Ballard’s technology enjoys a significant share of the ~7,200 FCEVs deployed in China to date.

While Ballard Power is growing at a rapid rate, the company is still having trouble on the profitability front. Moreover, fuel cell technology is seriously being challenged by battery technology. Ballard Power appears to be overvalued at its current market capitalization of ~$4 billion and P/S ratio of ~33. Ballard Power’s TTM revenue only stands at around ~$0.117B, wrote Simple Investment Ideas in the article “Ballard Power Systems Is Facing Major Challenges.”

Shares down 5.4% premarket.

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