Shares of fuel cell company Plug Power (NASDAQ:PLUG) slipped as much as 3.3% in early trading Friday and are still trading down about 2.8% as of 10:15 a.m. EDT. Curiously, though, the news out of the fuel-power sector this week isn’t about Plug at all — it’s about Plug’s rival in fuel cells, Ballard Power Systems (NASDAQ:BLDP).
What’s up in fuel cells this week? As Ballard announced yesterday, Indian industrial giant Tata Motors has just placed an order for 15 of Ballard’s 70-kilowatt “FCmove” fuel cell modules to power its zero-emission Fuel Cell Electric Buses. No price on the purchase was announced, but Ballard says it plans to deliver the fuel cells before the end of next year.
What does this have to do with Plug? Simply this: In April this year, Plug Power announced that it’s moving beyond its core business of building fuel cells for electric forklifts and partnering with Britain’s BAE Systems (OTC:BAES.Y) to build fuel cell systems for buses.
Granted, Ballard’s news concerns the Indian bus market, while the focus of Plug’s partnership with BAE will be North America. But even so, Plug has elected to become a competitor to Ballard in the fuel cell bus market. As such, one could argue that good news for its competitor Ballard is bad news for Plug.
This isn’t an argument I personally buy, by the way. The market for electric buses is currently so small that any progress penetrating the bus market by any fuel cell company probably increases the popularity of the concept for all participants. But if other investors are taking good news for Ballard as bad news for Plug, then that would explain why Ballard is outperforming Plug stock today.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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