The daily price fluctuations of the shares in the hydrogen and fuel cell sector discussed here – primarily those from the USA and Canada – give an indication that very different interests determine events here: Thus, on many days in July 2021, there was a concurrence of price declines with almost identical percentage losses in the prices of all these shares with manageable trading volumes at the same time. In other words: The buy side held back and the forces betting on falling prices had the upper hand. However, no selling pressure could be detected, which is reflected in the amount of shares traded.
With US$ 5 billion in the bank, Plug can position itself perfectly in the hydrogen and fuel cell theme complex. This includes its own H2 production as well as the development of alliances, such as the most recent one with Renault. And it is advisable – in my opinion – to reduce the one-sided focus on the market for forklift trucks (material handling), since the major manufacturers such as Toyota and Kion are pursuing their own hydrogen strategy in the future and the devices of future generations will already have a fuel cell system included, so that the conversion or expansion of a battery is not necessary.
It seems like Nikola Motors [Nasdaq: NKLA] was able to stop the bleeding of the past few months. The stock is rising again. Up to 30 million shares are now traded each day, a comparatively high volume for the company. The new-found optimism among investors seems to stem from reports about Nikola’s recent progress in meeting its targets. Construction of the Arizona factory is well underway. Then there are new production facilities being built in Ulm, Germany. And another boost for the stock came when competitor Daimler Truck announced its intention to have 5,000 hydrogen-fueled heavy-duty vehicles on the road over the next few years, with business partner Shell providing the fueling infrastructure. Sounds a lot like Nikola’s business model, the difference being that Nikola will produce its own hydrogen, and be able to keep the revenue, instead of outsourcing the task to another company.
There are two sides to every story. And that’s very much the case with the planned cooperation with General Motors, GM, and the cancellation of 2,500 battery electric refuse trucks for Republic Services which turned out to be rather fortuitous in retrospect. In the GM scenario, Nikola would itself have had to spend over USD 700 million on tools, among other things. The participation of GM with USD 2 billion as a “valuable consideration” would have resulted in a dilution of the number of issued stocks.
Plug Power [Nasdaq: PLUG] has undergone one financing round after another, with a third bought deal sandwiched in between, this time to the tune of more than USD 1.7 billion. What’s more, the South Korean SK Group has promised to put up USD 1.6 billion in return for a 9.9 percent ownership stake in the company, an investment that will also form a basis for a joint venture between the two corporations. And if that’s not enough, Plug, which is headquartered in the U.S., intends to fit out delivery vehicles for France’s Renault Group. Plus, the company has been busy buying in top talent for its management team. That’s the good news.
The hammer fell on Nov. 30, 2020. General Motors will not buy into Nikola. But according to the new memorandum of understanding, GM still wants to work with Nikola on battery and fuel cell technology. Consequently, the Badger pickup truck will not emerge from GM’s assembly line as planned. And the originally projected USD 2 billion investment is also rendered moot. As a result, Nikola stock plummeted.
Fuel cell and hydrogen stocks are riding a wave of popularity as a new megatrend sweeps the market. So far, every single one of these stocks has exceeded expectations. But how long will the love affair between investors and the industry last? Will analysts and shareholders use new methods to evaluate business models, prospects, backlogs, submarkets and revenues, and, above all, the potential for profit? And will the market separate the wheat from the chaff? I’d say yes, that will definitely happen.
A temporary jump in Nikola’s market cap to over USD 25 billion and a stock price topping USD 70 – on one day, even USD 90 – were quite the start. And yet, I stayed on the sidelines, which turned out to be the right thing to do.
This March, the German gas and water industries association DVGW published the findings of a study called “Hydrogen electric vehicles – trends and outlook,” which the organization had commissioned to evaluate the prospects for hydrogen in the transportation sector.
Two years ago, the interest of German truck manufacturers and freight forwarders in fuel cells was extremely low. It’s different today. Almost all logistics companies are now in some way concerned with the question of what fuel their vehicles will be powered by in the future.