Ballard To Sell Automotive Fuel Cell Assets to Daimler and Ford; A New Company Will Further Automotive Fuel Cell Technology
08 November 2007
Ballard Power Systems will sell the company’s automotive fuel cell assets to Daimler AG and Ford Motor Company. Daimler and Ford will manage and fund automotive fuel cell technology development programs through a new private company to be located at Ballard’s facilities.
Payment for these assets will consist of all 34.3 million Ballard shares held by Daimler and Ford, valued at approximately $168 million based on the 20-day average share price preceding the announcement on Wednesday. These shares will then be cancelled. Ballard expects to record an estimated gain on the transaction of $95-to-$105 million.
This transaction will enable Ballard to concentrate on growth in fuel cell applications which provide clean energy solutions in commercial markets. It also lowers Ballard's risk profile by addressing the realities of the high cost and long timeline for automotive fuel cell commercialization. At the same time, a new private company will be established and will be positioned for success in automotive fuel cell technology over the longer term, with management and funding provided by Daimler and Ford.—John Sheridan, Ballard’s President and CEO
Under the terms of the sale Ballard will transfer the following to Daimler and Ford:
A perpetual, royalty-free, sub-licensable license to Ballard's remaining patents for use in automotive applications. As long as Ballard is a shareholder of the private company, Ballard will continue to grant perpetual, royalty-free, sub-licensable licenses to fuel cell patents developed by Ballard to Daimler and Ford for use in automotive applications.
113 employees, primarily in the research and technology development areas (20% of Ballard’s workforce).
Automotive fuel cell test equipment and other automotive assets such as service spares and test materials.
Daimler and Ford will contribute $60 million to the new private company and Ballard will invest $60 million. The ownership structure of the new private company will be 50.1% Daimler, 30% Ford and 19.9% Ballard. The value of Ballard’s investment in the private company is protected by a purchase/sale option agreement with Ford for $65 million plus interest.
Ballard will not be obligated to provide any ongoing funding to the private company.
In association with its minority ownership position, Ballard will:
Receive rights to use automotive intellectual property in non-automotive applications, including both the transferred and future intellectual property developed by any of the private company, Daimler and Ford.
Provide contract technical services to the private company, on a profitable basis.
Manufacture fuel cells for the private company, Daimler and Ford, on a profitable basis.
Ballard, Daimler and Ford have agreed to terminate the Automotive Alliance Agreement that had defined their respective responsibilities for automotive fuel cell development work. This transaction also cancels Daimler and Ford’s special voting and veto rights at Ballard, as well as their rights to four seats on Ballard's Board of Directors.
Ballard will for now focus just on the commercial fuel cell markets such as materials handling, backup power and residential cogeneration. Today, commercialization activities are progressing in each of these markets in North America, Europe and Asia.
These commercial markets represent a very large global opportunity for fuel cell products. Our product shipments in the third quarter of 2007 were up 123% over the same quarter in 2006—clear evidence of the growth potential. We are also confident there are opportunities for our products in additional geographic markets as well as product extension opportunities in different applications.—John Sheridan
Ballard also remains committed to fulfillment of current bus demonstration program contracts, including the supply of fuel cell modules for up to 20 BC Transit fuel cell buses. Ballard will continue to actively pursue additional fuel cell bus demonstration program opportunities. These programs generate environmental benefits from the use of fuel cells and also promote greater awareness of fuel cell-based solutions.
The transaction has been approved by Ballard’s Board of Directors and has received the necessary approvals of Daimler and Ford. Completion of the transaction remains subject to receipt of all necessary regulatory approvals as well as the approval of the Daimler Supervisory Board. As the transaction constitutes a related party transaction for the purposes of applicable Canadian securities laws, the transaction must be approved by a simple majority of Ballard’ shareholders, excluding any votes cast by Daimler or Ford.
I thought it had been agreed that running vehicles on fuel cells was very bad for the environment due to the CO2 cost of making the incremental electricity to make the hydrogen? Or compared to just using the natural gas directly in the engine.
Look at Ballard 10 years ago, it thought then that there was a future in transportation using fuel cells. Now it knows better.
Posted by: John Baldwin | 08 November 2007 at 12:18 AM
Financially this seems very odd.
Why do Ford and Daimler want to put money and management into a fuel cell development company now? Neither has tons of spare cash, especially Ford.
If Ballard was making good progress why not hold the Ballard stock. If Ballard was OK but needed capital why not supply some?
And if Ballard was not making progress why not look for other partners? It's a big world out there.
Ballard really seems to make out well. They shed 113 employees and their associated benefits and give up only some patent royalties which probably pay nothing at the moment. They can still use all their own patents and anything that comes out of the new company. There is a considerable paper profit which will cheer executives and stockholders.
Not enough information to draw a conclusion. My guess is that Ballard had firmly decided to quit FC for vehicles. Ford and Daimler didn't know what to do and postponed a final decision with this arrangement.
Posted by: K | 08 November 2007 at 01:34 AM
In relation to the 2006 profit of more than 3.000 Million Euros, this is very little money which Daimler is investing again into Ballard and the fuel cell technology.
But now there are no more discussions and discussions again. No they have the majority and what they say will be done.
More interesting could be the answer to the question how much money Daimler is putting into Lithium battery activities. A123 oder Teslamotors ??
And remember: Daimler has still a 19% share at Crysler. I drove the Crylser Epic in 1999, a wonderful electric car then. The Ni-Mh batteries in 1999 a bit expensive, but the car was ok, the performance really good. It would be quite a modern car still now. Electric and with new batteries, probably.
Posted by: R. Reichel | 08 November 2007 at 03:26 AM
John, a ICE CNG vehicle consumes 7 kg of NG for 100km for a fcv with the same performance, same mission 1kg of h2 is enough: even if you reform 4 kg of NG to get h2 we save a lot of fuel and co2 emission!
Posted by: Roby | 08 November 2007 at 08:35 AM
@ Roby -
you need 4kg of CH4 just to supply the hydrogen atoms needed to yield 1kg of H2. However, steam reforming is only 65-75% efficient, so you actually need to consume ~6kg of CH4. Additional overheads accrue for compression to 700 bar or else liquefaction in the distribution chain. By the time your 1kg H2 reaches your FCV, it will have required 6.5-8 kg of CH4 to deliver.
In which case, you might as well burn NG directly in a monovalent ICE. Adsorbed NG is a near-term prospect, reducing the required pressure from >200 to ~60 bar. Add start-stop functionality and the well-to-wheels carbon footprint will be no worse than that of an FCV. The NOx produced can be dealt with adequately in a three-way catalyst.
Also, consider that NG distribution networks already exist. Setting up a parallel infrastructure for hydrogen
would be very expensive and generate substantial CO2 during construction. On top of that, the cost of automotive fuel cells and on-board storage is extremely high.
The only reason auto makers are pursuing H2 at all is because California's ZEV mandate can only be fully met by producing some number of FCVs and/or BEVs. It is only very recently that battery cell and pack technology has advanced far enough to make full-featured BEVs a realistic option once again.
Posted by: Rafael Seidl | 08 November 2007 at 09:11 AM
RAfael you are partially right: is true the SMR has 65 to 70 % efficiency but 4 kg CH4 have 200 Mj of energy with respect 120 Mj of 1 kg of H2 so they are more than enough ! (that means that Roby in his computation assumed an efficiency around 60% that take in account also the energy spent in refuelling h2 at 350 bars. Probably you forgot that with SMR you can get H2 not only from CH4 but from water too:
CH4 + 2H2O => CO2 + 4H2.
Moreover FCV in Nedc cycle has 45 to 50 % of efficiency (if hybrid 55 to 60) while a ICE NG is for sure lower than 17-18 % (trust me i'm in the field). Even taking in account the ineffiecency in the production of H2 the FCV cars are so efficient that the overall co2 emission is lower! trust me! the problem is that FCV are promising but not yet mature while today my company sell many many thousand of CNG cars (and in the near future too hopefully!).
Posted by: paolo | 08 November 2007 at 12:39 PM
Do 700 bar tanks commonly exist? Cost, lifespan?
Do they have regulatory approval for stationary/on-road use?
700 bar is roughly 4x the pressure found in an automotive CNG tank.
Posted by: Bill | 08 November 2007 at 04:39 PM
The new Mercedes B Class that will be for sale in Germany from next June will use 4.9 kg per 100km.
This is not leaving a lot of room for fuel cell vehicles. Run it with a mixture of 20% biomethane and 80% fossil methane and you are getting very low g CO2/km, at maybe an extra cost of around 2000 Euros. No range issue, 450km on CNG, also runs on petrol...
Posted by: baldwincng | 09 November 2007 at 12:50 PM
hei Baldwin a FCV uses 1 kg h2 in real conditions! Not in a homologation nedc cycle!!! The 5 kg of ch4 are simply assuming that the engine has the same efficiency of the gasoline one (6,7 liter homologation equals teorically 5 kg of ch4 unfortunately with a port inj a methane engine cannot achieve the same efficiency of a gasoline one. what about the increased weight of the car?)
Do you understand that in NEDC cycle a fcv has more than 50 % vs an optimistic 20 % of a NGV vheicle? the fact that today a NGV is more mature of a FCV is obvious but also inn the 1900 a horse was better than a car...
Posted by: roby | 09 November 2007 at 02:38 PM
paolo and roby are absolutely correct!
Even with 65%-efficient SMR, hybrid FCV's can double the energy efficiency of ICE. The efficiency of SMR can be considerably increased if the high-temp heat of 800 C required can be recycled via a steam turbine for electricity production, if and when large-scale SMR or gasification of biomass or coal will be used for H2 production. In this fashion, very little energy will be wasted in SMR or gasification of coal and biomass, and FCV hybrids like the Honda concept FCX which can achieve 60% tank-to-wheel efficiency, can triple the efficiency of ICE-NGV at 20%, or considerably higher than the Prius II at 37% tank-to-wheel efficiency.
Something to think about, isn't it? FC and H2 advocates are not fools at all!
Posted by: Roger Pham | 09 November 2007 at 10:04 PM
Sorry, it's not efficiency that drives decisions, but initial cost and variable (fuel) costs.
Tank-to-wheel efficiency doesn't much matter when the fuel cell itself is too expensive to put into a mass-market ($30,000) vehicle.
Posted by: Bill | 10 November 2007 at 05:32 PM
for all the hydrogen fanatics, can one please post a report on the current developments of hydrogen and its promises? Every time I read on Green Car Congress I see nothing but hydrogen bashing but only a few readers are able to see the, "light" and still have faith in the product.
I on the other hand are biased as **** when it comes to battery electric vehicles + range extender like the Chevy Volt. But I still wonder, is the hydrogen infrastructure still worth it despite having to build it first? I mean what's wrong with the AC 110 volt outlet if it can meet my needs on a daily basis as well as having the electricity generated from hydro? (British Columbian here)
Like why would I buy a Honda fuel cell for $50000 and then a hydrogen refueling station for another $10000 when i can buy a $30000 Chevy volt that meets my needs? The ******* thing can't even out accelerate a Chevy volt (8.5 sec to 100km/h) in terms of drag to drag performance. (vs the Fuel cell Honda 10 seconds to 100 km/h)
Posted by: philmcneal | 11 November 2007 at 01:46 PM
The Chevy Volt sounds amazing, Phil. How long have you had one?
Posted by: | 11 November 2007 at 03:57 PM
I to thought fuel cells & hydrogen was going to be far to costly, untill i read about a small UK company called ITM power, they seem to have made some progress on the costs of this gear and making hydrogen from renewable or off peak electric.Check them out.
Posted by: ward | 12 November 2007 at 06:49 AM
Lets not assume that transport is the only end use for or H the only fuel.
Renewables and other grid based surpluss energy will need transient storage to increase efficiency.
Low or zero emmision machines are very desirable and If still expensive will no doubt serve he growing demand while he supporting technologies develop in lock step.
An instant foot in the door, Training for the techs -every journey starts with the first step.
This (these) Co's have track records of landing product in meaningfull no.s already.
The job needs to be done and here is a co stepping up.
I think this is an example of enlightened self interest.
Posted by: Arnold | 13 November 2007 at 02:42 AM
opps excuse my ignorance, the 08 FCX is faster than I thought, its a 7 second car to 60 mph from zero.
and apparently it handles not too shabby: http://www.canadiandriver.com/articles/ly/hondatoybox.htm
Posted by: philmcneal | 13 November 2007 at 04:15 PM
forgot to add, the volt is going to be targetted with a 8-8.5 seconds to 60 from zero, so I guess Honda beat it to the ZEV production line first, congrats.
Assuming they are going to full throttle the FCX 08 model and then have it cost comparable for $30000 a piece? For a seven second car that gets 80 mpg that sure sounds YES in my book, ok so how long the fuel cell stack lasts?
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