A supply agreement has been announced between Ballard Power Systems Inc. (USA) (NASDAQ:BLDP) and Broad-Ocean. In the deal, Ballard will supply and deliver fuel cell engines numbering 200 for use in clean energy commercial vehicles and buses in key cities in China. Manufacturing of the fuel cell engines will be done at Ballard’s facilities in British Columbia, Canada. Shipments of the fuel cell engines in the deal that is approximately valued at $11 million will be done later this year. Ballard, however, stands to earn more from the deal with time.
“This $11 million order will be incremental to the expected $25 million value,” said the president and chief executive officer of Ballard, Randy MacEwen.
Earlier deal
Ballard’s supply deal with Broad-Ocean follows the signing of a broader agreement earlier in the year in which the two companies envisaged not only a supply of products but also technology transfer and licensing. From the perspective of Ballard, China’s rising urbanization presented an opportunity for its clean energy technology that couldn’t be ignored since this technology could be useful in solving the challenges engulfing the most populous country in the world such as air quality and mass transit.
According to the deal, Broad-Ocean would liaise with the local governments in each of the assembly locations. The company would also engage with manufacturers of electric commercial vehicles and buses with a view to having the Ballard-designed modules deployment on their engines.
Clean energy motors
The Zhongshan, Guangdong-based Broad-Ocean was started in 1994 and focuses on manufacturing motors which are used to power specialized and small electric machinery for EVs (electric vehicles). These EVs include passenger vehicles, commercial vehicles and buses. These motors also find use in HVAC (heating, ventilation & air conditioning) equipment.
On an annual basis, the Chinese firm manufactures over 50 million motors that are supplied to customers located on 5 continents. Last year, Broad-Ocean bought a stake in Ballard worth $28.3 million. This is approximately 9.9% of the outstanding common shares of Ballard.
On Thursday shares of Ballard Power Systems Inc shot up by 9.24% to close the day at $2.60.