BYD, a pioneer in electromobility: Can First Hydrogen and Plug Power follow suit with hydrogen?

BYD - Energy storage a new lucrative business segment?

BYD originally started with the production of batteries. Later, automotive and chip production were added. As the Company was unable to keep up with the established major car manufacturers in the combustion engine sector, it focused on electromobility at an early stage. The Company was able to draw on its experience in the field of batteries, which is probably one of the reasons why BYD's Blade batteries are considered the leader in electric vehicles. This developmental lead over well-known car manufacturers makes the Company a serious competitor. If internationalization succeeds, BYD should also finally overtake Tesla.

The Denza D9 model, which represents BYD's flagship luxury car, is intended to help with this. The vehicles, which are priced at around EUR 85,000, are to be delivered as early as the first quarter of 2024. But there are also stumbling blocks along the way. The US wants to impose punitive tariffs on electric vehicles from China, the EU is looking into state subsidies, but BYD is working on solutions. The Company intends to build factories in Mexico and Hungary so that cars no longer come from China in the future. Hungarian Foreign Minister Peter Szijjarto spoke of one of the largest investments ever made in his country. Until now, the Company has only manufactured buses in Hungary.

Progress is also being made in the field of autonomous driving. Approval for test drives has been granted by the city of Shenzhen. In addition, there is another area of business that many investors are not yet aware of and whose market is growing rapidly: energy storage. In South Africa, BYD has built a plant with a capacity of 540 megawatts (MW). This is expected to produce 150 MW of renewable energy every day. This announcement is also likely to have been the reason for the jump in the share price, which currently stands at EUR 24.90.

First Hydrogen - Expanding into North America

First Hydrogen is working on a hydrogen mobility concept for light commercial vehicles with zero emissions. The Company focuses on the Best-of approach and works with well-known partners such as Ballard Power and AVL Powertrain. This made it possible to develop two prototypes very quickly. These have already been approved for road use in the UK and have achieved a range of 630 km on a single tank of fuel during test drives. In comparison, electric light commercial vehicles manage around 240 km on a single charge. The vehicles also have a very efficient energy management system. Energy is recovered during braking, which recharges the battery and keeps it charged.

Nevertheless, the batteries are set to become even better. On December 5, First Hydrogen and EV Technologies Inc. signed an agreement to develop high-performance batteries for hydrogen-powered fuel cell vehicles. The new batteries will offer higher efficiency and performance and will be integrated into the fuel cell vehicles. The cooperation shows that the Company wants to expand into North America. Vehicle tests by fleet operators are also to be made possible there in the future. In order to offer its customers the complete value chain, the Company is also working on hydrogen filling stations and the production of green hydrogen.

Shawinigan, Quebec, has been selected as the location. The aim is to create a green hydrogen ecosystem there. A 35-megawatt green hydrogen production facility and a vehicle assembly plant for up to 25,000 vehicles per year are to be built on site. Support comes from the Canadian government, which has announced a new standard for zero-emission vehicles in order to sell only clean vehicles by 2035. Those interested in more detailed information on the Company should take a look at the recent study at researchanalyst.com. The share was unable to escape the negative momentum of the hydrogen market and lost around 70% at its peak. A double bottom was formed at the end of November, and an initial upward trend was established on December 27, which remains intact up to CAD 1.54. The share is currently trading at CAD 1.71.

Plug Power - The situation is precarious

Plug Power has long been regarded as the hydrogen company in the alternative energy sector and is pursuing the goal of creating a broad-based hydrogen ecosystem. This ecosystem will include production facilities, storage options, supply routes and energy distribution. The Company established itself on the market with the GenDrive, a fuel cell for forklift trucks and other material handling equipment. The product range is supplemented by electrolysers and specially developed equipment. The Company also builds hydrogen production plants, including in New York State.

However, despite a lot of support from politicians, Plug has not managed to become profitable. Even though turnover rose slightly to USD 198.7 million in the last quarter, the gross margin is almost minus 70%. While investment is necessary, cash reserves are depleting rapidly. In times of rising interest rates and negative financial figures, finding new financing under these conditions will be difficult. There is hardly any fresh capital on the open market. What remains is state support. However, the Biden administration has imposed very strict rules for subsidies in this regard.

At least the first electrolyser has been successfully installed at an Amazon site in Colorado. This is good news, as Amazon is one of Plug Power's biggest customers. Ultimately, however, the Company is in a dilemma. Since announcing that it may be unable to continue its business operations, potential new customers are likely to adopt a wait-and-see approach. This is evident in the Company's news. There have been no new major orders since the quarterly figures. Those who are already shareholders are probably sitting on significant losses, as the shares closed at USD 4.50.

The expansion of electromobility is progressing. Almost all major car manufacturers have announced a move away from the combustion engine. BYD has a developmental head start due to its history. In addition, the energy storage market as a new business segment and internationalization could provide a further boost. The hydrogen market is currently still lagging. However, the expansion of renewable energies is increasing supply, which should cause the price of green hydrogen to fall. In addition, more and more governments are supporting hydrogen projects. This is good news for First Hydrogen, which has recognized the challenges of electromobility and is offering solutions for the light commercial vehicle sector. The Best-of approach helps save money and still offers first-class quality. Plug Power has now sunk hundreds of millions of USD and is far from being profitable. Special caution applies here.