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Posted on  

January 14, 2002

Most fuel cell companies give up gains on US plan

By Allan Dowd

VANCOUVER, British Columbia, Jan 9 (Reuters) - Shares of several fuel cell developers that had skyrocketed in advance of a new U.S. plan to boost hydrogen-powered cars gave up most their gains on Wednesday once the plan was actually released.

The plan unveiled by U.S. Energy Secretary Spencer Abraham and major automakers was short on specifics, and came with warnings it could take years if not decades for environmentally friendly vehicles to become commercially viable.

The plan was released at the annual Detroit international auto show, which was the spark of similar gyrations for fuel cell stocks two years ago, prompting one analyst to term this the industry's ``silly season.''

Fuel cells use a chemical reaction to produce electricity from hydrogen which derived from such sources as natural gas, methanol and modified versions of gasoline. They are seen as alternative to the internal combustion engine.

Many fuel cell developers do not aim their products at transportation, but their shares still skyrocketed on Tuesday in anticipation of the announcement.

It was a different story for most on Wednesday.

Plug Power Inc. closed down $1.54 at $10.50, although that was still above its Monday close of $8.66 FuelCell Energy Inc. which had jumped 23 percent on Tuesday closed at $19.25 on Wednesday, down 11.9 percent.

H Power Corp dropped 32 cents to $3.73, although that was still above its Monday close of $3.30.

Bucking the trend, albeit only slightly, was Ballard Power Systems Inc., which is already working with several automakers to develop fuel cell cars and is involved in the United States' only major testing program for the vehicles, in California.

Ballard stock, which rose 15 percent on Tuesday, was up a more modest 2.8 percent, or 99 cents, on Nasdaq to close at $35.95, having been up as much as 10 percent earlier in the day.

On the Toronto Stock Exchange, the Vancouver company's shares closed at C$57.45, up C$1.95 or 3.5 percent.

Fuel cells have been hailed as an environmentally friendly technology because the reaction produces only heat and water as emissions. The entire process does produce pollutants as hydrogen is made, before it reaches the actual cell.

Abraham said the new Freedom CAR research project would fund research into fuel cells and advance different ways of handling hydrogen and creating an infrastructure to make hydrogen fuels widely available.

Analyst Gary Holdsworth of Wedbush Morgan Securities said he was ``unimpressed'' because the plan lacked details such as funding levels and appeared to focus on areas such as cell technology development which is far more advanced than that done on fueling infrastructure.

``We believe that many investors were expecting much more out of this announcement. We do not believe Freedom CAR comes close to the Manhattan Project call-to-arms that some fuel cell enthusiasts have been calling for,'' Holdsworth said in a note to clients.

Holdsworth said while it was positive that politicians are now interested in the technology, he put more significance in General Motors' unveiling this week of a prototype car that could set the trend for future fuel cell vehicles.
 

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