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FuelCellStocks.Com Fuel Cells News October 6, 2005 Fuel Cell Production Losing Power Source: Globe and Mail VANCOUVER — Fuel cell production, once thought to be the high-technology sector's holy grail, is proving to be a money-losing proposition for the industry's leading players, according to a survey released yesterday by PricewaterhouseCoopers. "What we are seeing is that some of the companies that went public in recent years are finding life difficult," said John Webster, a managing partner at PricewaterhouseCoopers in Vancouver. "Many of the 20 North American-based companies included in the survey have changed their focus to make sure that they are moving towards product commercialization, a process that is time-consuming and costly," he said. Most are selling to a limited customer base. This helps to explain why combined losses in the North American fuel cell industry rose to $465-million (U.S.) in 2004, marking a 20-per-cent increase from the previous year, while annual revenue fell 4 per cent in the same period to $234-million. In addition, the combined market value of the companies in the survey fell to $3.2-billion last year, a decrease of 11 per cent from 2003. All of the companies in the survey continued to operate at a loss as they seek to commercialize. Still, in spite of these realities, the forces that continue to drive the development of fuel cells remain as strong and as plentiful as ever, the survey says. Fuel cells, which yield electricity, heat and water by catalyzing the reaction of oxygen and hydrogen, have been embraced by environmentalists because they are capable of powering vehicles without emitting harmful sulphur dioxides or nitrogen oxides. As a result, they are widely seen as a possible part of the solution to global air pollution caused by fossil fuels, and the depletion of conventional energy sources. Ballard Power Systems Inc., the Burnaby, B.C., company that continues to lead the industry, has narrowed its focus to developing fuel cell stacks for the auto sector. Other companies included in the survey are developing fuel cells for use with smaller electronic devices in which batteries cannot effectively provide the power to use the full potential of these devices without frequent recharging. However, much of the industry remains in the research and development
stage, with seven companies surveyed reporting revenues of less than $1-million
and four reporting no revenue at all. The industry's two largest companies,
Ballard and FuelCell Energy Inc. of Danbury, Conn., together accounted
for 48 per cent of the industry's total revenue in 2004.
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