What: Shares of fuel-cell company Ballard Power Systems Inc. (NASDAQ:BLDP) jumped as much as 29% in trading Monday after announcing a new production deal. At 12:20 p.m. EDT shares were still up 27%.
So what: Ballard has come to an agreement with Guangdong Nation Synergy Hydrogen Power Technology Co. Ltd. to produce fuel-cell stacks in China and include them in locally assembled fuel-cell engines for buses and commercial vehicles. The deal will see Ballard receive $18.4 million in technology transfer and training revenue, recognized primarily in 2017. And over the next five years there's a "take or pay" agreement to sell $150 million of membrane electrode assemblies to the stack-producing joint venture.
Now what: This could be a big revenue addition for a company with $56.5 million in revenue last year. But supplying Chinese companies with technology can be risky (recall Sinovel stealing technology from American Superconductor), and this is essentially teaching a competitor how to make your products. It'll be years before we learn how much value this creates for Ballard or what Synergy does with the products, but for now the market is loving the new opportunity for fuel cells in commercial vehicles.