Fuel cell stocks are back in the news on Tuesday, and the news is lifting shares of start-up electric semi-truck manufacturer Nikola (NKLA -5.05%) a modest 2.1% as of noon EST. More pure-play fuel cell stocks Bloom Energy (BE 0.22%) and Plug Power (PLUG -1.96%), meanwhile, are doing much better -- up 8.2% and 11.1%, respectively.
Nikola's the one with the big announcement, tweeting yesterday afternoon that construction of its planned $600 million electric truck manufacturing plant is on pace, and promising to begin trial production of its trucks either late in the second quarter or early in the third quarter of 2021.
The first phase of Nikola's $600 million electric truck manufacturing plant is on pace. Based on Nikola's current construction rate, trial production is anticipated to begin in the late second quarter or early third quarter of 2021. #NikolaManufacturingPlant #ManufacturingPlant pic.twitter.com/YJtYxBRPR2— Nikola Motor Company (@nikolamotor) December 7, 2020
Although Nikola's stock was rocked last month by news that General Motors (GM 0.72%) had rescinded its offer to buy an 11% interest in Nikola, the automotive giant is still interested in selling hydrogen fuel cells to the start-up, for use in its electric semis. This suggests that, while Nikola per se may not be the best fuel cell stock to invest in (because GM is demonstrating a lack of confidence in it), fuel cells in general may still have a future.
And yet, there's some not-great news to report for the fuel cell companies as well. Just after 11 a.m. this morning The Wall Street Journal released a huge feature story on Bloom Energy that is already taking the stock down from its highs earlier in the day -- and which has the potential to have knock-on effects all along the nascent fuel cell industry.
Beginning with Bloom's foundation back in 2001, the Journal's story describes how Bloom got its start as a NASA contractor researching technologies for converting natural gas directly into electricity (with water and carbon dioxide as byproducts) by running the gas through a proton exchange membrane. In Bloom's vision, one day houses all across America might be powered by "Bloom Boxes" generating electricity on-site by this mechanism, independent of electric grids.
Years of losses however, attracted the interest of short-sellers who accused the company of being neither "clean, green, or remotely profitable." Bloom responded by assuring investors it saw a "path to profitability," and continued making sales to major corporations. But despite Bloom continuing to grow its revenue, and cutting the manufacturing cost of its Boxes by more than half, losses mounted, forcing Bloom to consider pivoting to new technologies, specifically, generating electricity from pure hydrogen rather than natural gas.
The problem with that, says the Journal, is that solar and wind power are emerging as alternative green power sources -- and they're cheaper than Bloom's solution. On the one hand, this may bode well for competing fuel cell companies such as Plug Power, which has already decided to focus on hydrogen fuel cells. On the other hand -- Plug's no more profitable a business than Bloom is, despite its hydrogen focus. And Plug faces the same challenge from cheaper wind and solar green energy.
Ultimately, the Journal concludes that Bloom is "a reminder of how a rapidly changing industry can foil even the most driven entrepreneurs." Fuel cell investors aren't taking the reminder to heart today -- but maybe they should.