What happened
This week hasn't been a fun week to own shares of renewable energy company Plug Power (PLUG 2.49%) stock, which has declined for three straight sessions now, including today's 4.4% drop (as of 11:30 a.m. ET). But why is Plug stock falling at all?
To find the answer, I think we need to take a quick trip to France.
Image source: Getty Images.
So what
Montpellier, France, to be precise.
Three days ago -- right about the time that Plug Power stock started falling -- the city of Montpellier dropped a bombshell on the world's fuel cell stocks. As Electrek reports, the French city canceled an order (from an unnamed supplier) for 50 new hydrogen fuel-cell buses.
And why did it do that?
City president Michaël Delafosse explained the decision thusly:
Hydrogen technology is promising. But ... it would be six times more expensive than with electric buses. So, for the moment, we are giving up on hydrogen buses, we will see in 2030 if hydrogen is cheaper (emphasis added).
Specifically, Montpellier discovered that it would cost approximately $1.08 per kilometer of operation to run the fuel cell vehicles, versus just $0.17 per kilometer to run similar battery-powered electric vehicles.
And as soon as Montpellier figured that out, it abandoned the deal in a hurry.
Now what
Now why is this significant to Plug Power? It's not as if Plug was hoping to sell buses to Montpellier, after all. (If it were, you can be certain Plug would have issued a press release to announce it.)
And yet, while Plug may not have been involved in this particular hydrogen fuel cell bus deal, it did announce its intention to partner with BAE Systems to build hydrogen fuel cell buses last year -- and to partner with Groupe Renault to build other commercial, fuel cell-powered vehicles as well. If what was true for Montpellier turns out to be true for other would-be fuel cell-powered vehicles, though, then the prospects for fuel cell buses taking off as an industry -- and giving Plug Power another route to revenue growth -- would appear to have dimmed noticeably this week.
This, in a nutshell, is a good reason for a Plug Power stock sell-off.
