Latham, New York-based fuel cell maker Plug Power announced Thursday that it had entered into an agreement with Zhangjiagang Furui Special Equipment Co and an unnamed “big three” Chinese automaker to develop new fuel cell solutions and applications for industrial electric vehicles market in China. Under the terms of the deal, the three companies will work together to build EVs equipped with Plug Power’s hybrid fuel cell engine systems.

Plug Power
Image Credit: Plug Power / YouTube video screenshot

Plug Power and partners to deliver first prototypes by March 2017

The US company said in a statement that the three partners would form a fuel cell vehicle development team and put their R&D and financial resources for “a large-scale demonstration project.” The three companies plan to deliver two industrial delivery truck prototypes using Plug Power’s ProGen fuel cell engines by March 2017. They project to deliver another 500 vehicles and a fueling station in the Shanxi province within another year.

If the first 500 vehicles are received well by the market, the companies plan to deploy as many as 13,500 vehicles and build a large fueling station network over a period of three years. FBR Capital analyst Carter Driscoll said in a research note to investors that the deal is “another step in lateral expansion beyond fuel cell solutions for the material handling.”

Chinese government focusing on clean energy

The research firm said, with this deal, Plug Power has formally entered what is expected to become the world’s largest fuel cell market. FBR Capital has an Outperform rating on the stock with $2.50 price objective. Plug Power CEO Andy Marsh said in a statement that it was first of the several partnerships the company has been pursuing in China.

Hydrogen and fuel cell vehicles are a key component of the Chinese government’s Energy Revolution Program, which includes about $100 billion of investment through 2030. Andy Marsh believes that China will become the world’s largest mobile fuel cell market within 2-3 years. Plug Power CEO said the Chinese government was taking the Paris climate agreement very seriously.

Plug Power still struggling to become profitable

Plug Power makes GenDrive fuel cells that power forklifts. It also offers GenFuel hydrogen fueling stations to attract recurring revenues. Some of its biggest customers include Wal-mart, BMW, and Nike. Fuel cells account for about 80% of the company’s business. According to Albany Business Review, the company has been focusing on delivery van technology this year to reduce its reliance on the material handling market.

The Latham-based company has been struggling to become profitable. During the latest quarter, it reported adjusted losses of 7 cents a share on revenues of $17.6 million. Analysts on average were expecting 5 cents per share in losses and $34.84 million in revenue.