Reading the headlines about climate change and the increasing pressure to drastically cut back on greenhouse gas emissions can be depressing. But that’s not true for those who are associated with Plug Power (NADAQ:PLUG) or who happen to own PLUG stock.
Electric-vehicle sales are rapidly growing, but consumer-grade, plug-in EV technology like that used by Tesla (NASDAQ:TSLA) doesn’t cut it in the commercial world. That leaves a big hole for fleets of commercial vehicles that are under pressure to switch to zero emissions, but don’t have hours to wait while a battery recharges.
With its bet on hydrogen-fuel cell (FCV) technology, Plug Power is positioned to be the biggest player in that market. Even more enticing for the owners or prospective owners of Plug Power stock, the company’s FCV technology has the potential to make an even bigger leap. Specifically, it could become mainstream in the consumer automotive world.
Why FCV Could Ultimately Trump Plug-in Electric
To understand Plug Power’s potential and the case that PLUG stock has real upside, it’s important to understand the technology. Plug Power develops hydrogen fuel cell systems for electric vehicles. The motors of these vehicles are still electric, and they’re still considered zero-emission vehicles. But instead of a plug-in battery, they use a refillable hydrogen fuel cell.
The big advantage of battery-powered electric cars like those made by Tesla is they can be plugged in at home by consumers. Compared to gasoline, electricity is cheap. And because battery-powered cars got a significant head start versus fuel cells in the consumer space, there is a well-established network of electric charging stations across the country.
The big advantage of FCV technology is that range anxiety — the bane of electric car owners — is not an issue. A vehicle equipped with a hydrogen engine like the one developed by Plug Power can travel for 300 miles on one tank, and it can be fully refueled in just three minutes. In comparison, an electric car can take hours to fully charge.
So why aren’t FCV-powered cars everywhere, with Plug Power stock at stratospheric heights? The big problems are infrastructure and fuel cost. Tesla and other battery-powered electric cars are able to appeal to consumers with the extremely cheap cost of electricity. A hydrogen-powered electric vehicle, on the other hand, costs around the same to fuel as a traditional car.
The other issue is refuelling infrastructure. Tesla has been rapidly building out a national charging infrastructure for its cars, with a 5-station Supercharger going for around $250K. A single hydrogen pump can cost six times that. And while consumers can charge their electric car battery at home, they can’t afford to install hydrogen pumps.
Analysts’ Views
Reports from research firms KPMG and McKinsey point to a rosy future for FCV companies like Plug Power, if they can weather the plug-in electric onslaught. KPMG’s 2018 report which surveyed auto industry executives stated that hydro fuel cell vehicles have begun replacing battery-powered electric vehicles. as the sector’s top trend
The McKinsey report predicts that by 2050, FCV technology could power a global fleet consisting of over 400 million cars, in addition to commercial fleets of 15 to 20 million trucks and 5 million buses.
PLUG stock price is primarily based on the company’s current applications and commercial customers. PLUG has focused on forklifts, but has recently begun providing engines for delivery trucks. Both forklifts and delivery trucks can return to a central depot where they can be refueled with hydrogen.
In July, PLUG is launching a new ProGen 30kW engine aimed at fleets of delivery trucks. And if the technology can beat battery-powered electric vehicles in that market, the company will have a shot at consumer vehicles. There are obstacles to overcome, including the lack of cheap refueling options and the need for public infrastructure, But if all the pieces fall into place, PLUG stock can rise tremendously.
PLUG Power Stock Has Had a Rough Road, But…
Plug Power stock started trading at $119.38 in 1998. PLUG stock price peaked near an astounding $1,500 in 2000, then began a two-decade collapse. In 2019, PLUG stock price began a slow recovery that brings it to today’s $2.54.
PLUG’s decisiuon to go all-in on hydrogen fuel cell technology has led to a bumpy road for Plug Power stock. Tesla CEO Elon Musk has publicly mocked FCV, calling it “mind-bogglingly stupid,” “incredibly dumb” and “fools cells.” If he’s wrong and Plug Power is able to expand into commercial delivery fleets — and possibly even push its FCV technology into the automotive mainstream — then today’s PLUG stock price may turn out to be the bargain of the century.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
