The days of the gasoline (or diesel) vehicle are numbered. Everyone seems to be in agreement on that. Gas-powered cars and trucks aren’t going to disappear tomorrow, but they will be replaced. The success of Tesla (NASDAQ:TSLA) reflects the growing popularity of electric cars. But there’s another story in our zero-emission future: hydrogen. As the race toward green vehicles heats up, Plug Power (NASDAQ:PLUG) is positioned to take advantage of its bet on hydrogen. And that means big upside for PLUG stock.
Here’s everything you need to know about this A-rated stock, and why its 136% gain over the past 12 months is just the start of its run.
Hydrogen Fuel Cell vs. Battery Electric Vehicles
Before getting into the details of Plug Power, it’s important to understand why the company’s hydrogen fuel cell technology is important.
Hydrogen fuel cell vehicles use a chemical reaction between hydrogen and oxygen to generate power that charges a battery to provide the driving power. The waste is water. Hydrogen has 10 times the energy capacity of Lithium-ion batteries per pound. That means hydrogen fuel cell technology has a big advantage over battery powered electric cars like those made by Tesla. The vehicles are lighter, since they don’t need a huge battery. They have longer range. And while electric cars can take an hour or more to fully charge, refueling a hydrogen vehicle takes two to three minutes.
The big challenge with hydrogen is the distribution of fueling depots. They are much more expensive to build than an electric charging station. That has kept the technology limited largely to commercial applications, which is why Plug Power is such a big player in supplying warehouse solutions.
Hydrogen Hype on the Rise
Auto manufacturers in Japan and South Korea have previously released hydrogen fuel cell cars in limited markets. However, in 2020 the alternative zero-emission fuel is suddenly getting big headlines.
In April, Daimler and Volvo announced a joint venture to produce fuel cell-powered semi trucks. That was followed shortly by Germany’s Quantron AG taking the wraps off a new hydrogen-powered semi truck, with production scheduled to start in 2022. It joins Nikola’s (NASDAQ:NKLA) already shipping Nikola One hydrogen-powered semi. And it’s Nikola that really kicked off the news cycle on hydrogen-powered vehicles this year. In response to the much-hyped Tesla Cybertruck, Nikola announced the Badger.
Nikola’s new pickup truck starts taking pre-orders at the end of the month. And while there is a battery-powered electric version, a combo that uses both fuel cells and a battery doubles its range to 600 miles. That’s twice the expected range of the Cybertruck. And it’s bad news for traditional automakers like Ford (NYSE:F), which is struggling and looking to an electric version of its F-150 pickup for salvation.
Pickup trucks now outsell sedans in America. That made the prospect of the hydrogen-powered Nikola Badger — with zero emissions, extended range and the ability to refuel in minutes — very newsworthy indeed.
How This Benefits Plug Power
The benefit to Plug Power from the growing public awareness of hydrogen power is largely a “halo” effect. The awareness of hydrogen fuel cells and their benefits is giving this company (and PLUG stock) much more visibility. That’s casting it in a more positive light, which encourages investors. They have been watching the company post losses and take on debt for years as it pursues critical mass adoption of its technology.
Plug is also benefiting directly, as it expands from the warehouse to the road. In 2019, it signed a deal to partner with StreetScooter to produce a fleet of 100 delivery trucks for courier DHL, powered by Plug’s ProGen hydrogen fuel cell engines. Earlier this year it announced a partnership with Lightning Systems to produce hydrogen-powered Class 6 delivery trucks.
Bottom Line on PLUG Stock
After hitting frankly ridiculous levels in early 2000, PLUG stock crashed. Hard. In fact it spent several years as a penny stock.
However, with growing pressure to reduce greenhouse gas emissions, Plug Power and its bet on hydrogen fuel cells eventually began to pay off. In 2017, Amazon (NASDAQ:AMZN) bought a stake in the company and began deploying its hydrogen fuel cell forklifts in warehouses. Also in 2017, Walmart (NYSE:WMT) signed a deal to expand its relationship with Plug. Since 2014, the retailer had deployed a new Plug Power solution at its distribution centers at a pace of one every six weeks.
PLUG stock ended 2017 at $2.36, nearly doubling its value from the start of that year. It has been in rapid growth territory since then. It still hasn’t quite recovered to its 2020 high close of $5.72 prior to the March market crash, but that won’t take long.
In a world where zero-emission is taking on new importance, and the limitations of battery-powered electric vehicles are becoming more evident — especially for commercial purposes — Plug Power is in a good position. And PLUG stock is primed for continued growth.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.