Battery maker Plug Power (NASDAQ:PLUG) is up more than 12% today. What’s behind the jump in PLUG stock? It seems that news out of engine maker Cummins (NYSE:CMI) has raised prospects on the battery innovator.
So, what do you need to know about Plug Power today?
Well, today Plug Power was treated to the news that Cummins will sell its 2.5-megawatt electrolyzer to produce a hydrogen-powered taxi fleet. Cummins plans to sell the electrolyzer to hydrogen mobility company Hysetco, a joint venture between Toyota (NYSE:TM), TotalEnergies (NYSE:TTE) and others.
If the project comes to fruition, it could result in the largest hydrogen-powered taxi fleet in the world by 2024. Cummins Managing Director Piet Berens commented on the breakthrough deal:
“Accelerating decarbonization through partnerships with companies like Hysetco is key to Cummins’ Destination Zero strategy […] We are committed to establishing green hydrogen as a viable alternative energy vector and furthering the green hydrogen economy globally. This exciting project is an innovative example of hydrogen’s potential to decarbonize transportation and mobility at scale, and we are proud to be a part of it.”
What does this have to do with Plug Power?
PLUG Stock Gains on Prospect of Lower Hydrogen Costs
At first, today’s news may read as a mixed bag for Plug Power. This is because Plug itself is positioned as a hydrogen producer, especially with its fuel cells. As such, the Cummins news only establishes yet another competitor in a quickly saturating field.
That may not appear to benefit PLUG all that much. However, per basic supply and demand, more hydrogen produced means lower costs across the board for input. So, cheaper hydrogen will likely facilitate greater sales of Plug’s hydrogen-powered fuel cells. This is likely what’s behind the jump in PLUG stock today.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
