Hydrogen fuel cell maker Ballard Power Systems Inc. (BLDP-T) is undertaking a global restructuring to cut its expenses by over 30 per cent, as the Vancouver-based company wrestles with an industry slowdown.

The cuts will impact an undisclosed number of staff, along with its product development programs, capital expenditures and working capital improvement initiatives. Operational consolidation will also take place.

Despite the changes, Ballard says its product delivery and program execution will not be affected.

Pointing to a “challenging macroeconomic and geopolitical outlook and amid protracted policy uncertainty,” Ballard’s president and CEO Randy MacEwen said the company sees the availability of low-cost hydrogen and refuelling infrastructure as a process that will take years to develop.

"As this delay represents a significant headwind to our corporate growth plan, we are implementing a cost restructuring to moderate our investment intensity and pacing to better align with delayed market adoption," MacEwen said.

The majority of the savings from the restructuring are expected to be realized in 2025.

MacEwan remains confident in the future of hydrogen fuel cells, even after the setback: “While the speed of travel has changed, we have unwavering conviction on the direction of travel, with clean hydrogen and fuel cells playing an important role in decarbonizing heavy mobility applications.”

Changes stemming from Ballard's restructuring

Ballard operates globally, with operations in Canada, the U.S., Europe and China. It has around 1,000 employees, according to its profile on LinkedIn.

In its Q2 financials, Ballard reported holding $789 million (all figures US) in current assets, with $1.02 billion in liabilities and equity. It operated at a loss of $31.5 million, with $36.2 million in operating expenses. Revenue was $16 million, which was outpaced by costs, resulting in a gross loss of $5.1 million. Ballard had $678 million in cash on hand.

Ballard maintained its 2024 guidance range of $145 million to $165 million for total operating expenses and $25 million to $40 million for capital expenditures. Such numbers were justified by its 12-month order book of approximately $75.5 million from its order backlog of approximately $169.5 million as of June 30, according to a management’s discussion and analysis document for the quarter.

A sagging Chinese fuel cell market was specifically noted by MacEwan, and the underperformance of the Weichai Ballard joint venture. Ballard is conducting a strategic review of its Chinese business strategy, including “all options” for the joint venture.

Its plans for a hydrogen fuel cell gigafactory in Rockwall, Texas are also impacted by the restructuring. A proposed investment (last pegged at approximately $160 million) is being reassessed to extend the funding timeline and delay material cash outlays until the company has better signals from the market, MacEwan said.

CFO Paul Dobson and COO Mark Biznek will also be leaving. Dobson will be replaced by former vice-president of corporate finance and strategy Kate Igbalode as Ballard’s new CFO, effective immediately. Biznek will be succeeded by Lee Sweetland, the previous senior vice-president and chief transformation officer, as COO effective at the end of 2024.

"We will continue our focus on customers and the development of next-generation, low-cost fuel cell products for select heavy mobility and stationary power applications, while maintaining disciplined spending and balance sheet strength for long-term competitiveness and sustainability," McEwan said.

Hydrogen market becomes sluggish

The challenges faced by Ballard are obstacles affecting the entire industry.

A December 2023 analysis by the Hydrogen Council and McKinsey & Company stated the hydrogen market is growing, but costs and cost expectations have risen “substantially”, particularly for renewable hydrogen, rising by 30 to 65 per cent. Such analysis was corroborated by Wood Mackenzie.

The International Energy Agency slashed its forecast for hydrogen-dedicated renewable energy capacity from 2022 to 2028 by 35 per cent.