Electrifying Times
VANCOUVER British Columbia (Reuter) - Germany's Daimler-Benz AG has launched an ambitious drive program with Ballard Power Systems Inc. of Canada to bring a new electric car to market in eight years.
Daimler, Germany's largest company and maker of Mercedes cars, signed a $333 million deal with Vancouver-based Ballard. Under the agreement, Daimler will take a 25 percent stake in Ballard and the two companies will invest in developing so-called ``fuel-cell'' technology.
Fuel-cell engines, which are already powering prototype buses and cars, grew out of the U.S. space program and produce no emissions. The ``cells'' are devices that convert fuels such as methanol or hydrogen into electricity without combustion.
For Ballard, a small company that has spent 15 years trying to commercialize the technology, the deal with Daimler represents a major boost. Its shares rose C$3.00 ($2.22) to C$39.25 ($29) in Toronto on Monday's news.
``Today marks a major milestone in the history of Ballard,'' President Firoz Rasul told a signing ceremony in Vancouver. ``It is probably the most important event that has taken place in the life of this company.''
Ferdinand Panik, head of the project for Daimler, told reporters that the two companies aim for commercial roll-out of a passenger car powered by fuel cells in eight years. Fuel-cell buses, which will go into service in Chicago and Canada this year, might be widely available before then.
The push to devise clean engines has been driven in part by more stringent pollution laws in United States and Europe. Other car companies including General Motors Corp. are also in the race to build a clean car.
But Daimler said its commitment to fuel cells was not motivated so much by the environmental benefits as by the up to 30 percent greater efficiency of fuel cells over gas engines.
``We are not aiming for a niche market. The objective is really to concentrate on the mass production... We want to compete against internal combustion engine,'' Panik said.
The biggest hurdle will be to lower the cost ``by a factor of one hundred'' so the cars are affordable, he said. Key to achieving cost reduction will be mass production and Daimler is targetting initial output of fuel-cell car engines at 100,000 units.
Analysts were skeptical, however, and said consumers would only switch to the new vehicles in large numbers if forced to do so.
``Until gasoline prices rise significantly or there's a government tax to discourage people from using traditional engines, I don't think we're going to see the rush of consumers,'' said Wesley Brown of Nextrend, a California automotive consulting group.(Oil Lobby)
A recent report by the Economist Intelligence Unit in London projected that conventional gas engines will provide 90 percent of the power for the next 15 years. Still, it said that fuel cells and hybrid engines are the most likely power source for future automobiles.
Daimler and Ballard will seek to market the technology to other car companies around the world although Mercedes is expected to launch its own car based on the engine system.
By selling it to others, the technology ``will get to the marketplace in parallel with all the world's auto companies,'' Rasul said. North America and Europe are their target markets.
Copyright 1997 Reuters Limited. All rights reserved.