Understanding Plug Power’s Contract with Ballard

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During Plug Power’s annual shareholder meeting in July, Andy Marsh hinted that execution was one of the few unknowns standing between six Walmart distribution centers and sixty. Plug’s goal is to deploy their fuel cell solution at every Walmart distribution center, but Plug needs to prove they can handle the increased demand first. And for good reason. Up until last year, Plug’s manufacturing floor was relatively idle, and nobody knew exactly how much they could handle.

Not long after the introduction of GenKey earlier this year, Walmart signed the first multi-site GenKey deal. The initial contract started off with just five distribution centers. Plug demonstrated that they could deliver though, so Walmart added another distribution center to the deal (Sterling, IL). And it appears that Plug has exceeded expectations once again. They’ve been able to deploy entirely new sites in about thirty days, and Andy Marsh has increased his plant-capacity estimate to above 10,000 units per year.

Now how does the Ballard deal relate to any of this? It’s obvious that Walmart doesn’t like unknowns. Every move they make is calculated and yearns for certainty. So there’s no doubt they noticed that the Plug-Ballard contract was expiring this year, leaving Plug without a long-term stack supply. Yes, Plug has ReliOn. . . but ReliOn’s integration into the forklift arena is unproven. Customers like Walmart want proven technology. With the Ballard contact, Plug has now set-up five years of crucial stability and reliability within their supply chain.

Plug has proven that their balance sheet is solid. Plug has proven that they can quickly and reliably deploy their GenKey solution. Plug has proven the value proposition behind a GenKey infrastructure. Plug has proven that a transition to their hydrogen and fuel-cell systems is seamless and turnkey. And now Plug has proven that they have a reliable supply chain that can keep-up with demand. There’s little left for them to prove. Time and product-awareness are quickly becoming the only things standing in the way of more orders.

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