Good morning, everyone, or good afternoon, wherever you are in the world today. Welcome to everybody for our first ever virtual Investor and Analyst Day. These are extraordinary times, we wanna thank you for joining us, even if we cannot meet in person.
My name is Tony Guglielmin, I'm the Chief Financial Officer at Ballard Power Systems. It's been three years since we last hosted an Investor and Analyst Day, we expect today and hope today will be very informative and highly productive for all of you. I will review the agenda in just a minute, before that, a few housekeeping notes. With our virtual format today, we have included several Q&A periods over the course of the day.
You will be able to submit any questions in written form by sending emails to analystday@ballard.com, and we will do our best to respond to questions during the event. If we're unable to get to your question, we'll get back to you over the next several days. We'll also be patching in a number of people into today's proceedings via video from remote locations.
These include several Ballard executive members in Europe and Asia, as well as distinguished panel members located today in Europe and North America, including Dr. Ken DeWoskin, Senior Advisor to Deloitte, Dr. David Hart, Director of E4tech, and Bernd Heid, Senior Partner with McKinsey & Company. We look forward to hearing from these gentlemen a little later in today's agenda. Lastly, video, along with all of the slides, will be available in the investor portion of our website in the next day or so.
With that, a brief word on the agenda that you see on your screen. In addition to our distinguished panel members, we have a number of Ballard presenters, all of whom I'll introduce over the course of the day. With the unprecedented investor interest in hydrogen and fuel cells, our lineup on the Ballard subject matter experts will be addressing a number of key areas, including our strategic direction, our corporate growth platforms,
progress in key target applications by geography, our product development roadmap, our cost reduction strategy, an operations update, comments on our approach to ESG, and finally, a financial review. Then Randy will wrap up at the end of the day. Today's agenda is it into, provide a deep dive into our plans to provide for scaling of our business and moving forward to profitability.
Today's speakers are people that are ideally suited to provide you with plans, insight, and context, and I hope you'll find all the presentations and discussions interesting and informative. We expect today's Investor and Analyst Day agenda to take about five hours without any formal breaks. Please note that a video of today's proceedings, presentation material, as well as all the bios of speakers,
will be available for download from the investor section of our website at www.ballard.com, in the event you're not able to listen for any portion of the proceedings. Lastly, I would just like to point out the usual safe harbor statement that applies to all of the information we'll be providing during the course of today's event. Let's get started. Our first speaker today is Randy MacEwen, Ballard's President and CEO. Randy became President and CEO of Ballard in October 2014, and Randy is gonna provide a brief review of Ballard's corporate strategy and investment thesis. Randy?
Thanks, Tony. Good morning from Vancouver. I'd like to personally extend my warm wishes to you to join Ballard's Investor and Analyst Day 2020. We have an exciting agenda lined up for you, with the objective of providing better understanding and increased transparency on Ballard's business. I'm particularly proud that we have the opportunity today for you to hear from Ballard's leadership team.
Every day, they inspire me with their commitment to customer obsession, safety, integrity, and innovation. Like many members of the Ballard global team, I've been in the industry for a long time, in fact, first starting getting exposure to the industry about 24 years ago. Now, a lot has changed in the past 24 years, indeed, over the past 24 months, we wanna share much of this with you.
Your time today, in my opinion, understanding the Ballard story and the interest in the hydrogen and fuel cell community, is well-founded based on where we are today. There are seven key factors that are impacting the hydrogen and fuel cell sector. First, we have extraordinary policy changes that have happened literally over the last two years.
We now have some 70 countries that are looking at decarbonizing and going to net zero carbon by 2050. 20 of those countries are focused on hydrogen strategies and roadmaps that will form a key plank in their decarbonization plans. There's increasing policies around not just addressing climate change, but air quality as well.
We're seeing policies in Europe, throughout Europe, including at the national and at city levels, as well as in countries like China, South Korea, Japan, and a lot of policy recently coming out of California. Secondly, we have a growing number of vehicle deployments, and, you know, only a few years ago, the number of vehicles on road was relatively de minimis.
Today we have, really for the first time, scaled adoption occurring, the first signs of it, in buses, commercial trucks, passenger cars, and forklifts. Now, we're at the first second of a 24-hour day in terms of market adoption, so there's a lot of work to do. What's happened with these initial deployments is that the discussion has transitioned away from, does the technology work? We've proven it works as an industry.
The discussion really now is about how do we improve the economic value proposition and drive down the cost? Now, speaking of value proposition, a third key point is the fact that there's, I would suggest, universal consensus now, that the area where fuel cells offer the strongest value proposition are in medium and heavy-duty motive applications, bus, truck, rail, and marine.
We're also seeing that the cost of renewables, which have plunged about 80% over the last decade, are now paving a pathway for low-cost production of green hydrogen. We're seeing, for the first time, credible reports that are providing pathways for competitive TCOs, total cost of ownership models, for fuel cell electric vehicles, not just against battery electric vehicles, but also incumbent legacy technology. We've seen a sea change for corporate investments over the last, really, 2 years.
In August of 2018, Weichai and Ballard announced its formative transaction, with joining, creating a joint venture in China, with Weichai also investing in Ballard. Since that time, it's been dominoes with a number of players, mobility giants, and energy majors moving into hydrogen and fuel cell technology. Finally, I think this one's underreported and underappreciated, it's really the ESG investment theme.
What's happening, of course, are investors are reassessing risk, and they're transitioning out of carbon-intensive investments into investments that offer lower risk and lower exposure to carbon, and in many cases, also have a social mandate as part of their businesses. This investment theme, I think, is critically important in terms of capital. I want to punctuate this point about policy change over the last 2 years. We are increasingly becoming a CO2-regulated world.
The policy changes we're seeing are not just focused on decarbonization, but they're focused on hydrogen across a number of different sectors, whether you're looking at the production of steel, whether you're looking at mobility, whether you're looking at energy overall. This policy changes that are favoring hydrogen deployments has never been seen before.
We're now seeing $hundreds of billions being committed to decarbonize using green hydrogen and fuel cells in a variety of applications. This policy landscape that we see is the context for Ballard's vision, and our vision is to deliver fuel cell power for a sustainable planet. It has been remarkably durable over our 40-year history at Ballard.
This vision inspires our team and gets them fired up every day to not only improve our business and decarbonize mobility, but pass on to the next generation a more sustainable planet. Ballard's vision is complemented by our mission, and our mission really addresses the four key stakeholder groups: our customers, employees, shareholders, and society at large. For customers, we use our fuel cell expertise to deliver valuable and innovative solutions to our customers globally.
This is a recognition of the core competencies of Ballard on fuel cell, PEM fuel cell capabilities. Secondly, it's a point that we want to not only provide valuable solutions, but innovative solutions, and also a recognition that we're selling and providing products globally. Second is our employee base, and here we're creating rewarding opportunities for our employees.
Our team members are really focused on what we call our employee value proposition, and Jan will be sharing with you later today more about Ballard's employee value proposition. Third is providing extraordinary value to our shareholders, here I think, certainly we're looking to provide outsized returns. Finally, and this is an important one, we believe, it's the... I would say, not just the role we have in decarbonizing, but the duty we have at Ballard, and that duty is to deliver fuel cell power to help support the transition to a hydrogen society.
Now, we frequently get the question: Why are you focused on the medium and heavy-duty motive applications, bus, truck, rail, and marine? There are three key reasons for that. First is that the value proposition for fuel cells is strongest in these applications.
I want to make a very important point here, is that battery electric technology and fuel cell electric technology, these different pathways of electrification are highly complementary. Where you have light-duty vehicles that have short-range requirements, that have relatively low utilization, have lots of opportunity for recharging, battery electric is quite compelling.
Where you have heavier vehicles with higher utilization, with higher range requirements, and a need for fast refueling, fuel cell electrification is very compelling. At Ballard, we're focused on these use cases where the value proposition for fuel cell technology is strongest. Second is that many of these use cases in medium and heavy-duty motive offer the need for centralized or depot refueling.
Think about city buses, transit buses that return back to base at night to get washed and refueled, or fleets of commercial trucks that come back to a base, or a train that comes back to a rail station, or a marine vessel that comes back to port. Here you have the opportunity for centralized depot refueling. That means you do not need to have a distributed refueling infrastructure.
It's a lower barrier to entry on the refueling infrastructure side, and also better economics on your fueling capability and infrastructure. Third, and this is really important to Ballard, is that these applications disproportionately contribute to emissions, and to date, have been extraordinarily difficult to abate.
Think about, for example, in the U.S., 10% of all on-road vehicles are buses and commercial trucks, yet they disproportionately contribute one-third of GHG and a whopping two-thirds of NOx and PM2.5. We're focused on these market segments that we're gonna add a lot of value in terms of decarbonizing heavy and medium-duty motive applications. Now, there were two important reports that came out earlier this year in January.
I wanna highlight these reports for a minute because what they do is demonstrate, in my opinion, for the first time, this credible pathway towards TCOs that are total cost of ownerships, that are competitive with not just battery technology, but incumbent technology as well. The first report was jointly prepared and published by Deloitte and Ballard in January, entitled Fueling the Future of Mobility: Hydrogen and fuel cell solutions for transportation, and the second report, Path to Hydrogen Competitiveness: A Cost Perspective, prepared for the Hydrogen Council by McKinsey & Company.
Both these reports are on our website, and what they describe is the pathway for fuel cell electric vehicles to be cost competitive in a variety of use cases and applications over the next decade. We have, fortunately, the leader from Deloitte and the leader from McKinsey & Company, respectively, on our panel today, to take some questions on these reports as well. We provide this slide in the slide deck, and I'm not gonna comment too much on it, but it does provide you with a snapshot of Ballard today with a number of key metrics.
What I did want to do is recognize in the top right-hand corner here, the four strategic investors we have at Ballard: Weichai, Nisshinbo, Anglo American Platinum, and Broad Ocean. We wanna thank them for their support, for their confidence, and for their partnership. I'd like to talk a little bit about Ballard's strategy, and we articulate this as our E-1, 2, 3, 4, 5 strategy.
E represents engaging the e-mobility ecosystem. It's a recognition that we cannot do this alone. We have to engage the entire supply chain, the entire value chain and ecosystem, in order to drive the adoption and accelerate the adoption of fuel cell electric vehicles by simplifying fuel cell vehicles for customers and driving down the cost. Here, there's a lot of work to do at Ballard in...
with the industry. We're, we'll talk a bit about this going forward today. Now, 1 of E-1, 2, 3, 4, 5 is that we will continue at Ballard to be number 1 in PEM fuel cell technology for these medium and heavy-duty motive applications. We continue to invest in research, in technology development, in product development, in customer experience, so that we're not just the leaders today and 10 months from now, but 5 and 10 years from now.
Very important for us to maintain that leadership position. 2 of E-1, 2, 3, 4, 5 are the 2 growth platforms we have. Here's Power Products, where we design, manufacture, and market our PEM fuel cell products. Secondly, technology solutions, where here we have customers that may have fuel cell ambitions but don't necessarily have in-house fuel cell competencies and capabilities, so we support those customers and their dreams.
Both of these platforms are highly cross-leverageable. Three of E-1, 2, 3, 4, 5 are the three key geographic markets: China, the European Theater, and California. Four, this one is critically important, this is the four parts of the value chain that Ballard participates in. We've been doing this not just for 6 months or 6 years, but for, you know, 25 plus years at Ballard. This is really about designing and manufacturing fuel cell engines for end markets, bus, truck, rail, and marine, as we'll talk about the passenger car market as well.
Inside of those fuel cell engines, you have fuel cell stacks, as well as balance of plant, components. The balance of plant components we specify, and procure from third parties with full design, and control strategies for that module. That stack inside of those fuel cell engines, critically important. The stack is comprised of unit cells, which have MEAs, membrane electrode assemblies, and bipolar plates. At Ballard, we understand the material science and the design of MEAs.
We are looking at membranes, gas diffusion layers, catalysts, ionomers, how you process and seal those MEAs and manufacture them in scale. How those MEAs are then paired up with bipolar plates and the serpentine design of those plates for flow fields, how you're pushing oxygen and hydrogen and water through at different temperatures and pressure and operating conditions, and then taking those MEAs and plates under compression hardware,
putting that stack inside of an engine with these balance of plant components, having them work in the field in different climatic conditions and duty cycles and road conditions. Ballard is expert at this, and that's because we're in these different parts of the value chain, and this being in these different parts of the value chain also enable us to compress costs. Of course, as we're servicing these modules in the field and getting back data every day, every week, every month, every quarter, that's informing our product development for the next generation.
Of course, today, we're on generation eight of our fuel cell engine and generation 13 of our fuel cell stack. This vertical integration is critically important to Ballard's strategy. Five of E-1, 2, 3, 4, 5 are the five key applications we focus on, four of them being the medium and heavy-duty motive applications of bus, truck, rail, and marine, and the fifth one, the passenger car market, a longer-term market where we see lots of embedded optionality.
I think what's important to understand here is that the same core competencies, the same technology, and in fact, in many cases, the same products or a significant portion of the bill of materials of products, are being leveraged across these different market opportunities. Multiple shots on goal with our strategy.
Before I get into our sustainable competitive advantages, there's a major event that happened yesterday I wanna share with you, a major announcement at Ballard that enhances our sustainable competitive advantage. First, we announced yesterday an important strategic collaboration with MAHLE. We'd previously indicated we're working on a comprehensive strategic collaboration with a major tier one supplier based in Europe for the commercial truck market.
The announcement yesterday was really the culmination of about a year's worth of work in terms of discussion, diligence, technical collaboration, and scoping. We're thrilled to be partnering with MAHLE, a company that celebrates, this year, its 100th anniversary. They in 2019 had 77,000 employees, 160 production locations, and 16 research and development centers, and annual sales last year of around EUR 12 billion.
MAHLE's commercial vehicle division supplies a broad range of products to truck OEMs. MAHLE components are present in half of the world's vehicles on the road. Let me repeat that. This is important. Mahle components are present in half of all of the vehicles on the world's roads today. MAHLE has been a series supplier for fuel cell vehicles for over a decade, including air intake systems and air filter solutions.
They're now focused on the development of a variety of balance of plant components for fuel cell modules. Ballard and MAHLE are bringing together complementary skills and experience to develop, industrialize, and cost-reduce fuel cell engines for commercial trucks, initially focused in Europe. Ballard has prime responsibility for system design and fuel cell stack subsystem, while MAHLE has prime responsibility for balance of plant components, thermal management, power electronics, and systems assembly.
We expect to finalize definitive agreements in 2020. We believe MAHLE adds a second main pillar to our industrialization strategy, along with Weichai, and puts us in a very strong position for growth as the European truck market takes shapes to meet the 2025 and 2030 CO2 emission reduction standards and as California prepares for 2024 clean truck standards.
This is a long-term relationship that we're intending with MAHLE, and we plan to provide updates over the coming quarters and coming years on the progress and as our relationship evolves and takes additional shape. I often get the question, you know, "What are the sustainable competitive advantages from Ballard? You're in a leadership position today, but what about 5 years from now and 10 years from now, particularly as these markets really start to scale?" The.
I think as you listen to the presentations today, there are 7 sustainable competitive advantages we have at Ballard that were filtered through the presentations today and threaded through. First, we have world-class talent and expertise. Our people are our strength at Ballard. Second, we have leading PEM fuel cell technology.
Third, we have a comprehensive product portfolio, and as you'll hear, we're doing great things to increase that product portfolio and push costs down. Next is the vertical integration I just described, and we have unparalleled field experience with 50 million kilometers of on-road field experience in these heavy-duty motive applications to date. We have an extraordinary list, a roster of blue-chip customers with a lot of customers, customer stickiness. At Ballard, we believe we have a very powerful brand.
In fact, we believe the Ballard brand is the gold standard in the PEM fuel cell industry for durability, performance, and reliability. Finally, I'd like to ask you, as you're listening to the presentations today, to keep in mind these 10 strategic priorities that Ballard is focused on.
Delivering outstanding customer experience, investing in our leading fuel cell technology and products, a very aggressive drive on product cost reduction, I'm excited you'll hear about today, forging key industrialization partnerships, including executing now going forward on the Weichai-Ballard joint venture on the MAHLE partnership. Investing in advanced manufacturing capacity expansion. There's a very exciting update on that front today.
Growing our local presence in key markets and continue to be, at Ballard, a great place to work, and we're really excited about not just growing a sustainable organization, but doing it in a way that also has ESG responsibility. As Tony will talk a little bit about later, driving improved financial performance at Ballard, scaling revenue, getting gross margin expansion, getting leverage off of our cost structure, moving to profitability, and doing all that with a very sound balance sheet.
Finally, pursuing complementary M&A opportunities. Now, on this last one, we haven't dedicated time today to talking about our M&A strategy and screening criteria just given time restrictions. However, we do expect in an upcoming investor call to share more about our M&A strategy. With that, I think you'll find the presentations today not only exciting but highly informative. Again, our objective is to provide an increased understanding of our business and transparency. With that, I'll turn it back to Tony.
Great. Thanks very much, Randy. We're now going to turn and focus on our two key growth platforms that Randy mentioned a few minutes ago, beginning with Power Products. This will include a discussion of total addressable markets and the value proposition for Ballard's heavy and medium-duty motive applications. First up is Rob Campbell, our Chief Commercial Officer, who will speak to our Power Products platform.
Rob joined Ballard as Chief Commercial Officer in 2017. Rob has extensive experience in global business development in China, Japan, India, Europe, and the U.S., and has deep experience in the clean energy space, including the solar industry and the fuel cell and electrolyzer sectors, having at one time been Hydrogenics' EVP of sales and marketing. Rob, over to you.
Thank you, Tony. It's great to speak to you today, even virtually. We've been very busy since our last Investor Day in 2017, where I outlined our power product strategy and focus on heavy-duty motive as the leading market application for our transition to a zero-emission world. Today, I'll provide an update on our progress, as well as more details on our markets, most importantly, why Ballard is winning in these markets.
Now, just as a bit of context, as Randy mentioned, we use PEM fuel cell technology to deliver power, bus, truck, marine, and rail. We will show you why Ballard will continue to lead in this technology. Because it's most effective in terms of coordinating the heavy-duty fleets and vehicles with fueling infrastructure for the initial entry into the zero-emission market.
First, let's check in on how PEM fuel cells are doing in the marketplace in order to help reinforce our beliefs. As reported by E4tech, and I'm sure more to follow from Dr. David Hart of E4tech, here with us today on this, we are seeing significant scaling of PEM fuel cells with an historic CAGR of 30% and a market share within the fuel cell family of technologies of approximately 80%.
This scaling is driving major investments, resulting in substantial cost reductions. More on this later on exactly what Ballard is doing, please be patient for Kevin and Lee's presentations. PEM has been, is, and will be the dominant fuel cell technology in the market for mobility, as PEM clearly outdistances all other technologies. PEM fuel cell technology is also at the core of Ballard's strengths.
Our plans, as we shall see today, will keep us in a dominant position going forward. With that bedrock foundation of leading PEM fuel cell technology, we are going to now walk through how real and how relevant our heavy-duty motive strategy is today and will be in the future to deliver important, sustainable results.
I am going to focus my comments on our key applications as outlined by Randy: bus, truck, rail, and marine. We will hear afterwards how these applications are doing in our key regions, China, Europe, and California. First, I want to quickly summarize some of our key milestones since 2017, New York City event, to underscore the tangible progress Ballard has made and progress that continues to set the stage for our future sustained success.
We start with this Class 8 project with Kenworth, a drayage truck active in the port of Los Angeles today. Over to France. This is the first bus rapid transit project with Van Hool. Looks futuristic, but you can actually ride this bus today. Early engagement in marine. Just get these buttons working. With a partnership with ABB, a brand-new market for Ballard. A purpose-built, zero-emission train with Siemens. More on this later from our European team.
Just bear with me. The largest fuel cell truck fleet in the world. Alfred will give us a complete update on China in his presentation. Our 13th generation of stack. This is the development of vast experience, both in-house and on the road. This is containers. Keep those containers moving at the port of L.A. with this capacity fuel cell yard truck.
Keep those packages moving with UPS, more important than ever with COVID. Okay. You know something's happening when the largest fuel cell diesel engine company in China, and also the largest fuel cell engine company in the future, gets involved with fuel cell technology. Thank you, Weichai. Rail projects in the U.K., a great opportunity to retrofit the existing fleet with Porterbrook.
The launch of our latest technology, FCmove, and we'll hear much more about this as we go forward. The market marine moves quickly. We jump in with both feet and form a Marine Center of Excellence in Europe. Here we have 64 tons of heavy-duty trucking in the heart of the Canadian oil patch, and they want more of the same. Jump from 64 tons to 280 tons with this massive truck working with Anglo American.
Anglo American has a vision to transform the mining sector with sustainability. More zero-emission vehicle boats for Europe's canals and rivers. Fuel cells just make sense for this application. More development with Norled, with the world's first liquid hydrogen ferry. This will set the stage for larger ships in the future with the use of liquid hydrogen.
A purpose-built bus with our latest FCmove technology. This bus is now on tour across Europe. Next stop, Paris. Wrightbus, a fantastic success story for Belfast and a true champion for fuel cell buses moving forward. Back to North America with New Flyer, tested to the Altoona GOAT standard for robustness, they did it with Ballard. Finally, this month, the launch of FCwave, a special design product for marine, and the interest is super high for this new technology.
How impressive was that? Thanks to a tremendous team effort by Ballard and in close collaboration with all of our customers. Look at the results in aggregate: thousands of buses and trucks and significant engagement in rail and marine. You could ask, why are we winning with these customers? Why are we leading with these applications? Simply put, experience matters. 40-plus years dedicated to this business.
Our proven experience allows our customers to be confident in their choice to work with Ballard. We were first to market with a heavy-duty strategy, and we have the experience, technology, and products to confidently move forward. The market is accelerating as never before, and time is of the essence to address climate change and reduce pollution. Customers do not want to take technology risk with this transition, and they do not want to wait.
Ballard is the clear choice for market adoption. Further proof points, we have products deployed in all climates, 50-plus million kilometers of real-world service, 670 megawatts of fuel cells produced, and the longest-lasting stacks on the planet. Simply put, we have you covered when it comes to bus, truck, rail, and marine zero-emission needs. As mentioned, Ballard's heavy-duty strategy plays to our technology strengths.
These markets in heavy duty are also the first movers on our journey to zero emission because they deliver maximum environmental benefits in terms of emission reductions. Medium and heavy-duty trucks powered by diesel represent only 5% of the vehicles on the road, but currently contribute more than 20% of transportation emissions, as trucks are typically driven much greater distances than cars.
Heavy duty also enables maximum market adoption, with fleets creating attractive economics for fueling stations and fuel supply. We are not alone in our beliefs in heavy duty. We now have the establishment of a robust and dynamic hydrogen industry and fuel cell industry focused on heavy duty, with many leading players now totally endorsing our heavy-duty strategy.
Bottom line, we are creating an industry that is changing the world of mobility to sustainability. Hot off the press, as Randy mentioned, we now welcome MAHLE as our collaboration partner. The part I really liked was the fact that 50% of all vehicles on the road in the world have MAHLE products in them. A fantastic partner for Ballard to work with. New players are good for the hydrogen industry supply chain, and by the way, competition only makes Ballard stronger.
We welcome all the new participants to our journey. We have the power to change the world. Let's touch on macro trends in the industry. On the engine side, we now see that hydrogen fuel cells are clearly recognized as a viable contributor in the rapidly transitioning world to zero emission. In talking to a key customer just last week, one who's been in the engine business for decades, and I quote, "We are seeing the end of combustion happening, and we are fully on board to transition to electrification," end of quote.
That means fuel cells when it comes to heavy duty. Did you see the recent news from Europe regarding acceleration of CO₂ reductions? Very bold, very needed. How about the U.K. and California, looking to bring forward their plans to eliminate internal combustion engines by next decade? A major acceleration.
The pendulum is in full swing to zero-emission vehicles, ladies and gentlemen. On the battery side, batteries have enabled the first wave of electrification, and of course, will play a major role. However, as with all technologies, there are pluses and minuses, and we are seeing more questions today about the geopolitics of commodities, the issues of recycling batteries, and the question about how to enable more renewables, while also ensuring critical grid stability, not to mention range limitations, of course, in heavy-duty applications.
We have our challenges, too. Our classic, where do you get the hydrogen? Now, what color is that hydrogen? In this case, green or blue with carbon sequestration. Both are emerging as very attractive options. It does, however, take sustained and significant investment to build out the infrastructure, and it is great to see the green recovery endorsement of green hydrogen in so many jurisdictions around the world. Against that macro backdrop, we can drill down into what our customers are saying and why they are selecting heavy-duty fuel cells for their application.
All-weather performance is one aspect. Case in point is SunLine Transit in California. They operate fuel cell electric buses in a 100-plus degrees Fahrenheit weather, which is tough on batteries. At the other end of the spectrum is cold weather, which is also very limiting for battery electric operation in the wintertime. Payload is another great example. Kenworth provided the following analysis based on recent work done. In one day, regional trucks drive a distance of approximately 350 miles.
A battery-only truck requires 900 kWh of energy to deliver that range and weighs an extra 16,000-17,000 lbs, which is equivalent to approximately five or six cars. Think of it. You have to put five or six cars on a truck before you can actually put any of your payload on the truck. That is quite a reduction, and in fact, it reduces payload by 30%. The fuel cell version of that truck has no material change to the payload compared to diesel.
Finally, refueling time. In our experience, our transit authorities are recharging their fuel cell electric buses in five to ten minutes, compared to several hours for the battery electric version, without the addition of expensive superchargers or demand spikes on the grid. Having quick refueling with hydrogen translates to fewer vehicles needed and no grid impact.
In many recent transit studies, this is a significant benefit. Bottom line, only fuel cell vehicles can directly replace diesel route for route on a one-by-one basis. Looking at infrastructure. Of course, infrastructure questions become very significant when looking at large-scale adoption. We need cost-effective solutions for the complete ecosystem. Hydrogen's role as a cost-effective solution is now better understood and recognized more than ever before, with the deployment of larger and larger fueling stations around the world.
We will discuss the Foothill Transit report during Nicolas's California presentation, where hydrogen at scale is shown to be more cost-effective than electric charging, another important proof point for hydrogen. Building out hydrogen capacity for heavy duty will also enable greater expansion of affordable fueling capacity for passenger cars, another added benefit. Let's reflect on all this and ask the question: how big is our market?
Well, it's very big. Based on industry reports and our own analysis, we see an addressable market in 10 years at over $130 billion for fuel cell engines in our current target markets of China, Europe, and North America, representing 1 million megawatts of fuel cells per year. That is correct, 1 million megawatts of production. This is a 1,000 times growth opportunity from today.
We also have the off-road segment. This is also exciting upside potential, representing another 20+% to our total addressable market, and we are excited to see major sustainable mining vehicle initiatives with Anglo American and Weichai, as well as developments in excavators and construction equipment, as shown here with JCB.
Further, we are active in backup power and distributed generation, and are cultivating some very exciting strategic relationships for megawatt DG and backup power needed for such applications as large-scale data centers. Now, let's understand how this transition will take place. Back to our four key mobility markets, heavy-duty mobility markets.
This report here from the Hydrogen Council highlighted bus, light commercial van, vehicles and vans, and rail, such as the tram project we did earlier with CRRC, in the near term. With medium term, for large trucks and commuter trains, such as the project we are working with Siemens on, and longer-term timelines shown for marine and passenger cars. The blue triangles represent ambitious adoption scenarios. The white triangles represent business as usual or what we anticipate without acceleration.
This build-out, we need to progressively expand our product offering in order to cover this range of application with the best, most commercially effective solutions. This is exactly what we're doing. We are investing. Our goal is to be the best, the best in terms of performance, life cycle costs, and also offer the most comprehensive range of PEM fuel cell products in the market, so that we can provide the best solution for each of our served applications.
To do that, we need a complete family of stack technology, and this is exactly what we're doing. At the core, our fuel cell stacks, as mentioned, cross-leverage all of our capabilities through our experience and through our in-depth knowledge of MEAs and bipolar plates, powering from a few kilowatts to megawatts as systems, meeting space, durability, performance, and cost targets.
First, our legacy 9SSL stack technology at the top. This is the workhorse of the industry, powering close to all fuel cell vehicles in China today. We will learn more from Alfred on this data point. In the middle, our latest LCS, 13th generation of development stack technology, specifically designed for heavy-duty performance as required in applications such as bus.
Recently announced, our at the bottom, is our HPS stack, where higher power and power density are our top priorities. This is the output of several years of development designed to exacting German automotive requirements. These stacks and future iterations provide Ballard with a complete family of solutions. Let's see how this family of technology will help us address our core markets. We have 4 key product families focused on heavy-duty applications, each one utilizing one of our stacks, depending on the application and customer preference.
We have the legacy FCvelocity, which is with our 9SSL technology, FCmove, which is our latest module using the LCS technology, as well as FCwave, as I mentioned, purpose-designed for the marine market, and also FCrail, which represents our evolving work with Siemens, which we expect to see on the tracks very soon. Finally, a late addition to our FCmove family, this is our new FCmove XD platform, specifically designed for larger trucks, such as Class 8 heavy-duty trucks.
This platform is a top priority, with demonstrations leading to planned series production. We are super excited to have joined forces with MAHLE for this platform, and we'll show further progress, as mentioned by Randy, on this exciting collaboration shortly. With all our products, our objective is to bring the best technology and solutions to the market for all of our heavy-duty applications, and in this case, accelerate the introduction of affordable, best-in-class series production, large fuel cells so needed for the largest heavy-duty trucks.
Let's turn to our addressable market timeline. What are we looking at? How will this $130 billion market open up for Ballard? We started with buses. Buses are the anchor of Ballard's experience, we lead in this application. We see the transit buses well underway and emerging activities with coach and intercity buses. This is a $14 billion addressable market. Followed by trucks. Trucks have multiple applications, we see with this, a scaling from range extension applications to larger power, ultimately leading to long-range, heavy-duty fuel cell trucks.
This is the largest market segment we're going after, hence, the large focus and priority Ballard is putting on this sector at $100 billion of addressable market. Followed by rail. Rail, we have our initial projects such as CRRC in China with the tram, followed by passenger car, sorry, passenger trains expected in Europe in the next year or so.
This is a $4 billion addressable market. Finally, marine. Marine will take time to develop for the very large ships. It's worth the development cycle, with an additional $13 billion of addressable market for a total of $130 billion. This happens over the next 5 years or so. It's dependent on many things, but it will be our focus, and we will drive the adoption as fast as we can.
In terms of driving that adoption, we have key levers for expansion, I've highlighted 4 key levers, we just must look at the overall situation. First, we identified our markets. Second, we know what products are needed to address these markets. Now we're proceeding with laser focus to make everything happen based on these 4 elements I show here on the slide, in order to underpin our sustainable growth and enable the full transition to a zero-emission world with mobility.
Let's dig deeper again. Technology improvement. PEM fuel cells are Ballard's DNA, we are driving further gains through continuous improvement in our core technology streams. We are also scaling while simultaneously innovating, as we will shortly learn from Kevin. Our short-term scaling enables speed to market based on Ballard's proven technology. Our innovation keeps us in the lead for the long term. Product industrialization.
We are driving costs down at record pace through industrialization. Our scaling and design improvements are tracking exceptionally well on costs for CapEx as well as OpEx. We are rock solid in our roadmap. Kevin and Lee, as mentioned, will show more on this important work. We are also intent on accelerating the market and are doubling down, as you have seen, on our core technologies.
In addition, we have long recognized the importance of partners to complement our own skills and competencies, partners with industrialization skills as well, and high volume, serious manufacturing in key geographic markets, as well as added channels to market. We have Weichai in 2018 and now Maly in 2020. We're privileged to be working together with such strong partners. Xie Xie, Weichai, Danke, Maly. This is very exciting.
When turning to application integration and ecosystem, again, we are intent on acceleration of the market with our partners. Partners with application knowledge to have a clear understanding of product requirements and performance goals that allow us to better integrate solutions. Thank you to all of our customers for your long-standing and strong support.
Partners, to help bring together the complete solution, renewable energy, hydrogen production, fuel distribution, fueling stations, vehicle supply, and aftermarket service. As you can see, the chain, the supply chain is long, and this has been a challenge in the past. We believe in a team effort to drive solutions here, as the scale and scope are understandably very large and need a strong team to support it.
The good news is that new business models, such as H2Bus, are underway, well underway, to provide total solutions that will help simplify and cost reduce the complete process, while also enabling much deeper integration of renewable energy into our economies. Let's sum up. The future is a bright Ballard blue. We have the proven technology, the experience, and the team needed to deliver. We are leading with cost reduction and scaling. We are collaborating with the industry's best to accelerate the transition to a sustainable planet. We are Ballard. Thank you, and back to Tony.
... Great. Thanks very much, Rob. Before I introduce our next speaker, just a quick reminder, if you have any questions for our upcoming Q&A session after Kevin's presentation, please send them to analystday@ballard.com. In terms of our next speaker, I'd like to introduce Dr. Kevin Colbow. Kevin is our Chief Technology Officer.
Kevin's been with Ballard since 1994, and has held a range of positions and responsibility in the technology areas before being named our CTO in March of 2019. Kevin's now gonna provide an overview and update on our second growth platform, the technology solutions business. Kevin?
Thank you, Tony. Good morning. I am truly honored to have the opportunity to present to you today, first on Ballard's technology solutions growth platform, and then again, later today on our product roadmap. I've been with Ballard for 26 years, and I'm excited now more than ever because we are well positioned with our technology and products to capture the growing worldwide market opportunities.
The TS growth platform's mission continues to be to help customers solve difficult technical and business challenges in their fuel cell programs. Ballard's unique assets, primarily in its area of expertise of proton exchange membrane fuel cells, can be utilized to create complete bundled solutions. Automotive has historically been the largest part of our technology solutions platform, but the application reach continues to grow.
The types of offerings include product development, testing services, licensing and technology transfer, component design and manufacturing, as well as system design and integration. With that, the next slide provides the key strategic objectives for Ballard related to our technology solutions business. First, to reduce customer commercialization friction points, to build to achieve high margin revenue that
continues to support the Ballard business overall, to enable longer term market opportunities, to build and cross-leverage our IP portfolio, technology, advancements, and know-how, and to align programs with core competencies and resources, which allow us to leverage Ballard's power products into the emerging markets such as truck, rail, and marine. Our three key assets are our people, our intellectual property, including patents, know-how, and trade secrets, and our testing and prototyping capabilities within our facilities. I will talk about the first two.
In terms of our people, we currently have approximately 400 technical professionals covering disciplines from fundamental material science and electrochemistry through mechanical and electrical engineering, all the way to systems engineering and reliability growth engineering. Our core science and engineering staff can be characterized as having a high level of experience, as evidenced by their average tenure of 10 years.
In total, we can draw upon approximately 4,700 person years of experience. In addition, our employees have proven to be highly dedicated and proud of their contributions to Ballard, as evidenced by the consistently high employee retention rates. Most importantly, though, we are a collective team of specialized fuel cell developers.
In terms of our intellectual property, given our long history and significant cumulative investment, Ballard's IP position is very strong, and as shown in the graphic, covers all aspects of proton exchange membrane fuel cell technology. There is a larger portion of the pie in the key core technology areas of membrane electrode assemblies and bipolar plates.
Perhaps even more importantly, from a technology solution standpoint, in addition to the 400 patents and patent applications, we have know-how and trade secrets, which are critical to effectively leverage this intellectual property from a commercial standpoint. Our deep know-how includes house layer processing, MEA manufacturing and sealing, plate design in carbon and metal, plate manufacturing, fuel cell system control strategies, system modeling, and optimization. In this slide, I have summarized our broad portfolio of key technology solutions markets, as well as some of the key customers.
Not surprisingly, they overlap extensively with our key power product markets already covered by Rob. We are engaging with customers in our key markets, but also leveraging our activities to support customers looking at emerging markets. Our technology solutions business is highly cross-leverageable, giving us an early view into industries evaluating fuel cell solutions, which also provide a highly innovative environment.
Benefits include reinforcing our business models, validating markets, and establishing strategic relationships early with blue chip customers. A few examples that I will speak to momentarily include, in automotive, our engagement with Audi and more broadly, the VW Group. In buses, trucks, and forklifts with Weichai Power in China, and in rail, Siemens, which builds on our earlier work with China, in China, with CRRC.
Technology solutions has historically been a $5, 50 million-$60 million dollar business, and looking forward, we expect relatively modest growth as customers will tend to cycle through as they transition to product sales, and then being replaced with new customers in new market segments. I would like to provide you briefly with 3 examples or case studies of how customer needs are aligned with our technology solutions offerings.
In automotive, VW Audi have engaged us in a full product development program, which began back in 2013. The 9-year technology and product development engineering services contract runs to mid-2022, and it has led to the development of a high power density fuel cell stack for the passenger car market, with industry-leading performance metrics, including power and power density, maximum operating temperature, and free start capability.
This stack was 100% designed and developed by Ballard. We also recently announced a non-binding MOU with Audi, which will result in Ballard's IP rights for this stack in all applications, including passenger car, and commercial vehicles and trucks, which builds upon our existing rights, in bus, rail, marine, off-road vehicles, and stationary.
Our second example is aligned around bus, truck, and forklift markets, focused in China with Weichai Power. We're expecting a continuous collaboration through our Weichai Ballard joint venture in development today, in 5 years, and 10 years from now. The first installment of this development is the initial $90 million development program of several products and includes the technology transfer for the manufacturing of carbon bipolar plates and the assembly of fuel cell stacks and modules.
I am particularly proud of the technology transfer progress to date that has enabled the first PEM fuel cell gigafactory. This co-development has also leveraged the Weichai expertise around designing engines and its strength in supply chain. Our third example relates to the European rail market, aimed at supporting Siemens by introducing to them fuel cell technology for the regional trains to support their overall electrification strategy.
For Ballard, this work further builds our internal capability in application-specific engineering. A similar rail development program was completed in early 2019 for light rail trams in China with CRRC. In both cases, Ballard has and will have designed and built 200 kilowatt rail modules. Again, this is an opportunity to develop and demonstrate products as well as develop long-term customer stickiness.
This final example further punctuates how early learnings from these customer demonstrations can be applied to our future products. We are now going to show a brief video on what our customers have to say. Thank you.
Hello, my name is Lauren Skiver, CEO, General Manager for Sunline Transit Agency. Sunline Transit Agency sits in the Coachella Valley, about 116 miles east of downtown Los Angeles. We're a small transit agency, but are most noted for our work in alternative fuels. Sunline has been using alternative fuels for more than 25 years, and has been concentrating its efforts in hydrogen for more than 20 years.
We were the first transit agency to produce hydrogen on our property at 84 kilograms at the time, and we now have the largest electrolyzer for transportation, a Nel Proton project, that we've done on our property, producing 900 kilograms per day. That long history is only the way it is based on our relationships, and one of the key relationships we forged over the years is with Ballard.
Ballard has been a strong partner in SunLine's success, not just because of their product and the reliability and productivity of the fuel cells they produce, but because of the relationship. Ballard has been strong in providing support, education, training, and getting to the bottom of any root cause issues we have with our vehicle types, and this includes other things besides the fuel cell system.
I think that's why Ballard has been so instrumental into our success. They believe in providing an amazing product, but they also believe in support and success for their customers. Without those kinds of relationships, SunLine could never be where that it is today with the fleet, and we're very grateful to Ballard, their support, and the products that they provide to the community to drive the commercialization of fuel cell technology forward. Thank you.
In ABB, we are currently looking at how we can cut emissions in shipping, and we see fuel cells in combination with hydrogen as a very important enabler to achieve that. What we find very unique about Ballard and our experience with Ballard is the competence of the people and the long track record and the history of Ballard in fuel cells. We see that the new product will make a huge contribution to shipping.
Good morning or afternoon. My name is Julian Soles. I'm Head of Technology Development for Mining and Sustainability at Anglo American. Right now, we're building a 2-megawatt power plant, which is made up of 800 kilowatts of Ballard HT100 modules, and the balance of that is with batteries in terms of where the power comes from.
That's gonna be fitted into a 290 ton off-road haul truck to operate at one of our mines in South Africa. Why Ballard? We've been working with Ballard on the project for about 18 months, and we selected them for several reasons. The most importantly, is that our application is extremely challenging, and we really required a fuel cell that had demonstrated in the field, high reliability and performance.
We wanted to work with a team that was extremely collaborative and actually wanted to really help us succeed, and in Ballard, we've seen that. We've got plenty of evidence now. I'm very happy that we made that choice. Finally, the other part was we wanted to work with someone who actually had experience in delivering fuel cells at scale.
You know, we've been extremely ambitious with our timelines to get our pilot truck operational, so it's important that we get timely delivery of the components. You know, we felt that Ballard had a strong track record of this, and, you know, we have taken delivery of all nine stacks that we ordered, and we're currently in the process of integrating eight into our power module.
So far, we've been extremely pleased with the choice we've made, and we're very excited to move into the next phase, and early next year, get it into the truck and demonstrate the application of fuel cells and hydrogen in mining.
Good day. My name is David Warren. I'm director of sustainable transportation at New Flyer. My role with the company is to oversee the low and zero emission programs within our company. When we look at fuel cell electric technology, we see the advantages to the range capability, less fill time, and the scalability of hydrogen for large fleet deployments.
We are very grateful to Ballard. I can testify that my experience with your company has been outstanding, the quality of the people I deal with, and the technology that you've introduced, and the reliability improvements that we've witnessed over the last 10 years of working with you. Thank you.
Hi, Johan Ostegard from Norled in Norway. We are now constructing the world's first hydrogen-driven car ferry using Ballard's fuel cells. This is the 200 kilowatt maritime application that Ballard has been developing for some years. We've been active in the cooperation with Ballard to develop this fuel cell together with our naval architects and ship operators.
It's been a very, very fruitful cooperation, and we now are looking forward to get this ferry in operation in the autumn of 2021. The ferry is currently being constructed now, and the final engineering, the final risk assessment is ongoing. This is certainly a stepping stone for Norled and for Ballard to get this project up running.
Ballard has been a delight to work with, and a very forward-thinking company, with a fantastic product. We have had, in our Wrightbus buses, Ballard fuel cells running for 12 years. We've just taken those buses back off service, and the fuel cells have another three or four years left of life. This is the only fuel cell company that has at least 12 years of arduous running as a technology partner.
Great. I hope you found that video informative. We're now gonna take a brief break here to take some questions that we've been getting, and we've had several of them. Again, just a reminder, if you have any questions, please send them to analystday@ballard.com. I've also had a number of questions that around cost reduction and some of our efforts in some of the geographies, and I think we'll get to some of that later.
Let me be a bit selective here on the questions, and again, if we don't get to them, we'll get back to you later. Perhaps the first question I can direct is to Randy, again, noting that Ballard is, again, with the particularly now with Mole and with Weichai, has its global footprint. The question is around IP protection and what Ballard's doing to ensure that it protects its IP.
This is a question we frequently get, and it's important to understand, we take four key principles when we look at IP protection. The first is the quality of the counterparty. As an illustrative example, when we look to collaborate with Weichai in China, we did a lot of due diligence on: Who is Weichai? You know, we actually went and met with a number of companies that Weichai had invested in or partnered in globally.
They're very much an international company that respects brand, respects reputation, respects intellectual property. The quality of the counterparty is critically important. Of course Nel is similar. Secondly, we also look at how we structure our arrangements commercially with a counterparty.
Where we intend to provide intellectual property, we contract for that, and we get paid for it, so a value transition that we get paid for, and then we put structural barriers in our contracts to prevent leakage where we're not intending to transfer and get paid. The third, and this is critically important, is, of course, we've got to stay ahead on the innovation curve.
We don't stay static on where we are. We're constantly investing in our core R&D technology, in our core products, to stay ahead in with future generation technologies. The fourth is where there has been leakage or some type of compromise of our intellectual property, we're gonna be very aggressive in defending that, and making sure we're taking the appropriate actions.
Great. Thanks, Randy. We've had also a number of questions on Mole announcements, perhaps I'll throw this over to Kevin. Some of the questions are a bit about the technical scope of supply, referencing Ballard, taking the fuel cell system, Mole on the power chain. Maybe just comment on how you see that, how important it is that Ballard, you know, is involved in integration, any comments you might have as well. We've had questions on the timeline, when we might see some product in the market.
... Thank you, Tony. Well, maybe I'll deal with the second part of the question first. Certainly in my second presentation later today, I'll go into the details of when we roll out some of these products, and I'll be in a position to comment more specifically. In general, the, you know, the first, this engagement has just started. We're working already in terms of the scope of the supply, so expect some of the first units to come out in the 2022 timeframe. With respect to the scope, again, I will be talking about the fuel cell module. Certainly, the scope that's closest to Ballard.
But when you start looking at some of the balance of plant components, things like coolant pumps, things that are more common across the industry, that's where MAHLE will have an opportunity to really contribute in terms of driving that down. But I think the essential piece is gonna be around things like DC-to-DC conversion, powertrains, some of the controls, to controls integration that can be achieved.
But it's safe to say, Ballard will stay core to its areas of expertise, and the addition of MAHLE and their expertise will allow for a seamless integration, something that we've seen to be important in many earlier generations of engagement with OEM customers and otherwise.
Great. Thanks, Kevin. Do you wanna add, Rob, wanna add anything or?
Yes, just in general, what we also see is the need for greater systems integration, and that, as Kevin mentioned, that seamless integration. The products of the future will be much better packaged, much tighter integrated, and this will help drive down cost, but also nudge up the reliability of those systems and make them easier to apply across the full fleet of vehicles intended.
Great. Thanks, Rob. While you have the floor, Rob, a question was just noting in our E-1, 2, 3, 4, 5 strategy, we focus on China, Europe, and North America, California. One of the questions was just about the rest of the world, and we don't have on our agenda today. Of course, we're focused on those. Rob, the question is just: Do we see any other opportunities outside of those key markets, and is Ballard active in any other markets?
It's a great question, and Randy mentioned, there are already 20 countries around the world with hydrogen roadmaps. What we're seeing is an expansion of this roadmap of, and a recognition of the use of hydrogen across the globe. We prioritized those markets that are furthest along. Europe has a deep history, in terms of looking to decarbonize, as well as China and California.
As mentioned, this is now spreading around the globe, and with that, we are also expanding our activities. We're very focused on our core markets, but we're seeing tremendous opportunities in countries such as Australia. In fact, we already have an initiative called H2AUS, which is intending to put buses into Australia, fuel cell buses, in the near future.
There are large markets, such as India, that are moving very quickly in their recognition of the importance of integrating renewable energy with zero emission technologies. We see a bright future, as I mentioned, and these markets will have more to talk about in the near future. Thank you.
Great. Thanks, Rob. We have had also 2 or 3 questions on another market application, which we haven't talked much about today, and we don't have a lot, which is the aviation sector. There's been a number of recent announcements made about the potential for fuel cell technology in aviation. Randy, maybe you wanna give your thoughts on just how you see fuel cells playing in that, and is Ballard considering that as market opportunity?
The aerospace industry is an industry that must decarbonize. When you look at the contribution of emissions from aerospace, we're talking about a significant contribution that really has no other option, viable option in terms of how to abate that segment other than hydrogen. What we're seeing, and we've seen some of this over the last few weeks with some of the major aerospace companies announcing plans for hydrogen and also looking at fuel cell technology.
I think this is a market that we see longer term. We're not gonna see, in my opinion, a high-scale adoption of hydrogen and fuel cell technology in the next number of years in aerospace. As you start looking at 2030 and onwards, we're gonna see significant adoption, in my opinion, in those markets. For Ballard, I think what you can look for is an important announcement on the aerospace front in 2020.
Great. Thanks. Thanks, Randy. I'll tell you, I think we'll wrap up the question. We have some more questions, but I think we're gonna cover some of them a little later. Perhaps what we can do is just wrap up this section. We have two or three more Q&A sections over the course of the day, and so we'll come back to some additional questions later if we don't answer them through the presentation.
Thanks, gentlemen. What we'll do now is we're gonna move on to the next portion of our agenda, which is to review an update on commercial activities in our key geographic target markets, namely China, in Europe, and in California.
I'm gonna introduce all of the speakers now, all of whom are dialing in remotely, and I'll come back, and we'll take some Q&A after the presentation. First up will be Alfred Wong. Alfred is the managing director for Asia Pacific region, and Alfred is located in Hong Kong and will address the China market. Alfred has been with Ballard for 20 years.
Following Alfred will be 2 senior executives with from our European operations, who will discuss activities in that market. First will be Jesper Themsen, president and CEO of Ballard Power Systems Europe, located in Hobro, Denmark. Jesper has been with Ballard since before the acquisition of Dantherm Power in 2010. Oben Ülüc , our Director of Sales for Europe, Middle East, and Africa regions, who is located in Berlin.
Oben has been with Ballard for 6 years. Finally, we'll hear from Nicolas Pocard, our Director of Marketing and Business and Development, who will address commercial activities in the California market. Nicolas has been with the company for 8 years. At thi s point, I'll turn it over to Alfred.
Thanks very much, Tony. Good morning, good afternoon to everybody. I'm calling in from Shanghai today. Just want to say, hope that everybody is staying safe wherever you are. I was wishing I could join the rest of the team in Vancouver today, unfortunately, due to COVID, that's a little bit more challenging.
Before I get to the main part of the presentation, I just wanted to share some of the recent photos of the Fuel Cell Vehicle Congress event that took place in Shanghai a couple of weeks ago. In China, there's been a really extensive progress made on the recovery of COVID in the past few months, it was one of the first major exhibitions that I've attended since the outbreak.
As you can see from the photos, the exhibition floor was just absolutely packed with people, and the conference breakout sessions had people lining up from outside the door. You know, as you can kind of see, you know, China is really now fully back in business.
At the same time, a number of local manufacturers have announced major vehicle launches that's gonna happen in the next few years. Here you can see a vehicle that's displayed by FAW. Great Wall, SAIC, they've also made significant announcements to launch vehicles, so lots of activities happening at this time in industry. If we can go to the next slide, please.
I just wanted to remind all viewers here that China is considered to be the world's largest and fastest-growing commercial FCEV market. Just to put some context around that, while there are about 5,000 new buses manufactured in North America each year and about 15,000 in Europe, in China, the number is in the range of about 200,000-400,000 a year, depending on what data source you use.
On the truck side, about of the 4 million trucks that are manufactured globally each year, about 45% of them are deployed in China, a very large market. Now, relative to some of the other countries that have fuel cell ambitions, China has had a relatively late start.
It's really been about 2015 and 2016 period where the volume has really started to ramp up. As you can see from the graph in the middle, the growth has been very quick and very rapid over the last few years. Overall, China has an ambition to reach 1 million fuel cell vehicles and 1,000 refueling stations by 2030. It's now well on pace to do that. To date, there are about 7,200 fuel cell vehicles and 80 refueling stations that's been demonstrated so far. We expect more of that to be announced before the end of this year, so it's tracking well against the published roadmap. If we go to the next slide.
If you've been following the industry, you have probably seen this already, but just last week, there was an announcement made by the five ministries joined together on a new policy that's gonna be guiding the development of the FCEV industry. This policy is really great news for the industry as a whole, as it provides an overall framework on how the government is planning to continue to support the growth and the demonstration.
Based on the latest policy, what we can expect going forward is that the central government will be substituting the direct subsidy scheme, which has been using. Currently, what it does now is to provide subsidies directly to manufacturers.
What it's gonna be doing is to substitute that by going with the financial incentives or rewards, which would be distributed to selected demonstration regions or city clusters. The demonstration regions are expected to have more autonomy on how these incentives will be used to continue to support the in-industry players and drive the demonstration programs forward.
Under the framework of the demonstration regions that's been announced, what it's looking for is to select regions that have very favorable conditions to execute these demonstrations. Factors including the competitiveness of the industrial base, the completeness of the industrial base, competitiveness of the hydrogen supply conditions and economics, prior experience in demonstrating fleets, and as well as their own local policy that's guaranteed to be in place to support the growth.
At this time, all the key regions right now are in the process of preparing for the program application, which is due, expected to be due in November 15th. We can expect to get a little bit more clarity on how this is all gonna get rolled out in the upcoming months. What's clear at this time is that the demonstration programs will leverage both funding from national and regional levels, so it's overall a very positive sign. Going to the next slide. At the regional level, at this point, there are now 36 regions that have announced reach on plans to promote FCEVs, and as well as the deployment of refueling stations.
The table here is just an illustrative example of some of them. Over the past week, several regions have already published updates to their plans, we're expecting more news to be coming soon as different cities plan to cluster together to form their demonstration regions. What's really encouraging, when you look at all the data, is that if you sum up the targets from all the different regions, you'll see numbers and goals that far exceed the targets of the national roadmap. From a regional level, if you add it all up, you know, you're gonna get a much far bigger number. Next slide. What does this all mean for Ballard?
We strongly believe that all the work that we've done in the market so far puts us in a very good position to support China on these demonstration programs. With the policy document, there are a number of key themes that were identified as part of this framework, which I've identified on the left here. The first one really calls for the breakthrough and industrialization of core fuel cell components.
As you've heard, some of what Rob and Kevin has discussed, that we've been involved in the development and the local production of fuel cell stacks and systems with our joint venture partners, and some of these activities date back to 2017.
There's also a section that calls for the demonstration of certain performance metrics in power density and free start, for example. At Ballard, we've successfully demonstrated a number of, or all of these parameters in real-life operating conditions. Thirdly, and I think that one that's really important is that going forward, the financial reward system is really going to favor the demonstration of heavy-duty trucks, heavy-duty vehicles that have a very high power requirement.
We understand from our work that we've done before, that this is really the area that provides the strongest TC, that's the most attractive, that has the most attractive value proposition to the end users. It's also an area where we really feel that we can provide the most attractive TCO to given our given our proven durability in this area, it's really what sets us apart from our competition.
Lastly, the policy does mention putting a focus on the promotion of products from leading enterprises. I think, I believe that partnership with Weichai, which I will get into more, a little bit more later in the presentation, will really position us to win in this market. Just going forward to the next slide. You'll see that we currently have three operating entities in China. Three operating entities in China. The first one, it's our, it's our WFOE, that we've established in Guangzhou in 2017.
Under this wholly owned sub, it really serves as our overall command center in China. We've populated this entity with sales, service, application engineering, quality supply chain capabilities to support all our activities in the country. As I mentioned before, we also have our Weichai Ballard joint venture, which is 51% 49% owned by Weichai and Ballard, respectively, we established it 22 months ago when we entered into a strategic collaboration.
That's the exclusive manufacturer of the LCS series of stacks and FCmove modules in China. Again, we'll touch on that in a moment. Third, it's our Synergy Ballard joint venture that's based in Guangdong Province. We've established this entity in late 2016 to manufacture our 9SSL series of stacks, which really, it's considered to be the workhorse of the industry, and powering a large number of the vehicles that's currently operating in China today.
Next slide. Our strategic collaboration with Weichai started in 2018, and there are really three key elements to that when we launched that. First is a 19.9% equity investment into Ballard. Second is the formation of the joint venture, third, the $90 million technology transfer program that Kevin talked about earlier. At Ballard, we're absolutely convinced that we have the best partner in China to drive our business forward with Weichai.
I recall that at the time when we were looking for a partner to move forward with, we were looking for somebody with exceptional operational capability, strong supply chain presence, strong customer base with all the OEMs, Weichai really checks off all those boxes. They're the number 1 heavy-duty engines, They've been the number 1 in heavy-duty engine sales in the world. Within China, they own a 30%, 34%, excuse me, a market share, with plans to grow up to 40%.
As I mentioned earlier, the fuel cell vehicle policy in China is really gonna put an emphasis on the demonstration of commercial trucks, and trucking applications of higher power. In Weichai and all their engine deliverables, 70% of their products go into truck applications. In addition to loose engine, Weichai is also very vertically integrated with a number of strong OEMs. As you can see on the right side, just a select handful of them.
Zhongtong Bus, which is one of the top energy bus manufacturers in China, with annual capacity of about 30,000 new energy buses per year. Sinotruk, world's second-largest heavy-duty truck manufacturer in China. Shaanxi Heavy Duty Automobile, which is the largest manufacturer of new energy commercial vehicles in Northwest China. Also KION, which is the world's second-largest supplier of forklifts.
Together, we believe that there's a lot of things that we can do in the truck space. Next slide. You'll see that you'll see this later on in today's event as well. We've just in Weifang, where Weichai is located, we've just commissioned the world's largest manufacturing fuel cell center, the largest fuel cell manufacturing center, which we've code-named Giga Shandong One. It's a brand-new facility that just finished construction this year. It's got a total floor space of 225,000 sq ft.
It's certified to IATF 16949 automotive standards, and it's got a capacity to produce 34,000 stacks, which is equivalent of 2 gigawatts or 2,000 modules per year. We're really looking forward to getting this factory up to full speed and producing products. If you go on to the next slide, the scope of our joint venture with Weichai really doesn't stop at manufacturing, but we're also continuing to invest in the development of next-generation products to meet the evolving requirements of the local market.
In the technical center that we have with Weichai, we now have 115 engineers and technicians that's now working with the Ballard team on 4 separate module programs and 2 stack programs. We want to ensure that we remain to be the best in the industry, to continue to push innovation. Also, the team there is working in one of the world's most well-equipped facilities.
In the technical center in Weifang, there's a full array of stack and module test stations, balance of plant component test stands, prototyping capability, and other specialized equipment that's specially designed for hydrogen testing. Going on the next slide. Since we started our activities at the JV, we've now built and commissioned over 100 modules, that's been integrated into five separate vehicle platforms. Four of these are 12-meter buses with Yutong, Zhongtong, Asia Star, and Howo.
Also, we've got a module that's now been integrated on a 49 ton semi with Shaanxi Heavy Duty Automobile. The majority of these, the buses that we've put together so far are now under revenue service in Shandong Province. There are now 10 dedicated fuel cell bus routes that's testing these buses.
Over the next few months, we can expect to see more vehicles added to this list. Going to the slide 12. On the next slide, overall in China, we strongly believe that we offer the best performing products in the industry, and this is reflected in our dominant market share that we hold today at about 45%.
Ballard technology now can be found in close to 3,300 vehicles, excuse me, with 17 different OEMs. These vehicles have now traveled in excess of 42 million kilometers. Of these vehicles, about one third of these are buses, and the remaining two thirds are trucks. Again, we've been working with a number of very high profile blue-chip OEMs, including Yutong, Zhongtong, Dongfeng Motors, and others.
Going on to slide 13. Just as a reminder to some of the viewers, before any vehicle can get qualified for subsidies, in China, it must go through a certification process by the Ministry of Industry and Information Technology, where the vehicle is entered into a new energy vehicle promotion list.
So far now, we're now up to 70 vehicles. Last week it was 65, today now, there are now 70 different vehicles that's now listed, that has a Ballard technology inside. That ranges from 8.5 to 12-meter buses and various different types of trucks, as well as specialty vehicles, that list is continuing to grow. On the next slide, I just wanted to show you some of the photos of the over 1,000 buses that we currently have deployed in China.
Now these buses have been operating in more than 10 cities, now have already accumulated over 13 million kilometers of service. Then on the truck side, we now have over 2,200 trucks operating in over 20 cities, including major metropolitan areas, including Guangzhou, Shenzhen, and Shanghai. Now we're at over 29 million kilometers of service, delivering goods for some blue-chip companies in
China, including e-commerce giant, JD.com, which is the equivalent of the Amazon in the U.S., and also a logistic company such as SF Express, which is the equivalent of UPS or FedEx. Aside from trucks, we also have one of our landmark projects. It's a tram project that we've been running over the past year in the city of Foshan in South China. This really is the first commercially operating tramline in the world.
We've been working on this project with CRRC Sifang over the last 5 years to put this product forward. Currently, we've got 5 trams running in the first phase of this project. It's running along a 17-kilometer route through the city. Each tram is powered by a 200 kilowatt Ballard module, and it's got a maximum capacity to carry close to 400 passengers and has a range of 125 kilometers. As of this date, it's now got over 100,000 kilometers of service in this fleet. It's an absolutely beautiful tram system.
Now, if you ever do get an opportunity to visit China once the COVID travel restrictions are over, I do highly encourage you to come visit and ride this. It's quite an experience. On the next slide, there's still a number of emerging opportunities that I think represents great upside for our business at Ballard, and those include mining trucks, forklift, passenger vehicles, and marine vessels. Recently, we've demonstrated a 200 ton mining truck that's equipped with a 340 kW fuel cell engine. So comprising of 4 separate units of XD85 module. We put that into demonstration now.
We believe that there is a, you know, a large undiscovered opportunity in the mining sector as mines look to decarbonize. As part of our activities with Weichai, we're also have ongoing activities to look at development of fuel cell forklift solutions together with Der Keonn, we'll expect to have more on that shortly. Lastly, just in conclusion, I do strongly believe that China is gonna continue to be a dominant force in the commercialization of FCEVs.
As I mentioned before, it is the world's largest commercial vehicle market. It's got all the right elements with the strong government support, with an ambition roadmap. I believe that over the past few years, with all the work that we've done, we're very well positioned to continue our growth, especially under the Weichai Ballard joint venture platform, where we have an absolute obsession and focus on cost reduction and advancing localization.
Lastly, you know, even with despite all our ongoing activities, I still believe there's a vast amount of untapped opportunities in emerging applications that we could look at, including passenger vehicles and other specialty mobility applications. Do look for us to do more in China going forward. With that, I'll pass the floor to Jesper, and with Ulvin, who will carry on with the update on the European market.
Thank you very much, Alfred. Good day to you all. I'm calling in from Ballard Europe in Denmark under these circumstances. Unfortunately, couldn't be there. I've been working with fuel cells and with Ballard since 2002. I've enjoyed the journey to where we are today, and I'm really excited with the outlook. As illustrated on the next slide, we see a lot moving our way in Europe.
Being deeply involved in the European market, it's amazing to see what is happening on policies and funding, supporting green economic growth, and at the moment, green economic recovery in Europe. At EU level, we have the Green Deal. It's focusing on sustainable financial growth with the ambition of becoming the first climate neutral net zero emission continent.
A main pillar here is the hydrogen strategy, with a strategic objective of 40 gigawatts of green hydrogen production by 2030. At national level, we see very ambitious hydrogen strategies being launched, several of these within the last 6 to 8 months. We have Norway, we have Germany, France, Holland, UK, Portugal, coming up with ambitious strategies, among others.
If you look at Germany, you'll see EUR 9 billion commitments. If you look at France, you will see EUR 7 billion commitments. This is serious. On the next slide, you will see that Ballard is highly active in Europe to support and to move these market opportunities. With our leading technology, we are in a very good position, and we are even able to foster further uptake in the market than what is given by this government support mentioned before.
At our European headquarters in Denmark, we are 80 dedicated employees. We have 18 years of experience with fuel cells. We have presence in Germany, U.K., France, and Norway, and we have service centers in Denmark, Germany, and U.K. This organization supports the current products in the field. It supports our customers, it supports our new opportunities, supports our new products. For the activities in the different segments that we are covering in Europe, I will leave that with Ogün, who has the direct daily interaction on these segments and these markets. Over to you, Ogün.
Thank you, Jesper. Good morning and good afternoon, everyone, from a sunny afternoon in Berlin. I've been with Ballard for about five and a half years now, which I qualify as the fastest five and a half years of my life. I'm going to update you today on fuel cell buses, truck and rail segments in Europe, how these segments are developing, how large the opportunities are, how Ballard is doing, and what our strategy is.
Then I will hand back to Jesper to continue with the maritime segment. European cities and authorities are taking concrete steps to improve the air quality in city centers. All over Europe, low emission zones are being deployed. Buses are important pillar of the public transportation in city centers, as well as in suburbs. It is critical that the public buses become zero emission and get electrified.
Several large European cities like London, Paris, Hamburg, Copenhagen, Amsterdam, and many others, have committed to buy 100% of their buses as zero emission by 2025 or before. A lot of activity is happening. As you may know, the public buses have a lifetime of roughly 10 to 12 years, we expect about 8% to 10% of the bus fleets will be replenished per year. Accordingly, the procurement of zero emission buses will reach about 66% by 2030.
Hydrogen fuel cells will play an important role in this transformation. In a recent, very exciting announcement, U.K. government announced the first hydrogen bus-only town initiative. 17 U.K. cities applied, and we will see soon who will be the first city.
Going to the next slide, I want to inform you about the status of the deployment in Europe. Over the last 7-8 years, several fuel cell electric bus demonstration projects have been completed. Technology has been successfully demonstrated. Very key things like long range, over 400 kilometers a day, fast refilling, 7-8, 10 minutes, and route flexibility, practically giving the chance, the possibility, 1-to-1 replacement of diesel buses without compromising the existing time plans.
We are currently experiencing a rapid increase of fuel cell electric buses in Europe. In 2019, maybe there were about 40-45 fuel cell buses on the roads. At this moment of time, in total, 225 fuel cell electric buses powered by Ballard, are either in service or ordered at the bus OEMs, and will be delivered soon for 17 European cities.
Furthermore, 848 additional fuel cell electric buses are either at tendering stage or planning stage, preparing for rollouts, pretty much in every part of Europe, as you can see on the map itself. In Germany, in Austria, Latvia, Netherlands, Belgium, UK, France, Portugal, Spain, and other countries like Croatia and Poland, are expected soon.
We had previously announced a partnership, H2Bus Europe project, which is really an ecosystem partnership with key partners in the hydrogen value chain, with the aim to deploy 600 fuel cell electric buses by 2023 at 3 countries, and then carry that to 1,000 buses in the next stage. At this moment, first deployments are being planned, and we are expecting the tender soon.
It's estimated up to 100,000 zero emission buses will be deployed by 2030 in Europe, and 25%-30% of those buses actually require fuel cells to deliver the duty cycle. With that, we are expecting a market opportunity of 25,000 fuel cell electric buses for Ballard in Europe. Our current market share is a little bit north of 80%, and as the market grows, we will see more competition and customers will enjoy more choices. We are confident to keep our market leader position in this segment. In the next slide, I want to give you some examples of our customers coming with new products to the market.
Over the last 18 months, there have been a number of new fuel cell electric bus announcements by our European bus OEM customers, such as world's first fuel cell double-decker bus by Wrightbus, or articulated 18-meter bus rapid transport by Van Hool, or the new generation 12-meter bus, Urbino twelve Hydrogen by Solaris. Solaris has also introduced a fully zero-emission trolley, eliminating the diesel range extender by a Ballard fuel cell, to allow over 100 kilometers of autonomy for a conventional trolley bus.
We expect to see more and more products to be announced within the next years so that our customers will have more choices. In the next slide, I would like to talk about a very important segment for Ballard, which will be actually fuel cell trucks. Decarbonization of the heavy-duty transportation is one of the key targets in European Union.
For this purpose, European Union announced a new regulation for heavy-duty trucks in June 2019 and set emission reduction targets for OEMs. In 2022, the buses will be added into this regulation. The new regulation requires CO2 emission reduction of, the first place, 15% by 2025, and later, 30% by 2030 versus 2019 levels. Very strict rules. There is a common consensus between OEMs and industry that in order to meet these targets in Europe, fuel cells will be required.
The longer the ranges, the more payload the truck has, the more kilometers it drives on the highway, the stronger is the value proposition of fuel cells. Of course, with the universal benefit of quick refueling with hydrogen. There have been major announcements recently by tier 1 OEMs, as well as tier 1 suppliers, that they will develop fuel cell solutions. In the next slide, I will touch base about the size of the opportunity and the strategy Ballard has for this segment.
Our market research shows that the opportunity is up to 100,000 trucks by 2030. This is a very large opportunity for us here in Europe. Ballard has a 3-tier strategy. The first step is to participate in the demonstration projects, test the initial products on the field, collect data, and prepare for the next phase. Ballard is currently involved in a number of truck demonstration projects in Germany, in the Netherlands, in the U.K., for various applications like 26-ton truck on highway drives, or a refuse truck in the city centers. Very different duty cycles, and it helps us greatly to learn.
I said this is going to be a large volume market. We know that we need to be in key geographies closer to the end users, as well as in Europe. For this purpose, we need to foster partnerships with European tier one partners who has scale, who has experience and access in this segment. You have heard from Randy and from our website yesterday, Ballard will collaborate with MAHLE of Germany to develop medium and heavy-duty fuel cell systems for commercial trucks.
MAHLE is a tier one OEM, Germany, with 77,000 employees globally. The partnership really merges the strengths of both companies, Ballard's deep understanding of fuel cell stack technology and system design over 40 years, with MAHLE's expertise and balance of plant components, market access, and scaling capabilities.
While this is a very important step for us, we are also proactively looking for opportunities to build ecosystem partnerships with other value chain partners to reduce the overall TCO and, similar to H2Bus Europe projects, we are looking for opportunities in Nordics as well as other places to roll out truck fleets. With the next slide, I would like to give you some updates on another very interesting application, which is rail.
Over 40% of the rail tracks in Europe are not electrified, so typically, diesel engine vehicles are running on these lines. Rail vehicles have very long lifetimes, 20-30 years, so communities who buy diesel engine rail vehicle right now, they know that they will tie themselves up for 20, 30 years, which they don't want to do.
Currently, there are two options to electrify these lines, either overhead lines or overhead opportunity charging or fuel cells. Building new overhead lines cost anything between EUR 2 million-EUR 4 million per kilometer in Europe, so it's very expensive. To build also charging infrastructure at small railway stations, remote places from main power lines, is not economical.
Fuel cells offer an economical proposition in this segment, especially for regional or commuter trains and shunt locomotives, whether these are new investments or retrofitting. What we learned from our rail partners, and also from Shift2Rail study of European Union, the market can exceed 1,000 regional trains by 2030, with significant interest in Germany, France, UK, Austria, Netherlands, Nordics, Poland, many parts of Europe.
All these countries have plans to significantly increase green hydrogen production. Rail is one of the possible solid uptakers of green hydrogen. German National Hydrogen Strategy in Germany, where I live, has already measures to support deployment of fuel cells. Next slide, please. Ballard has built partnerships, like with Siemens Mobility of Germany, to demonstrate the fuel cell technology and to secure a market access in mid and long term in Europe.
We are currently developing a 200 kilowatt system for Siemens' new EMU platform, Mireo. This is a purpose-built train. It's the best-in-class performance in electrical regional trains. As it's purposely designed from scratch, Ballard and Siemens work closely together to take benefit of the latest technologies available to us.
Siemens has started to build this hydrogen Mireo version in Germany already. I'm very hopeful that you should be able to see these trains in revenue service in short time. Furthermore, there is another application where we see synergy, is shunt locomotive with similar product line. There are over 65,000 shunt locomotives in Europe. Most of these shunt sites are either in city centers or near city centers, adding to the air pollution, so we need to clean them up.
There is an opportunity to retrofit these locomotives with zero emission fuel cell solutions. In order to demonstrate this technology, we are about to sign the very first contract very shortly in Europe. With that, I'm handing over back to Jesper to continue with the maritime activities. Thank you.
Thank you, Ogmun. We see a lot of interest from the maritime segment. First of all, zero emission requirements from the International Maritime Organization, who is committing to reducing greenhouse gases by 50% by 2050. That is supported by Europe cutting CO2 emissions by 50% in the same period. That is significant and a change in the industry. Norway is a country leading in this segment.
They are enforcing 100% zero emission in shipping in their heritage shores already from 2026. This all is moving towards zero emission shipping, where fuel cells are getting well-positioned. As you can see on the next slide, we are gaining experience and building partnerships in this segment. We are developing megawatt scale systems with ABB for cruise ships.
We are developing the world's first seagoing renewables-powered ferry in Scotland under the HySeas III project. We are electrifying port equipment with hydrogen and fuel cells in the H2Ports project. We have a very significant Flagships project, where we are powering a Norled ferry in Norway with 600 kilowatts of fuel cell power, and a river barge in France with ABB, 400 kilowatts of fuel cell power for main propulsion.
We have the first liquid hydrogen ferry, which will be with Norled. That's on the Hjelmeland route in Norway. A very interesting, significant project. Finally, at the moment, we have just delivered 200 kilowatts for the Electra fuel cell river barge in Germany. To support this and many new upcoming projects and opportunities, we are investing, as you can see on the next slide. The opportunity here is significant.
We estimate 2,000 megawatt opportunity in 2030. We're investing in our Marine Center of Excellence. As mentioned before, it's in Denmark. It was established in 2019. We're also investing in our new FCwave, 200 kilowatt product that is dedicated to the marine segment. We had the product launch earlier this month of the FCwave, 200 kilowatt product. Before Nicolas talks about California, I would like to show you a short video telling more about this new product. Thank you.
Good morning. I'm very happy to be joining us today, you today. I'm here from Vancouver with the rest of our team. I've been working in the fuel cell industry over the past 15 years, and I truly believe that the period we are going through at the moment is really exciting. We see a lot of change, and I think we start to see the adoption of mobility, using hydrogen and fuel cell technologies.
What I would like to do today, is to give you an update of what is going, what happening in California. California is leading the way toward the clean mobility. California is also leading the way with adoption of regulation, which are going to drive the adoption of zero emission mobility.
As just of last week, the governor of California have signed an executive order directing that all new sales of cars and passenger truck, starting from 2035, will have to be zero emission. California is also leading the way with the adoption of hydrogen mobility. Today, there are over 8,500 fuel cell cars in the streets of California, close to 50 fuel cell buses in operation in major cities, and there are over 20 fuel cell trucks being tested in different ports and warehouse facilities.
There is a network of close to 50 hydrogen refueling station, which is spread across the state. Yes, California is leading the way and is putting vehicle on the road. Let's start to look at a little bit what is happening with transit buses.
As of last year, the California Air Resources Board has issued the Innovative Clean Transit Regulation. With this regulation, by 2023, transit agency will have to start buying a minimum of 25% of zero-emission bus for their fleet. This number is rising to 50% by 2025, and will reach 100% of all new purchase of transit bus will be zero-emission by 2029.
This mean, with the lifetime of the buses which are being deployed, that by 2040, all transit buses operating in California will be zero-emission. This represent really a huge market opportunity for battery electric and fuel cell electric buses. If you see where Ballard is today, we are the true leader in the hydrogen mobility for transit buses.
There are today 37 fuel cell electric buses powered by Ballard products in operation at Orange County, AC Transit, or SunLine Transit Agency. Those buses are working every day and have proven their performance. The test done by OCTA recently have shown that a fuel cell electric buses, a New Flyer fuel cell electric bus, can reach 350 miles of operation during a single day on a 1 single refueling, even operating on highways at higher speed, as required by Orange County.
Today, fuel cell module which are installed on this bus are showing availability of above 97%, and this is the data from 2019 and 2020 operation of the Ballard fuel cell modules. Today, products are available. Standard fuel cell buses are a commercial products offered by New Flyer, with a 40-foot or 60-foot fuel cell electric bus, and by ElDorado, with a 40-foot fuel cell bus. All those vehicles have been tested by the FTA at Altoona and are available for purchase by transit agency across the United States.
Ballard has probably have around more than 95% of the market share in California for all the new fuel cell buses which have been purchased in 2020, 2010. What is more important is the customer satisfaction. We need to make sure that the vehicle which are deployed today in the streets of California and the rest of the U.S., meet the requirement of operation and what the transit agency is expecting.
If you look at what Michael Hursh, the General Manager of AC Transit, is saying, for him, he's been very impressed by the performance of the fuel cell buses. There's no range issue. They fuel quickly, and more important, the reliability of fuel cell electric buses is comparable to the one of internal combustion engine like diesel and CNG buses.
What is very interesting, as transit agency are planning for the ICT regulation and how they're going to meet the ARB regulation, where they will have to transform all their fleet to zero emission. They are looking at how we are going to do the deployment of zero-emission buses at scale. It's always very easy when you start with 5, 10 buses. You can plug them with battery electric. It's a bit more difficult with fuel cell electric.
Even if you start with 1 or 2 vehicle, you need to invest in a full hydrogen refueling infrastructure. The cost per vehicle, when you start only with a handful of vehicle, is quite high. As you are increasing the numbers of vehicle, the infrastructure investment you have made is going to be mutualized with a larger numbers of vehicle. What you start to see is, as you're increasing the fleet size, the cost of the infrastructure per vehicle is going down for hydrogen refueling infrastructure, but on the other hand, is going higher per vehicle for battery electric recharging electric infrastructure. Why is that?
As you are putting more and more battery electric bus to recharge, you are going to need more complex electric charging, and you're going to need more and more energy to be, you know, delivered to a depot. You will have issue with space, how you're going to recharge your vehicle, and you may need even a power substation. The result of the study, which have been done and publicly available on the ARB website, from all those ICT studies, are really showing that.
The cost per vehicle is decreasing for hydrogen infrastructure, starting when you have around 30 vehicle in a range of $100,000-$150,000 per vehicle, but reaching less than $100,000 per vehicle whenever you start to be at hundreds of vehicle. Whereas the opposite, you know, happen for battery electric, and it can reach up to $500,000 per vehicle when you start to have, you know, hundreds of vehicle in the same depot to charge simultaneously.
The finding from these studies is really driving agency to consider the ratio of battery electric and fuel cell electric vehicle they're going to deploy in the future. I would like to highlight one of the case study, which was done by Foothill Transit. Foothill is in the L.A. region, and it's very interesting because Foothill is the agency which probably is the pioneers. They went to zero emission with battery electric many years ago, and they thought they would be able to do all their fleet deployment to meet this 100% zero emission mandate with battery electric.
They realized on some of the routes, they are going to need more battery electric than they are using diesel today, buses. If they were to use fuel cell electric, they will need the same numbers of vehicle. As a good example on that route where they have studied, it's a 42-mile one trip route and a daily block of 263 miles. On that particular route, they would need 34 battery electric buses if they want to maintain the same level of service, where it will only take 23 fuel cell electric buses. Now if you translate that into the total cost of ownership over a 12-year period, start to see the huge cost difference.
Not only you save on the vehicle cost, and actually the price difference between a fuel cell electric and a battery electric vehicle is the gap is getting smaller and smaller. As you're saving a number of vehicle, you save on the total cost of the CapEx investment. You save on the infrastructure cost.
As we have seen earlier, it takes much more expensive to recharge those 34 battery electric, especially if you have on-route charging, which has to be installed in city centers at a high, high cost. Also you save on the refurbishment cost. You know, if you want your vehicle to operate 12 or even 14 years in some case, you will have to replace the battery.
That is significant cost of mid-life refurbishment, where on the fuel cell side, as we're able to refurbish a fuel cell, we don't replace the module, we refurbish the stack, we replace the membrane, we condition the stack. It's a much lower cost of ownership for the fleet user. Over the 12-year lifetime, the operator, Foothill Transit, will save $13 million by using fuel cell electric bus compared to battery electric bus.
All the agencies today across California are doing that study. They need to provide a plan to the ARB this year for the smaller transit agency, Sorry, this year for the larger transit agency, and in the next 2 years for the smaller transit agencies.
As we start to see those plans coming in, and they are all available on the ARB website, we can start to see a trend that at least a minimum of 30% of the zero-emission buses deployed in California will be using hydrogen as a fuel and fuel cell technology. This number is probably going to go higher as more agency are firming up the plan and looking at how they're going to meet the mandate.
I'd like to highlight one really good example here that we see on the graph here is OCTA, Orange County, which is planning to deploy a very high number of fuel cell electric buses. Orange County is one of the largest transit agency in California. They operate more than 500 buses.
The plan is showing that for the fixed route, they're going to use 100% fuel cell electric buses. The reason for that is not only fuel cell electric buses shows to be slightly a lower cost of ownership for the overall fleet, but they are the only buses we can meet today the range requirement, and we can meet the operational requirement of an OCTA.
That's a very important requirement for them to be able to operate the buses on the route that they have. Another example I'd like to use is SunLine Transit. We are seeing earlier today, the video from the CEO, Lauren Skiver. SunLine has been one, along with AC Transit, one of the agency which have been operating fuel cell electric buses for a long time. SunLine has buses since 2000.
For the past 20 years, they have been operating fuel cell electric buses, most of them powered by Ballard. Today, they have 16 vehicle on the road, which are operating every day in a very tough environment. The Coachella Valley is probably one of the hottest part of the United States, so the bus are submitted to very tough condition, operating on a highway, very hot temperature.
A lot of days of the year, temperature exceed 100 degrees Fahrenheit. Not only you need energy to move the vehicle, but also you need energy to keep the vehicle cold, and you need to be able to provide this comfort to the passengers. Fuel cell and hydrogen not only enable to deliver the range, but also provide enough energy so the vehicle can stay cool on a hot day in the Coachella Valley or stay warm in colder days in some other parts of the United States.
What I would like to do now is to switch a little bit and talk about trucks, and what is happening on trucks in California. As of June 2020, the ARB has issued the Advanced Clean Truck Regulation. With this regulation, starting in 2024, there will be requirement for OEMs to start having minimum sales of zero-emission trucks, starting from Class 2 all the way to Class A tractor-trailers. By 2035, there will be a significant percentage of those vehicles will have to be zero emission.
Up to 55% of the Class 2 and 3, 75% from Class 4 to 8 straight truck, and 40% of the truck trailer tractors. By 2045, 100% of the heavy-duty commercial trucks in California will have to be zero emission. This represent roughly quantity of 300,000 trucks sold by 2035, and this give an idea of a market size of $7.5 billion for the engine market. California is not alone here. It's leading the way, it has signed a joint MoU with other 14 states, those states have committed to promote and push to do everything they can to have 30% of all new medium and heavy-duty trucks being zero emission by 2030, 100% by 2050.
We'll see more and more fuel cell truck being deployed in California and hopefully in other states. What are we doing at Ballard today? We are working with the numbers of industry leaders in order to integrate, demonstrate the operation of fuel cell module inside of trucks to work with vehicle OEM, system integrator, fleet operators, from them to get familiar with the operation of a fuel cell truck, the maintenance of a fuel cell trucks.
We have, for example, as Rob mentioned earlier, a Class 8 drayage truck in operation in the Port of LA. This truck was integrated with a BAE power drive, electric drive, and a Kenworth truck. We are developing numbers of Class six, that you can see on this picture here, truck for UPS and another 5 Class seven trucks, which are going to be in operation also by UPS in California next year. We're also putting trucks on the ports, like those yard trucks, with the REV Group capacity.
This gives us a lot of information in order to develop the next generation of our fuel cell truck product, as well as forge strong partnership with system integrators and truck OEM, in order to deliver the best product in the future and drive this cost reduction to provide the operators with a competitive total cost of ownership. We strongly believe that Ballard is very well positioned to support the deployment of heavy-duty mobility in California, not only with bus and trucks, as you have seen today, but also with rail.
The first hydrogen rail project has been announced in California. There are numbers of marine, ferry, barges, push boats, which are being developed currently in the state. We strongly believe that California has continued to lead the way because of its resource of renewable energy. With declining costs of solar and wind renewable energy, this opens a route to affordable, available, green hydrogen in order to fuel mobility, clean mobility in California, but not only. Green hydrogen will be used in distributed power generation, microgrid application, and backup power.
The recent event or current event in California with wildfires and a lot of natural disaster, result of climate change, is really putting a stress on infrastructure. Today, resilience is becoming a very important topic in California, but also in other states and across the world. We need to have better resilience on our grid, on our critical infrastructure. Therefore, looking at alternative solution to power those critical infrastructure, telecommunication network, data centers or grid, local grid, is very important.
We strongly believe that hydrogen and fuel cell technology will have a key role to play to provide power generation, energy storage, and backup power for those sites. California is leading the way. California is also presenting a showcase for other states. We start to see other states joining what's happening in the Midwest, in Ohio, with deployment of fuel cell buses in Nevada, as with Las Vegas joining the cities which are going to be deploying fuel cell electric buses.
You see also growing interest in Oregon, Washington State, Colorado, which are also going to be deploying fuel cell electric vehicle. California is showing the way, and we lead a hydrogen economy deployment across the United States. Thank you.
Great, thanks very much, Nicolas, thanks to our other speakers. We're going to pause just to take a couple of questions for this group before we move on. Again, if you do have any questions, please do submit them online to analystday@ballard.com.
Pardon me. We have a couple of questions around China. I think Alfred's taken us through much of the policy, but we've had a couple of tougher questions. Alfred, I know you're ready for them, but one of them, obviously, is the opportunity in China is huge.
I think we all acknowledge that, but I was wondering if you could comment on the competitive landscape and how you see Ballard and the Weichai Ballard joint venture, staying ahead of the competition. I know Randy's up on the panel as well, and Randy, you may wanna comment as well. Alfred, perhaps you could go first and comment on how you see the competitive landscape in China.
I think we are seeing a number of companies, new companies, that are entering into this space, that we haven't seen before. With the local support that we expect through this policy, the level of competition will increase, and we expect it to increase. Nonetheless, I think the platform that we have with Weichai, I do strongly believe that is the best platform. That is gonna be the premium platform for fuel cells going forward.
We've got a great team there that's working in developing fit-for-market products that's really going to cover, you know, the necessary requirements for localization. We're working, you know, we're working with downstream OEMs to look at fitting products into trucks. You know, while I do feel that competition is coming and will be coming more fierce than in the past four years, we are in a good position.
Great, thank you. Randy, did you want to add any color?
Sure, yeah. I mean, I think Alfred's captured it well. When you look at the platform we have with technology, with products, with market reach, and now the Weichai Ballard joint venture commissioned and ready for scaling, I think there are two important factors going forward. One is cost reduction. You're gonna hear a lot today about the cost reduction plan we have at Ballard that will also filter into the Weichai Ballard joint venture.
I think the other thing that's important, Alfred touched on this very powerfully earlier, is the fact that the subsidy regime or the new regime that we're looking at moving forward for fuel cell support in China, has certain requirements, and whether it's localization requirements, technical requirements, or strong contributors, strong players, we're checking all of those boxes. We feel very well positioned in the largest market, not just for fuel cell vehicles, but the largest market for commercial vehicles globally.
Great. Thanks, Randy. Thanks, Alfred. We've had a number of questions on the marine market opportunity. I know we've talked, it's been noted quite a bit about bus and truck in terms of the near-term markets. We talked, you saw the video, of course. We're fortunate, by the way, Jesper Themsen, who was the President of Ballard Power Systems Europe, has reminded me he's also has a master's degree in marine propulsion, so I think, Jesper, you'd be eminently qualified to handle these questions.
One is just in terms of the opportunity that you see in Europe, around fuel cells, if you could just comment on how fuel cells where fuel cells and batteries have a role to play in the marine market. The second question's about timing. You know, you've mentioned that we're working on a number of early-stage projects. There are a number of initiatives going on. If you could comment on your view on just how quickly you think the marine market will accelerate in Europe and globally.
Okay, thank you, Tony. good question. I would say, looking into the future is always difficult, but starting with the comparison between fuel cells and batteries. Batteries, that's kind of a storage technology. Batteries are good for short distances, so if you have a ship going short distances between charging points, and you have enough time for charging, that's basically where you should use batteries.
When you go for longer distances, when you go for more payloads, that's where fuel cells will have its competitive advantage. We see at the moment that the marine markets, at least for inland and coastal areas, that will be split between batteries and fuel cells, where there are zero emission requirement. That goes back to neither of these technologies are today competing directly head-to-head with diesel engines, because there is a price premium for the new zero-emission technologies so far.
The big question is on timing: When will batteries and fuel cells be competing directly head-to-head on cost with diesel? Should they, because it's a zero-emission technology? That's difficult to really predict, but we see a big interest in the market today pointing in that direction, that this is the future technology, one of the future technologies for ship propulsion.
Great. Thank you, Jesper. Just a couple more questions, one for Nicolas. California, clearly, as you pointed out, is a market leader. You did touch briefly on some of the other markets in the U.S. I just wonder if you could provide your perspective on the U.S. market outside of California, where some of the key markets or key states would be, and how quickly you think some of those might move to adopt fuel cells. You, you touched on a couple, and perhaps, you know, Rob may want to pile on as well.
That's a, it's a really good question. We start to see, it started in California, but we really start to see, I think, initially, probably on the West. There's two, I think, pool of growth is the on the West of the country. I mentioned Colorado, in Nevada, in Washington State, and Oregon. A lot of initiatives, looking at the production of green hydrogen, also. Also there's a lot of activities in Northeast. There have been a deployment of fuse electric vehicle in the Northeast Corridor, as well as in the Midwest. Midwest is also the home of the automotive industry in North America.
We start to see the OEMs in the region developing fuel cell electric vehicle and investing in the technology development, as well as we start to see the deployment of vehicle. Ohio has been leading in the Midwest the deployment of fuel cell electric buses. Soon there will be this vehicle, also fuel cell buses in Michigan, we are working with New Flyer to put very soon fuel cell electric vehicle in Illinois. We start to see in Midwest also, another area.
Also don't want to forget about Canada. We start to see now some growing interest in Canada, as the Canadian government has released the or is going to release very soon their Hydrogen and Fuel Cell Strategy. Numbers of cities across Canada are looking at the deployment of fuel cell electric buses.
Great. Thanks very much, Nicholas. Randy, do you want to add a couple of comments?
I think one interesting thing, it doesn't matter if you're looking at rail in China or marine in Europe or drayage trucks in the Port of Long Beach, one of the interesting themes that we've seen emerging is what we call multimodal applications. We have, for example, fuel cell, hydrogen production, first of all, centralized, let's say, at a port, and the ability to use that hydrogen refueling infrastructure for a variety of applications.
Like forklifts at the port, like drayage trucks at the port, like rail and marine applications there. Increasingly, I think we're also gonna see, and we're seeing signs of this in the U.S. as well, and I think we'll see this globally, this multimode applications and leverage off of your hydrogen refueling infrastructure.
Okay. Rob, did you wanna-
Yeah, just a final supplement. You know, we have to remember, the one key thing we need is low-cost green hydrogen. The United States, in the Southwest, has tremendous renewable energy resources, as well as tremendous capacity to produce hydrogen. I see, you know, already, some of the lowest costs of electrical production from renewables in the Southwest.
My prediction is the Southwest will lead the market in the United States, but it'll be an example for other regions that can then start deep integration of renewables, whether it's hydropower, wind power, or solar power, or carbon sequestration, as I mentioned, to come up with the fuel supply, and that the market, with that development, is ready to go. It'll be nicely synchronized. I see a great spreading of the technology.
Great, thanks. Just, two last questions, and one is, we haven't talked today about backup power, in much at all, but Nicolas, you did touch on California, and we did have a question here about. We talked about this for the last several years, about why in the U.S., particularly, they've been so slow to pick up fuel cell backup power, particularly for the 72-hour generation, particularly in California. Have you any comments or any observations on what's taking place in that market?
I think it's changing. I think what we are seeing, you know, the disastrous events we have seen in California at the moment is really helping people to realize that we need resilience. We need extended backup power that. Yeah, backup is an insurance policy, so when everything is good, you maybe don't want to have this insurance policy.
As we realize that, you know, our infrastructure has that threat, that, you know, communication be disturbed, that today, in California, utility company have to shut down the grid in order to avoid more wildfires. There need to be backup power. There need to be solution which are going to provide communities and critical infrastructure with continuous power generation.
This is where hydrogen and fuel cell really start to be today, very, very interesting solution as a backup to the grid. We'll see very soon some announcement by major players in order, how they're going to start deploying backup for data centers and at a larger scale, in order to protect those assets. I think it took a while. The technology is working, have been proven for a long time, but I think sometime it just need a bit of more urgency to dr ive the deployment.
Great. Thanks, Nicolas. Rob, did you want to add a comment as well?
Yes. We're all aware that there's a tremendous transition going on in the marketplace, in the utility sector, with renewables and energy storage. Backup power, in terms of megawatt backup power, will be one area where the renewable energy can be deployed to give that grid stability. The overall subject of energy storage is now being addressed with primarily batteries, battery technology.
When we get to larger amounts of energy, it's just not practical, and this is where hydrogen has a new opportunity to fill an economic solution to enable greater use of renewable energy in the market, provide the stability to the grid, and do it in a cost-effective way. That is another emerging market, and as Nicolas Pocard mentioned, we're very active in this sector as well. We've got years of experience and more on that to come. Thank you.
Great. Thank you. Time for one last question, it's a tough one, it's always not a good idea to ask your boss to answer the tough questions. Randy, I know you've addressed this on a, on investor calls in the past, we had a couple of questions around the Weichai JV and the thought process around the an IPO. I know you've addressed this before, maybe that's not a tough question because you've thought about this one, I'll let you have that one.
Sure. I think the important thing to understand is as we entered into a collaboration with Weichai, we're really thinking about a long-term relationship here. As we went through the diligence process with Weichai, one of the things that really reinforced this for us was their questions about: What will the technology look like five years from now and 10 years from now? We really wanted to have a structure and a plan to attack the large China market for the long term.
Our joint venture with Weichai, you know, where we own 49%, Weichai owns 51%, we're looking at ways to effectively transition value from the joint venture to the benefit of Ballard shareholders over the long term. Obviously, we have revenue streams, for example, while we're selling MEAs to the Weichai-Ballard joint venture. Longer term, what we're looking at is EBITDA contribution, so a 49% pickup of our EBITDA from the JV as it transitions from commissioning to early adoption to scaling over the next number of years.
Importantly, how do we crystallize some of the value embedded in that Weichai-Ballard 49% ownership that we have? Weichai has done this very effectively with a number of other companies, where they've IPO'd and effectively spun out a portion of those businesses for public shareholders to participate in.
My contention, I've said this very often, I believe there's a lot of value in our ownership interest in Weichai-Ballard joint venture that isn't necessarily reflected yet in the Ballard valuation. If and when that vehicle was to be taken public, that would be a very effective way for us to basically unlock a lot of that embedded value.
Great. Thanks, Randy, that brings us to the end of the questions that we have. Again, if you have any additional questions, please email them in, and we'll get back to you. We're going to shift gears a bit right now and move to our panel discussion, and I'll introduce them briefly, and then Guy McAree as well.
Again, I mentioned earlier on, we have a number of key and very, I'll say, highly regarded panelists, particularly in the hydrogen space. A number of them have been authors of a number of documents that we've referred to. Guy McAree, our Director of Investigations, will moderate the panel. Again, the folks that we have today are Dr. Ken DeWoskin, a senior advisor to Deloitte, Dr. David Hart, Director, E4tech, and Bernd Heid, Senior Partner, McKinsey & Company. Guy, over to you.
Great. Thanks so much, Tony. Welcome to everybody that's watching. We have a very large turnout. Obviously, a lot of investors and potential investors interested in the fuel cell industry. When we thought about the agenda for today, we wanted to make sure that we covered lots of important information and we think interesting information that we thought everyone would want to see, and also to give you a chance to see some of the senior folks at the company and get a sense for the quality of individuals at the company.
We also wanted to give an opportunity for some third-party experts to voice their opinions on important issues related to fuel cell adoption, in particular, the fuel cell value proposition and competitive positioning as we move forward. As Tony noted, we've got 3 preeminent individuals, a tremendous amount of insight, I think, and important background that they can offer over the next little while as we have a conversation with them.
I think maybe the first thing to do is just to go around the table and have each of them kind of introduce themselves, provide a little bit of information on their professional background, for those who aren't familiar with who they are, and maybe identify where you're calling in from. We've got people calling in today on our Analyst Day from all sorts of different locations around the globe. Maybe starting with you, David Hart, could you just spend a few minutes and provide a little background?
Happy to. Thank you very much, Guy McAree. Thank you for the invitation to participate. I'm talking to you from Stuttgart in Germany, where I am attending the hy-fcell conference, which is one of the very few real physical conferences that I've been able to attend in the last six months. Very happy to be doing that.
My background is in mechanical engineering. I ran a research group at Imperial College London on hydrogen energy systems and fuel cells for a number of years, and more recently, as you say, I've been the director of E4tech since 2001. We work across the hydrogen and fuel cell space, as well as in biofuels and in batteries and in many other areas of sustainable energy. I've been doing hydrogen and fuel cell things for 25 years, and very excited to see the current really strong growth in the industry and the platform, I think, for moving ahead.
Thanks very much, David. Bernd Heid is a Senior Partner at McKinsey & Company. Hello, Bernd. Could you provide a little bit of an introduction on yourself and where you're calling in from?
Thank you, Guy, for the introduction, also thank you for having me here. My name is Bernd Heid. I'm a Senior Partner at McKinsey & Company. I call in out of Cologne, Germany. I lead our global hydrogen activities, I've been in that space now for over a decade, I must say that probably most of that time it felt like swimming against the current.
I also lead our relationship to a group that is called Hydrogen Council. That's a CEO-led initiative of players along the value chain in hydrogen have been in the position to co-author several of the reports that we published with members of the Hydrogen Council so on the demand outlook of the sector also, most recently, a cost perspective on the full value chain. I'm very pleased to be here with you.
Thanks, very much, Bernd. Appreciate that. Last, but certainly not least, Mr. Ken DeWoskin, who's a Senior Advisor at Deloitte, I think you're calling from somewhere in the U.S. today, Ken.
I am calling from Ann Arbor, Michigan, the home of the University of Michigan, where I spent the first 2 and a half decades of my life engagement with China. I was a sinologist and particularly working in early Chinese science and technology and eventually modern China's economic reform. I've been with Deloitte for 12 years now.
I became a consultant about 30 years ago, working primarily in Shanghai, Beijing, and Guangzhou, Shenzhen, the major cities of China. I've been very, very interested in the energy issues that China has struggled with in the course of economic reform, and in particular, most recently, in the decarbonization and the developments that related to mobility in particular.
Excellent. Thanks, Ken. Just a reminder to the audience, you're welcome to send questions in at analystday@ballard.com, and we'll keep an eye on what comes in and try to get as many of those answered as possible. Maybe to kick things off, I thought we'd kind of go around the table again, and I've got some questions that we sort of formulated to the discussion.
Starting with David, and for those who don't know, E4tech, David's company, publishes an annual report called The Fuel Cell Industry Review, which is a pretty comprehensive overview of developments and ongoing activities within the fuel cell sector for different application areas, including transportation, which we've been talking a lot about here today, but others as well.
David, from your perspective, maybe you could comment on kind of a, maybe a summary from your point of view of global fuel cell industry activities over the last few years, how you think, seen things change, what you've seen in terms of momentum building in the industry.
Yeah, of course. Happy to. Thank you for the introduction to The Fuel Cell Industry Review. We've been doing this for six or seven years now. We've built up a pretty good data set of what's happened in the industry, and we do it firsthand, so we contact companies directly. We ask them about shipments. We ask them about what's going on. Then we aggregate those and put them out. The review is at fuelcellindustryreview.com, for anybody who's interested.
The very positive message is that this year, or at least end of 2019, we saw the industry ship more than 1 gigawatt of fuel cells for the first time. That's an interesting milestone because in global terms of power generation, it's very small power plant. In industry terms and the supply chain of driving costs down, it's actually pretty important. That was one milestone, perhaps a psychological one. The other things that I think it's worth pointing out are that there are now 300,000 fuel cells, more than that, in fact, in apartment buildings, can use day to day in, day out, no problems to report.
It's really just a business. There are 35,000 forklifts, mainly in the U.S., all running on fuel cells. There are multiple megawatts, tens of megawatts, hundreds of megawatts of stationary power deployed. Quite a lot in Korea, where there's a very favorable policy situation, but also in the U.S., where certain jurisdictions have favorable policies too.
Quite a lot of cars, not as many as we might have hoped a few years ago when the industry was still very positive about the passenger vehicle as opposed to heavy-duty. Nevertheless, the number of cars shipped accounts for about 70% of the megawatts shipped. That sounds slightly odd, perhaps, but each car has a 100-kilowatt power plant on board.
There are a lot of them, and that's important in driving costs out of the supply chain. Very positive messages. We were looking forward to even bigger growth this year. We're still gathering numbers for this year, so it's a little hard to tell whether the situation that we're faced with in terms of the pandemic has things down. I think I'm still positive that we'll see more shipments this year than we did last year.
Excellent. Thanks, David. Randy MacEwen earlier in one of his slides made the point that in January of this year, there were a couple of pretty interesting and comprehensive reports that came out, one from McKinsey, one was a joint Ballard joint white paper. Both addressed the issue of total cost of ownership for different types of applications of fuel cells, with, I think, a fairly significant focus on the transportation space.
Actually, just to make the point that David and the E4tech team also worked with McKinsey on their report. You gentlemen, I'm sure, had plenty of discussions over the last year or so. Bernd, from your point of view, the report that McKinsey...
in January, evaluated 35 different use cases or application areas for fuel cells across 4 different sectors. Transportation was one of those, but you also addressed heat and power for buildings, heat and power for industry, as well as industry feedstock. Would you mind taking a few minutes and describing the approach that was taken in the analysis, particularly for transportation, because that's our primary interest here, and your key conclusions with respect to cost competitiveness of hydrogen and heavy-duty motive applications over the coming decade?
Thank you very much, Guy, for the question. First of all, what we did is the missing piece in the hydrogen economy, always the question about cost. Cost competitiveness is the key driver for enablement in this market. What we did is we looked at the full value chain, so from feeding in of renewables, energy storage and transportation distribution, and then various end users, from transportation, be it cars, buses, trucks, trains, maritime application, to building heat and power, industrial high-grade heat and also feedstock.
To remind us, we use today, 80 million tons of hydrogen in processes like refineries or linear production. What we did is we took 35 different applications along this value chain and worked together with the members of that Hydrogen Council group, to identify TCO calculations. The beauty of that exercise is this is not a McKinsey back office calculation projection. This was done in conjunction with the members of the Hydrogen Council, we were able to collect 25,000 data points on cost of hydrogen and the next best alternative, be it conventional or be it low emission.
That makes it so powerful in this calculation. What we found here is, if you compare the applications in two dimensions, one is hydrogen more or less competitive vis-a-vis conventional power, such as diesel or others? Or is it better or not than the next best zero-emission technology? Think of battery electrification or biofuel and alike. We found that out of the 35, 9 applications are better than the next best zero emission, but also better than the conventional one.
Here, hydrogen is a no-regret move. As I mentioned it, heavy-duty trucking is one of these applications, so that's also why you see that strong momentum behind this application. There were also applications where clearly we see hydrogen deployment as it's the best alternative to decarbonize. However, here, it requires a regulatory push or instruments like carbon tax to bring it in the money. We also see consumers paying more money for decarbonization, or you have players that put a price tag on decarbonization. In heavy-duty trucking, what we found, as of today, of course, diesel is the benchmark.
If you look at an heavy-duty truck, it simply means that by 2027, we find that hydrogen-powered trucks will be more cost-effective to operate than even the diesel truck. Battery here, as much as batteries help in small city urban mobility, for heavy-duty vehicles, simply the power pack of a battery is too heavy and too expensive to sustainably power that truck. That's also why in this application, a hydrogen-powered truck has a clear benefit even over a diesel powered truck.
Excellent. Thanks, Bernd. Ken, in the white paper that Ballard and Deloitte produced and issued in January, that white paper kind of dove into a very deep analysis of three specific case studies, actually in three different geographies around the globe. I wonder if you could a little bit about what the analysis involved and what the key conclusions were?
Yeah, sure. First of all, I wanted to thank Ballard for working with us on that study, which we found extremely interesting and very much in line with a broader decarbonization initiative that really touches Deloitte globally. We drove this study with a team in Shanghai, actually. The team in Shanghai has good experience in mobility and significant experience in energy as well. Ours is very focused on fuel cells, hydrogen and fuel cell usage, and also mobile applications and transport applications, with a nod to some fixed power applications as well.
In order to make a kind of a 360 degree view here, we looked at total cost of ownership was really the thing that drove the analysis, but we looked first at the dynamics of the technology, the way the technology advancing, especially with respect to cost, as both Bernd and David mentioned, and potential cost increases. We looked at the three application areas, really, of mobility and transport. Mobility, we looked at passengers, passenger vehicles, we looked at trucks, we looked at buses, and we looked at forklifts, where there's quite a significant application base already, user base already.
Each of these also then we looked at in the context of 4 geographies: U.S., China, Japan, and Europe for the cases we actually studied. That led us to a general conclusion that for basic mobile applications, the total cost of ownership of hydrogen fuel cell vehicles will compete successfully with battery electric vehicles by 2026 and with high-tech internal combustion engines by 2027. We're now essentially a half a decade away from the point where commercially this crossover will occur. That's very, very, very significant. We can talk maybe a little bit later about why China plays a part here.
I think it's generally conceded now that, in terms of the commercial viability of electric vehicles, unit sales, level of government support, and the sort of convergence of compelling forces for a large population to convert to fuel cell vehicles, hydro, China is probably the compelling case. There's quite a lot of information in there about the China situation in particular. Across the board, we do look at the four geographies I mentioned. In the report, we look at national strategies, we look at policy moves, especially with respect to support for R&D, but also support for infrastructure investment.
We look at the timelines during which critical decisions have been made on the government level and also the private sector level that has brought us to where we are today, just as a platform from which to look ahead.
Excellent. Thanks, Ken. Yeah, we'll come back to China in just a couple of minutes, actually. David, from your perspective and having a really good perspective, I guess, on the whole landscape in the fuel cell industry, which transportation applications are do you see gaining traction today? How do you see the commercial timeline for these applications in the marketplace? Could you provide your comments on that?
Thanks, Guy. Well, it's probably no surprise, I'm gonna be following the path that's been already set by Bernd and Ken. We see a huge amount of interest both in the data that we gather and in the requests from our clients in heavy duty applications. There's a growing realization that batteries can't do it all for a number of reasons. There are increasingly strong air quality imperatives, so regulations on zero emissions, either in city centers or in other places, are particularly strong drivers. Also a CO2 ambition which is very difficult to achieve for certain types of vehicles if you electrify.
We're seeing developments across a whole set of applications, which I think previously we would have considered maybe very difficult, and that's from commercial vehicles through all the way to very big Australian road trains, multi unit trucks. It also includes garbage disposal vehicles. It includes off-road vehicles such as the diggers. It includes mining vehicles, and of course, Ballard knows about those, too. Trains and ships.
These are all interesting because, as Bernd, I think, was saying, you need a total cost of ownership logic to these. These are not passenger vehicles, which are bought by an individual who wants to be a first mover and early adopter. These have to operate for tens of thousands of kilometers and tens of thousands of hours.
Seeing the traction in that area is extremely positive. In terms of timelines, the first vehicles are coming in. I'm based in Switzerland. We already have about 10 Hyundai trucks, which will be operating, delivering for the co-op supermarket, hydrogen. They're using renewable hydrogen produced from hydroelectricity, water electrolysis. We will start to see the first few units of all of these types of vehicles in fives and tens, and maybe slightly bigger, over the next two to three years. There are already bus fleets in Europe, and particularly in China, increasingly, trucks in China.
I think the period to 2023 is probably setting the stage, making sure the infrastructure is starting to be put in place, getting the supply chains in order, getting the production capabilities up, and then sort of through to 2025, we'll see a much more important ramp up of many of these applications.
Great. Thanks, David. You mentioned infrastructure, of course, that's a kind of a critical issue within the whole conversation about commercial deployment. Bernd, in the McKinsey report, there was an interesting analysis and discussion of the fact that with hydrogen infrastructure, as you add more vehicles, you can expect the cost per vehicle on the infrastructure side to go down,
which is really the opposite when you look at the battery electric market and infrastructure for battery electric vehicles. Can you elaborate a little bit on that? This is a pretty important point. It'd be good to hear your explanation and your insights on that.
Thank you, Guy, for the question. Indeed, what we did is when we looked at the overall cost in terms of total cost of ownership, next to the vehicle itself, the fuel that powers the vehicle, and also the cost associated to that, we need to take the infrastructure into account. While we see at the current stage, and I call it, this is in the world, far below 1% penetration of both electric vehicles and also fuel cell vehicles, you will find that it's relatively cheap to recharge or to spend infrastructure costs for recharging battery electric vehicles.
The costs actually, as of today, are in the range of a few thousand. So that's, let's call it 5,000 EUR per vehicle equivalent. That's understandably because you need a charging pole. A lot of that is done with home charging, and this will change over time. Of course, you need to upgrade that infrastructure. On hydrogen, and I will come to that. On hydrogen, it's quite the opposite.
Given that we have a massive investment upfront in that below 1% world, in infrastructure, we are around at EUR 16,000 equivalent per car deployed. You can look at the example in Germany. Germany is one of the more advanced infrastructure places. We have 85 operating stations for a total of a few hundred vehicles. In the end, that also explain why, relatively speaking, the infrastructure is so expensive.
If you do the same math for world that is more in the 20% in the buff world, you will find that the infrastructure cost for battery will go up because the microgrids that we have buried in the ground will not sustain a massive buildup. Currently, the microgrid is somewhere around 7.5 kW. For fast charging, you need 350 kW, but even if you do the overnight charging, it already puts constraints on the infrastructure in an urban area. That is why this infrastructure build-up, that costs an equivalent of EUR 7,500 per car.
You see the number goes up from four and a half to seven and a half, and at the same time, given that the hydrogen infrastructure can be better utilized, you reduce infrastructure costs for fuel cell vehicles from 16 to five and a half. Therefore, more or less, that equation flips around, and as I described it now, for mobility, this, of course, is an equivalent also in other areas of that infrastructure, and that is also why we strongly believe that there is no fight of is it battery only or fuel cell only?
These are very complementary technology and, basically, depending on the boundary conditions, you have favorable business cases in the one or other direction, depending on where you stand in that ecosystem.
Thanks very much, Bernd. That's very helpful. Ken, let's come back to China, because that is an area that I know you have a tremendous amount of experience and expertise in. Maybe you could give us your perspective on kind of the strategic importance placing on hydrogen and fuel cells. As part of that, you know, do you fully expect China to reach the overarching goal of 1 million fuel cell vehicles deployed by 2030?
Yeah, very, very good question, and thank you for it. You know, in this world of incredible uncertainties that we live in now, I think one of the few certain things is that China will play something of a leadership role in the decarbonization of its economy. That's not necessarily because they like to do altruistic things for the world, but it's compelling reasons that drive policy, that drive government investment and drive behavior there.
Let's start with infrastructure. I mean, ever since 2008, in the wake of the global financial crisis, China has been stimulating its economy very significantly through fiscal devices, monetary policy, and essentially every tool they have in the toolkit to do that. That has resulted in a huge state-sponsored, debt-fueled investment in infrastructure.
Particularly since about 2015 or 2016, the return on that investment has declined significantly. I mean, there are airports that don't need the capacity for decades, rails, construction, highways, bridges. Actually, China welcomes the opportunity to have new demand for new kinds of infrastructure. When BEVs began to proliferate in China, they just were very excited about the possibility of putting up charging pillars in as many places as they possibly could, you know, all sponsored by some combination of central government money and local government money and then private money.
Another part of that is, given the involvement of the party and the government and the economy and industry and commerce in China, it's very easy to integrate all of the sort of energy subsectors in a way that can be quite efficient and be quite effective. You know, for example, we, Hydrogen and fuel cell deployment as part of a renewable energy fixed energy generation system under, say, the control of the
State Grid, very easy to relate that to what is done by the, say, the major providers of mobile fuel now, which would be the oil and gas companies. China can move very quickly to a kind of rational integration of all of these different energy sectors in a way that makes them quite efficient and quite cost-effective.
A second point is that, you know, the history of trade, say, between the United States and the Middle East, the oil dependency over the last, you know, several decades and where that's brought us to today is not lost on China. They do not like being dependent on the importation of crude oil. They do not like being dependent on the importation of LNG, coking coal and all the sort of carbon sources of energy, which they are now major importers.
They don't like it for a couple of reasons. First of all, export future. Right now, it's a little bit less steady than it's been in the past. Export earnings and foreign exchange coming into China now is a bit constrained. The potential trade deficit that that implies is a very serious issue. They don't like the trade balance dimension of that, but they also do not like the national security risks, or the possibility that this could be a weak link in their, you know, growing national security concerns, facing a possible embargo in
Southeast Asian seas, for example. They're very focused on hydrogen to the extent that it actually reduces that. Actually, the Minister, a man named Wan Gang, who just stepped down as Minister of Science and Technology, has devoted his entire life to studying hydrogen, and he's a very strong advocate, been a very effective advocate to bring attention to the potential for hydrogen in the Chinese economy generally. Finally, the national security implications, and China is, of course, trying to buy lithium resources around the world, cobalt resources around the world.
They're facing increasing pushback in that pursuit. They know that even if they control and own some of these resources, then the risk supporting them back to China is significant in terms of national security interests. That's moving their thinking from BEVs more toward fuel cell vehicles, simply because they can be totally independent of foreign inputs, imported inputs in the fuel cell world. Except for the technology, of course, and the, you know, the manufacturing capability that they will not be able to onshore completely for the next several decades, at least. That's what makes it a very big story.
In a way, it's fair to say, I think that China's as much a story on its own as it is a laboratory for the rest of the world, because of the scale and the speed with which they do these deployments that are of interest to all of us.
From your perspective, wouldn't be surprising if they achieve 1 million vehicles by 2030?
Not at all. Not at all. I would be surprised if they didn't, actually.
Thanks, Ken. David, just thinking geographically here, going from China to another extremely important market for Ballard is the European environment. Can you comment a little bit on European Union's strategic plan to support scale production of green hydrogen, and the drive to reduce cost and electrolysis and fuel cell technology?
No, absolutely. I think it's been a very important signal, which has been building over a number of years. There's been a lot of groundwork that has gone into this, it's been a very important signal for the industry, and it's been probably a very important signal globally that Europe wants to draw a line in the sand, really position itself well in what it sees as the next energy revolution.
The plans are ambitious, multiple gigawatts of electrolysis to be put into place by 2025, 40 gigawatts by 2030. There's a lot of supporting analysis and supporting development in the kind of policy mechanisms that you need in order to make that happen.
There's a lot of discussion about making sure that the regulatory regimes are in place to allow, for example, markets in different energy carriers to be interchangeable. There is a lot of about making hydrogen, at one point, a tradable commodity, so that we actually have a liquid market in that. There's a lot of very forward-thinking aspects of introducing hydrogen, which, as Bernd says, there is a lot of it used today, but it's used in industrial applications. It's not typically green hydrogen, and it's not used to decarbonize in the way that we're thinking. The policy itself or the strategy sends an important message.
There's an enormous amount of policy work still to be articulated. There are a certain number of existing policies which already help in some way. The Renewable Energy Directive, or the second version of the Renewable Energy Directive, allows renewable hydrogen credits to be claimed in certain circumstances for refiners, for example, making certain types of fuels. There is a move there. I think the other aspect that's worth building into this, not just the EU, there are individual country strategies as well.
Germany has a national hydrogen strategy. The Netherlands, Norway, Portugal, Spain, Italy has released documentation which is pointing towards a strategic message. There is a pressure group in the UK now saying, "Hydrogen strategy now," which is a pressure group of industrial majors.
It's not, it's not people on the streets waving banners. What is sitting across this EU strategy is a lot of individual programs, all of which will also have regulatory and policy support mechanisms behind them. The German strategy is relatively detailed, but the others are relatively high level. There's a clear ambition to move everything forward. In terms of electrolyzers and fuel cells and costs, a lot of it comes down to actually scale.
The electrolyzer industry, as it currently stands, is really a project-by-project industry. There are very few players who have scale, and simply by putting in place standard mass production techniques, allowing the certainty of orders so that plants can be built, is really important. If somebody orders 500 megawatts of electrolyzers, that gives certainty to the electrolyzer producers that they can build a new factory. A couple of them are already doing that. That will bring costs down a long way.
There is, of course, innovation as well, but you don't have to have a magic breakthrough to bring the cost down to make renewable hydrogen competitive, as Bernd has already amply discussed. In fuels, it's similar. There is a lot of supply chain work as well. There are incentives for the supply chain. In Europe, it's very important to think that there is an enormous amount of economic activity, which depends, for example, on the transport sector. 65,000 jobs in Germany, going through the suppliers. They are all considering how to participate in fuel cells and in hydrogen.
A good example of that, I'm at this conference today, the trade show is full of people who make compressors, valves, and hoses and all sorts of components which are not sexy and exciting, but are very, very necessary, and you need multiple suppliers, and you need them to be able to also make an investment case to the board.
Because the European Union and others have put this strategy in place, it's much easier to go back to the board and say, "We need to invest in production. There will be a market. We will be able to bring the costs down, and we need to in order to make sure that we're well-positioned." I'm confident that the costs can come down, will come down. I think there is still a bit of a race for positioning, which is going on, which is going to be informative about which companies are actually the ones who are the long-term sustainable in the sector.
Thanks, David. You know, earlier presentations from some of the Ballard folks touched on rail as one of the heavy-duty markets that we're focused on in the longer term. We've had an investor question, which maybe, Bernd, you could address, which is, and I think this is an area that's of real interest to you, is, you know, what do you think the opportunity is for commercializing fuel cells and to electrify the rail industry?
Thank you for that question. I, first of all, think that rail is one of these applications where fuel cell absolutely makes sense. We see also that fuel cell-powered will be cost competitive even before the end of the decade. In our calculation, that's 2027, 2028. The main reason for that is, if you do not have a track electrified as of today, and that's often the case for freight trains or passenger trains, it will be more expensive to put electric catenary infrastructure into place. Just as an example to illustrate that, is 1 kilometer of electrifying a rail track, that is an equivalent to EUR million. 1 kilometer, EUR 5 million.
You can see that there, of course, fuel cell has a very strong advantage because the train is not so much more expensive, but you have far less infrastructure. That's why trains are an attractive application. This is already not in the too far distant future, the case, but we see already fuel cell-powered trains in operation. The first ones run in Germany. In the next 3 years, you will have global 50 trains in operation, and that is in countries Germany, Netherlands, Japan. You have first trains in California and, of course, China. China is also an important market both in the tram market but also in the rail market itself.
Therefore, we see an uptick in rail as application for fuel cells. Roughly to give you a sense of the figure, we see some 75 megawatts equivalent of trains. That's a few hundred by 2025, and that grows to somewhere around a few thousands until the end of the decade, and that is a 6x in terms of fuel cell power being deployed in rail applications.
Thanks. Ken, we've got an investor question here that's tapping into your expertise on the China market. This one is: If you could comment on the growing tensions between China and the Western world in relation to competitiveness, technology, growth, trade, what implications, if any, do you see for the fuel cell industry?
Yeah. Could I come back in 6 weeks and answer that question? I think that we are facing a watershed moment in terms of the election in the United States. Let me just make a few comments about the general tension, because it's critically important, really, in terms of how things develop. Often the media talks about a bipartisan consensus in the U.S.
with substantial support from a number of our European allies that something needs to be done to reset the way in which the developed economies engage China and to guide China into a different way in participating, say, in established global institutions like the World Trade Organization. That may be true, there may be a bipartisan consensus, there may be a significant, agreement with that, an alignment around the world, but the tactics are a different story. I think what's at stake in the United States is a potential change in tactics that would be very significant. Would be hard to argue-
... that the kind of hardcore, face-saving and face-losing negotiation tactics that have been deployed by the U.S. for the last three years have been very productive, because they certainly haven't brought a sense of peace, harmony, they've raised more questions than they've found solutions. That, again, makes the upcoming election a real, because I think that if the administration changes, then we're more likely to continue with tough negotiations with China, but not demand, say, structural changes in the way the economy in China has frankly been organized for 2,500 years.
We're not gonna change that with a negotiation in terms of things like development in the economy. N The notion of subsidies, for example, it's not even relevant to China because the corporate balance sheets of the big state-owned enterprises are kind of inseparable from the fiscal budget of the state itself. So you really don't have a good way to apply even what would be a subsidy regime.
Anyway, having said that, I'll borrow Bernd's phrase: I'm gonna swim against the current on this one and be somewhat optimistic. Because I think that the commercial imperatives that have existed in the last 40 years with Europe and China, with Japan and China, with the United States and China, Canada, are still there. If anything, they're there with more force than they've been historically.
The politics aside, the politics are gonna come and go, and the trade and investment tensions and specific actions that people take, the black swan actions, you know, might get worse. If you look out over 3 to 5 years, we will find solutions to some of these tensions. We will understand the common interest in finding a more harmonious way to proceed forward.
On fuel cells in particular, I'll go back to what I said before about China's, you know, national security concerns and interest in self-reliance. This is really a critical point. If anything, the tensions of the last 3 years that have merged, have strengthened the resolve on the part of Chinese leaders, General Secretary Xi Jinping and others that are now guiding the country to be more self-reliant.
We have, you know, Made in China 2025, and now this new campaign called the Dual Circulation Strategy, which draws a lot of attention to China working on its domestic economy, achieving a greater degree of independence from its dependence on export trade and imports from abroad. Hydrogen and fuel cells, because they can be independent of the rest of the world, the point I made before, actually are driven forward by the tensions that exist in the system right now rather than challenged by it.
I think actually it's generally good news, and hopefully, you know, always at stake, of course, is intellectual property issues with China, and that's a more complicated, maybe a subject for a different discussion. Going ahead, I think that technology ownership is gonna be critically important for companies that are involved in this business, that
China is going to have to proceed with this decarbonization agenda, not necessarily, as I said before, for altruistic reasons, but for national security reasons and economic reasons. I think that tensions notwithstanding, that things will continue along the track they've been traveling for a while.
Great. Thanks. On that optimistic note, we're kind of coming now to close. I just wanna say how much we really appreciate all the time that you've all committed to this, you know, different time zones and so on. I know it hasn't been the most comfortable for you to dial in, but thank you, David Hart, thank you, Bernd Heid and Ken DeWoskin. We really appreciate your insights, and I know the folks in the audience, the investment community, gain a lot from, you know, your perspectives today, we just wanna say thanks so much.
Thank you.
Take care.
Thanks. Thanks to you, too.
Thanks for having us.
Back to Tony.
Great. Thank you, Guy, and, I'd like to echo Guy's comments, thank our panelists. It's really an outstanding session. Thank you. Now we're gonna move into a more detailed discussion on our, product roadmap, followed by a, detailed discussion on our product cost reduction roadmap. First up will be Kevin Colbow, Dr. Kevin Colbow, who you've already met and doesn't require any further introduction. He'll be by, Dr. Lee Sweetland, our Director of Advanced Manufacturing, who I'll introduce more thoroughly after Kevin's presentation. Kevin, over to you.
Thank you, Tony. Let's turn our attention to Ballard's technology and product roadmap. We will cover 3 sections. First, our fuel technology, providing a fulsome description, including nomenclature as well as current status. I will then discuss our product portfolio strategy, taking you through the elements of technology evolution to meet market needs. 3, I will then conclude with product focus cases, reviewing the product roadmap's robust applications.
This slide here is included in the deck describing the basics of how a fuel cell works. This is something that can be reviewed offline, but more importantly, the bullet points on the left side provide a reminder of the fundamental elements of why membrane fuel cells are the right technology choice. It is a solid-state power generator with no moving parts.
It delivers high efficiency, 2-3 times out of an internal combustion engine. It is zero emission and has no toxic materials. As background, I would like to take a moment to review the nomenclature for proton exchange membrane fuel cells by using a truck value chain example. Starting in the top left corner of the slide, we have the membrane electrode assembly, commonly known as the MEA. The subcomponents of the MEA include the catalyst, the catalyst-coated membrane, CCM, which sits between 2 gas diffusion layers or GDLs.
The anode, the anode GDL, and the cathode GDL. The catalyst layers, which are nanoscale structures, facilitate these reactions. These processes that occur at the nano and micro scale require sophisticated models and characterization techniques, something Ballard considers one of its key core competencies. The MEA is the electrochemical heart of the fuel cell.
Ballard has a strong focus on MEA technology. In fact, Ballard is the leading PEM fuel cell company in our peer group, making their own MEAs. The unit cell is comprised of an MEA and a bipolar plate assembly. I've brought along, just for illustrative purposes, here's a single MEA unit, including this integrated ceiling, as well as a carbon bipolar plate. This unit cell is simply made up of this combination of 1 bipolar plate and 1 MEA.
The fuel cell stack is comprised of stacked unit cells, connected electrically in series and transforms the air and hydrogen into usable DC power. 1 or more stack arrays can be combined with the balance of plant. These components are packaged together, resulting in the fuel cell power module, sometimes called the fuel cell engine.
This slide shows our current scope of supply inside the fuel cell power module. It is comprised of the fuel cell stack and includes the air subsystem, including humidification, fuel subsystem, cooling subsystem, and the control system. With respect to the truck example, of course, there are other key components that need to be on the wheels of the vehicle that are currently not part of Ballard's offering.
This slide here underpins the E-4 component of our strategy that Randy articulated earlier today, whereby we have research and development in MEAs and plates, fuel cell stacks, and fuel cell modules and systems. We are vertically integrated in terms of the value chain, and these parts have a high degree of interdependence. In fact, compared to others, this relatively complete value chain positioning is a unique competitive advantage and a real differentiator for Ballard in the marketplace.
Clear from this slide is our breadth in terms of application of our stacks and modules. We are able to achieve this breadth because our core technology is highly leverageable, particularly as you consider the core MEA and plate technologies. As an illustrative example, bill of materials or BOM, of our newly announced 200 kW FCwave marine product, shares roughly 60% of the same components as our rail module.
Our research and development activities have successfully advanced our design, this work is ongoing in parallel to feed new technology into each product iteration. Specifically, we have leveraged our work in the technically challenging automotive application, improved component robustness, scaled up our manufacturing and product processes, developed our supply chain.
These drivers have contributed to an eighth generation of product improvements as we diligently drive product performance up, while simultaneously reducing cost. The recently launched FCmove, reduced product life cycle cost by 35% compared to the previous generation. This has been achieved while simultaneously designing for operating lifetimes of greater than 30,000 hours, using recyclable materials,
achieving a 50% reduction in the number of components in the bill of materials, achieving -25 to -30 degrees Celsius in free start capability, reducing product weight by 35%, and reducing product volume by 40%. I will now turn to looking more forward to provide you with a sense of what is coming as we review product portfolio strategy.
This strategy is underpinned by the desire to develop a full range of scalable products for a range of motive applications. First, our high power, up to 150 kilowatts in a single stack array, building blocks for scalable power, up to 450 kilowatts. Aggressive cost reduction, which will be discussed in detail in Lee's cost down section to follow.
Parallel, we are targeting improvements in some of the key attributes of which power density, both volumetric and gravimetric, fuel efficiency, and high temperature operation, which simplifies system-level cooling systems and radiator demand for ease of vehicle integration. These are all good examples. In order to achieve these targeted product improvements, it will be necessary to evolve the key stack technology attributes. In this slide, we have summarized the timeline we expect to achieve with respect to some of these attributes....
There's a lot of data to digest here, including things like driving down membrane thickness, increasing MEA performance, and increasing operating lifetime or durability. Most importantly, however, is the takeaway that Ballard, with its vast experience, has the ability to draw out the trade-offs to best meet market requirements.
Putting it another way, we know what the technology levers are, and we know how to move them. To provide you with some higher confidence, I would like to share with you some fuel cell performance data that we have recently achieved in our laboratory. Shows our current LCS baseline performance data for a 20-cell short stack at 2.5 bar absolute operating pressure. The red line shows the data for a cost-reduced LCS MEA and a new bipolar plate design.
These electrode designs are expected to meet 30,000 hours based on accelerated lifetime tests. I showed improvements at some specific maximum cell voltages, showing an 18% and 23% increase in power density for 700 millivolts per cell and 600 millivolts per cell. These are operating points which represent potential maximum voltage operating points.
Now, these curves are only showing the beginning of the life stack data, and while we are charting significant cost reduction, these curves are informative as we think about the total cost of ownership. Specifically, in determining the best trade-offs in the complete fuel cell system and the associated hydrogen consumption. I would like to now present to you our vision for the family of fuel cell stacks that will cover the full range of bus, truck, rail, and marine applications.
The blue and gray bars represent the range of net power output for each of the stack configurations. These stacks are unique in terms of the size of the unit cell active area, but share the same core technologies. As one moves to the right of the graph, the active area increases, allowing for a corresponding increase in the achievable power output.
The choice of power output is also dependent on the application trade-offs made between high power density and high fuel efficiency. Our current generation, LCSM, for Medium Duty, covers the lower power range below 80 kilowatts of net power. The LCSH, for Heavy Duty, will cover the approximately 70 to 110 kilowatt range, and the LCSX, for Extra Heavy Duty, will cover the 100 to 150 kilowatt range.
In this range, we also have available a high-performance stack with high power density and automotive stack technology. Building upon the motive stack product family introduced in the previous slide, here we show the roadmap timing for the technology and product development, product availability, in both in terms of early field trials and for commercial, as well as timing for expected injection of new technologies.
The LCSM is available now, and HPS stacks will be more broadly available early next year. The LCSH and LCSX are aimed at 2022 market introduction. Here's now a deeper look at some of the critical component development. First, with respect to catalyst layers, platinum nanoparticles supported on nitrogen-doped tantalum oxide modified carbon provides an example of collaborative academic research looking into new catalyst composition and new catalyst fabrication methods.
This catalyst is at an early research scale, but provides enhanced activity and durability. It is just one of several catalyst approaches under study, and this work is done at the University of Western Ontario in Canada. Ballard provides guidance on commercial requirements and evaluates catalysts in our test lab. Ballard collaborates on a number of research areas, and in addition to accessing the expertise of the university professors, we provide training opportunities for students and postdoctoral fellows, some of who eventually become Ballard employees.
Ballard continues to actively research and achieve exciting results with advanced catalysts for better performance and durability, while supporting our goal of further reducing platinum content in our fuel cells. Our novel catalyst layer design achieves high performance with greater durability than conventional catalyst layers.
Our high-performing design results in a 5 times durability improvement compared to a more conventional design using the same alloy catalyst. Our second example of critical component development relates to bipolar plates. While Ballard has designed, built, and tested bipolar plates using both carbon and metal, the vast majority of our product experience has been with 2 types of carbon plates, either in the form of an embossed flexible graphitic foil or a compression molded carbon.
Ballard's carbon plates have an operating life that exceeds the typical durability requirements of the product. They are reusable, and because carbon is compatible with the potentially corrosive environment of the fuel cell, they do not require any special coatings. They are lowest cost at all volumes. The graphic on the right shows the ever-improving metric of cell pitch or thickness of the bipolar plate, which drives improved power density.
We are well on the path of achieving a 35% reduction in plate thickness applicable for the medium-duty and heavy-duty relevant vehicle applications. These cell pitches are approaching those of metal. For clarity, this technology being developed in our LCS-M2 stacks will be applicable and transferable to the larger active area H and X stacks as well. In the final part of my presentation, I'd like to present the product roadmaps, first for the bus application and then for truck.
In designing our products, extensive market requirements investigation, resulting in a detailed set of product requirements. In this slide, we have shown a synthesis of this data for illustrative purposes and have provided a high-level view into the market segmentation. Our focus to date has been on the medium-duty bus modules in the 60 kilowatt range.
The expansion of product offerings will serve the light duty and intracity buses. In fact, the increased driving range of fuel cell electric buses compared to battery electric buses, is ideal for the intracity bus applications. In terms of our bus products, over the next few years, we will roll out a full range of power levels to serve the applications described on the previous slide.
The FCmove 70 kilowatt is available today. We will introduce the 100 kilowatt product in the first half of 2021. Also, in 2021, we will introduce a modular 120-240 kilowatt product. In 2022, the next generation scalable 70-100 kilowatt module will be introduced with the latest generation of stack technology, marking significant improvement in power density at the stack and system level, as improvements in the other key product attributes.
Turning our attention to the truck market, we have similarly synthesized the key market requirements. They are a range of power levels serving multiple markets. Hydrogen fuel price uncertainty requires a high fuel efficiency solution to ensure low total cost of ownership. In China, the lowest initial cost is the key driver, which drives towards high current density and stack power density. In Europe and North
America, the lowest total cost of ownership is the key driver, resulting in a high power and long life, leading to somewhat lower current density to maintain fuel efficiency. This factor is driving the ranges in power and power density. Here is the roster of truck products. We will roll out a full range of power levels to serve the many applications, and synergies with the bus market requirements enables common technology to meet the multiple market requirements.
For the FCmove XD, the higher power products, a modular approach of combining two or three of the heavy-duty building blocks will be used. The 450 kilowatt power range is now expected to be addressed with yesterday's announcement of the partnership with MAHLE, where parallel development, air compressors, and DC-to-DC converters will help reach these power levels cost effectively.
I've reviewed with you our PEM fuel cell technology, our product portfolio strategy, and our product roadmaps for bus and truck applications. The technology advancements have been and will continue to be significant. As Lee will review with you momentarily, I am proud of the research and product development teams that are working on the 41% contribution and cost reduction related to engineering design. Thank you for your attention.
Great. Thanks very much, Kevin. As a, as a non-engineer, I understood most of that, so that was well done. Thank you. Our, our next speaker will be Dr. Lee Sweetland, our Director of Advanced Manufacturing. Lee joined Ballard in 2018, following 18 years as a director in the new product sector at
Johnson Matthey in the U.K., where he focused on capital project management, continuous improvement, operations management, and also oversaw construction of a EUR 48 million state-of-the-art production facility in Macedonia, the implementation of highly automated production lines. Lee will address a very aggressive cost reduction program. Lee?
Thanks. As Tony said, I lead the advanced manufacturing team here at Ballard. It's been tough over the past year, keeping ahead of Ballard's growth. I'm pleased to say my team are coming to the end of a ramp phase, we will be increasing our capacity to over 6 million MEAs. That's a 6 times capacity increase compared to where we are in 2019, and we're now starting to explore the technologies for mass production.
I have a real passion for stretching boundaries with new disruptive manufacturing processes, and I'm really excited for these future challenges to go into the tens of millions of MEAs. It's my pleasure today, though, to be presenting Ballard's cost reduction plans, which I lead for the stack. I'll take you through the details step by step, to provide in our activities, giving you updates on our fantastic progress to date.
I'll aim to be as transparent as I can throughout this presentation, obviously, without compromising our know-how and our IP. First, I want to set some context as to our past achievements, the cost targets to be competitive, and finally, how important the cost reduction is to drive the volume, helping us down the cost curve. Over the past 10 years, cost of fuel cell electric buses have reduced by over 60%.
The electrification of the drivetrain that is common between battery electric and fuel cell electric buses underpins this cost reduction. Ballard's leading module technology has supported this reduction in fuel cell electric buses, and has demonstrated reliability and durability of our products, achieving a 50% service and maintenance cost reduction over this time period. These early demonstration programs were highly reliant on subsidy support due to the lack of volume.
To grow, there are 3 key requirements. The first is to demonstrate the use case for fuel cell electric buses, which I think from the earlier presentations today, you've seen compelling examples of. The next is we need low-cost green hydrogen, and as Nicolas stated, green hydrogen has already proved to be at parity with diesel in some areas around the world.
Finally, we need cost reduction, and cost reduction is brought about by the technology development within Kevin and my team, but also the economies of scale and manufacturing, which battery electric buses have already achieved. Next, I'll take you through the expected timeframe to hit total cost of ownership parity point, that will enable mass production or mass adoption of fuel cell power in buses.
The Deloitte White Paper, published in 2020, presented the fuel cell electric bus breakeven point with battery electric, is likely to be in the 2023 time horizon. With further cost reduction, enabling TCO parity with the internal combustion engine around 2024 within Europe. The breakeven points in the China market are expected to be later, around 2027-2028, due to the significant progress already made in battery electric penetration, with over 400,000 buses already deployed.
What cost reduction in fuel cell systems is required to make this become a reality? This chart shows the fuel cell system module cost per kilowatt against volume and the various TCO parity points with battery electric for buses, with limited subsidy and no subsidy. With volumes in the thousands, only modest cost reduction is needed to achieve parity.
As with tens of thousands, we need a further 20% reduction to then compete with diesel hybrids. As you can see, though, truck cost reduction is more demanding, but with our planned 70% cost reduction, we expect to be passing beyond parity for favorable use cases. The recent changes in legislation in California and Europe on minimum electric truck volumes will help us drive down this cost curve.
Now, how will Ballard achieve the 70% cost reduction? Firstly, we need to be establishing the capacity to supply the growth, Jody will be taking you through our current capacity increase, expected to be completed at the end of Q1 2021. Now I want to take you through our cost reduction plans for the systems and stacks.
The current FCmove 70 kilowatt system breakdown has the stacks comprising about 30% of the cost, with the balance of plant components, which include air compressors, hydrogen recirculation blowers, humidifiers, pumps, filters, and enclosures, totaling the balance, 70%. It's important to note that as the system power goes up for heavy-duty trucks, we expect the stack cost to dominate. Heavy-duty trucks is our largest future addressable market, Ballard is focused on developing a challenging stack cost reduction plan called three-by-three, which represents 3 major cost initiatives per 3 time phases.
Our three-by-three plan aimed to address all components of the stack with tremendous emphasis on the MEAs, which represents over two-thirds of the cost. We categorized our cost reduction activities into 3 areas: engineering design, supply chain, and advanced manufacturing.
The engineering design team focused on the stack unit cell, as Kevin mentioned, which is the MEA and the plate, striving to enhance the performance and durability using lower-cost materials, and clearly less of those materials. Supply chain is developing supply agreements with strategic suppliers for volume supply and identifying and engaging with the next generation component suppliers.
In my team, advanced manufacturing, we are leading the scale-up of the manufacturing with aims to minimize materials through increasing yield, reducing our labor costs, and also the cost of capital as we go through this huge volume expansion. Now I will take you through, step-by-step, our initiatives on the plate and to give you confidence in our activities. As previously mentioned, the MEA represents close to two-thirds of the cost within the stack and is a core competence of Ballard.
Our MEAs have demonstrated some of the highest durability seen in the market, and our challenge is to reduce while maintaining and enhancing that world-class durability. The most effective way to reduce those costs is to drive up the unit cell performance, i.e., the amount of power an MEA can deliver in watts per centimeter squared.
Kevin presented early results on the performance of our next-generation stack, and this MEA included a 50% reduction in the nanoplatinum loading, a 20% thinner membrane, but with advanced Ballard technology to maintain the lifetime, and also a next-generation GDL, facilitating higher current density operation. These changes are showing good stability in our preliminary design validation durability testing, which is anticipated to be complete late 2020.
Moving on to supply chain, we've been having key strategic suppliers are undergoing their own capacity expansion upgrades, which involve increasing roll widths and processing speeds. This is being driven by increasing volumes in buses and passenger car, but will be driven further as the truck market develops. At Ballard, we're busy qualifying the scallop material to prove equivalency to previous generations.
In advanced manufacturing, Jyoti will take you through some of the projects, but we'll achieve a 6 times capacity increase, like the fully automated liquid injection molding project. That will reduce our ceiling cycle time by over 5 times, and our direct labor by more than 20 times. Other projects involved processing raw good material at 2 times the width, 5 times the speed, and these projects are expected to deliver over 68% reduction in our direct labor costs in manufacturing the MEA.
Now moving on to the bipolar plate. Over the past 15 years, Ballard developed a flexible graphite non-SSL plate that has demonstrated outstanding durability and performance in the bus and materials handling market. The consultancy company, Strategic Analysis, as part of their DOE work, presented a cost comparison of flexible graphite, Ballard's technology, versus metal plates used extensively in the automotive applications.
As you can see, at all volumes, flexible graphite offers cost advantages. With a carbon-based plate also exceeding the lifetime of a vehicle, it does offer the lowest cost TCO by far. However, to be used in trucks, a new generation of plate is required to enable volumetric power density and also high current density. As Kevin showed, our concept plates have shown a 35% reduction in thickness, allowing this to come true, but also offer a 54% reduction in material costs.
To be supporting this new generation of supply chain, have been heavily involved in developing new relationships, as quality for the materials is going to become critical in making these thinner plates. In advanced manufacturing, focus has been supporting the early production of these first-generation plates, along with the future scale-up.
More importantly, over recent times, we've been supporting the commissioning of a Weichai Ballard joint venture facility in their plate production, which halves the cycle time compared to previous generations. We've now started work on the next generation processes required to scale beyond the 74 million capacity that our facility in China offers, and that's towards the tens of millions. Our next generation plate costs are tracking well to the strategic analysis cost curves, providing Ballard with a significant advantage at low volumes and as we scale.
Now, summarizing this three-by-three plan and the timing that we started in early 2019. Our first phase of advanced manufacturing scale-up is progressing well, with most key equipment commissioned or in transit. This will provide the 6 times capacity increase and significantly reduce our labor costs. Our engineering phase one activities on the LCS-M1 stack are undergoing screening DV currently, with scale-up activities planned for early 2021.
In our engineering phase two, exciting progress is being made on our next generation stack, as Kevin showed, with novel designs and improved MEAs. We expect these, all of these activities to help us achieve a 70% cost reduction compared to our 2019 baseline. As you can see, though, in the graph to the right, technology development has been essential in this cost reduction, as volume alone would not have been enough.
We are currently slightly ahead of plan. Having addressed the cost reduction for stacks, I will now turn my focus to system cost reduction. Reduction in system cost is highly dependent on volume growth. Unlike MEA materials, where automotive and bus volumes have been enabling supplier scale-up and significant volume growth, balance of plant component scale lags.
Ballard has been developing strategic partnerships with key tier one suppliers. An example of the cost reduction potential is shown for the air compressor. The cost trajectories for three pounds of compressors, our FCmove 70 kilowatt compressor, is already produced in volumes around 500 to 1,000 units per year, and is expected to undergo a 56% cost reduction through efficiency to scale.
The FCmove 100 compressor, which also serve our truck program, has to undergo a transformation in its manufacturing to a D-sample maturity, resulting in significant cost reduction from the present low volumes of 74%. As shown, volume growth is critical to achieving the anticipated cost reduction for managing BOP components.
Now moving on to the balance of plant others, which you can see represents around a third of the module cost. Balance of plant other costs include hardware, like enclosures, brackets, and mounts. In low volumes, these will have to be hand-welded, machined locally at high cost. Our FCmove 100 kW will be transitioning to cast and molded components, as our planned volumes now justify the investment in tooling costs.
For electrical, there will be simplification of the voltages and sensors, which will help drive out cost, with a transition to machine-made more akin to automotive assemblies. For hoses, our stack development activities will reduce complexity as a HD100 module has six stacks. They need air, cooling, and hydrogen hoses, which will revert to a single stack once the LCSH stack series is launched.
This will enable intricate handmade hoses to transition to simple machine-made hoses. In summary, our next generation stacks will help us achieve a volume growth and achieve a 83% cost reduction in balance upon others. Overall, Ballard's cost reduction plans are expected to deliver a 70% reduction in the stack and module costs as volumes grow. To make this happen, we've formed strategic partnerships to drive up volume, specifically Weichai in China.
We're also leveraging our JV and other partners like MAHLE, to help drive BOP industrialization. Combine this with our world-class technology development and our execution of our exciting three-by-three cost reduction plans, we can truly create a sustainable solution. Now I'll hand back over to Tony.
Great. Thanks very much, Lee. I'm sure there'll be some questions, and just on that point, I'll introduce Jyoti in a moment, but, we will pause for Q&A following Jyoti's presentation. Once again, if you have any questions you want to send in to either Kevin, Lee, or Jyoti when she's finished, please send them to analystday@ballard.com.
Our next speaker is Jyoti Sidhu. Jyoti is our Vice President of Operations and has been in that role since 2018. Jyoti's also been with the company for 20 years. Her experience includes supply chain, manufacturing, Six Sigma, ERP, and Jyoti currently serves on Oracle Supply Chain Advisory Board. Jyoti?
Thank you, Tony. I have been at Ballard for 20 years, and I have never been as excited as I am currently. You might wonder why. Well, all of the points our team has been making all this morning and what you have been experiencing in the market, we have never been in better position than now to deliver on our vision, which is deliver fuel cell, fuel cell power for a sustainable future. Let's take a look at what are we doing in operations to deliver on that vision.
POWER. Our strategy to bring operational excellence that supports the success of our customers and commercial scaling of our production by 2023 is called POWER. POWER stands for Playbook for Optimized Workflow and Efficient Resources. We have been low volume manufacturer historically, and we have done well.
As the expected growth continues to take place, demand for our products will continue to go high. We need to industrialize our manufacturing. This is where POWER framework comes into place. It has 5 key pillars: sustainability, quality, efficiency, agility, and capability. Each pillar has key metrics that are driving us towards operational excellence by 2023. Of course, always, EHS is the top priority.
We have a strong culture of EHS, not only in the products that are deployed in the field, but also the processes that we are using in our research, product development, operations, rest of the organization. We use hydrogen, high power, and we are using chemicals, so it's imperative we get it right. We have a objective to be carbon neutral by 2030.
We have our ISO 14001 certification, which guides our daily activities to ensure we continue to maintain strong culture of EHS in our organization. Critically important is quality. We have customers that place great emphasis on quality and reliability of our products. Customers such as Daimler, Siemens, Weichai, Wrightbus, demand quality, and rightly so, because they cherish their brand.
The performance, quality, and reliability of our products form great important part of our Ballard brand. We have certifications right now, ISO 9001, as well as automotive certification, IATF 16949, and we are in process of obtaining BDA, which is a German standard....
These certifications guide our daily activities to ensure what we are doing internally meets our customer requirements, as well as guide us to put plans together, how we gather customer requirements, how we bring them into product development, do our process development, ship the products out, and look after end of life of each product. We have been investing in our processes, in our capabilities, in our people.
We have been training of our individuals over Lean Six Sigma principles, and we have over 80 individuals who are certified currently all the way to Black Belt, Master Belt. These individuals have executed over 100 projects, bringing in $ millions in savings for soft and hard savings for Ballard. One of the key activities that need to happen for expected growth is capacity expansion.
Our capacity expansion strategy has been carefully developed after reviewing the way materials are coming in, the touch points, takt time, yields, the use of robotics, the labor we are using. This plan is underway currently, which is going to bring us sixfold capacity expansion into MEAs, plates, stacks, and modules. Global map that we are seeing in front of us, showcasing our capacity in Vancouver and with Weichai Ballard JV in China.
We are well-positioned in North America and in China. With the recently announced collaboration with MAHLE, we will be exploring production options in Europe. I will take you through all four parts of our integrated, vertically integrated value chain: stacks, MEAs, plates, and modules. Let's start off with MEAs.
Here, we have invested in truly world-class manufacturing equipment that is providing us six times of MEA capacity than what we currently had in 2019. With the upgraded capacity, we are gonna achieve over 6 million MEAs, translating into 1.66 gigawatt product, making Vancouver facility the largest facility of MEA manufacturing globally.
Just as an example, we have created one of unit of operations where we are achieving the cycle time of less than 7 seconds for MEA, compared to 35 seconds before. This unit of operation is developed in a way that tomorrow, when we need to double our capacity, we can do so without doubling the investment in it.
Great use of automation in this line, and we have in quality, inline quality inspection and traceability of parts, which is very important because you want to know if there is anything going wrong with your part at the process step, where it's happening rather than end of the line. Yields are going to be up 99%, and we are achieving that currently.
Again, very, very important because a lot of value gets added in this step. Let's take a look at the bipolar plate production capacity expansion. In investments we have made with Weichai Ballard JV, our line is capable of producing over 7 million plates, and we have a space currently that can allow us to double the capacity in short period of time.
Cycle time reduction has been achieved over 50%. Currently, we are in process of developing for scale-up of high power density, flexible graphite plates, the processes within our Vancouver facility. Now, let's take a look at our stacks. Investments we have made in Vancouver, as well as with Weichai Ballard JV, our lines are able to produce over 27,000 stacks in Vancouver and 34,000 stacks at JV.
We have semi-automated equipment in these processes. We have inline quality inspection and control, which is gonna happen later this year, as well as the reduction in our cycle time. This type of a capacity provides us great optionality, not just to meet the requirements within China, but outside China. In case we use up our capacity within Vancouver, we have an option to buy stacks from JV and serve our customers.
Let's take a look at module assembly production capacity expansion. With the investments we have made in semi-automated equipment in Vancouver, we have a low volume production going on, which is providing us 5,000 systems, but line is capable of going up to 10,000 with current equipment we have in place.
At JV we have with Weichai, the line is capable of producing 20,000 stacks, but capable of going up to 80,000 stacks. Some of the key things we have implemented in that line are, again, component traceability, really important when you are putting these products into trucks and buses out there, as well as animated work instructions.
We made sure these work instructions were animated so we could make sure quality of our products could be maintained regardless where the products were being produced, as well as ensuring the standardization we needed in manufacturing. Of course, we are now capturing critical torque data. Again, very, very important for our customers. We have looked so far what we have invested into capacity expansion.
Let's take a look what are we doing in our production systems. Again, we continue to invest into Industry 4 technology and MES system that's going in place in our manufacturing right now. This is providing us real-time cycle time data, yields, as well as equipment effectiveness, and translating it to OEE, one of the key metrics in the manufacturing environment. It's really cool to use this data to make business decisions.
We are in transition of using our metrics, not just for collecting the data, but trying to make business decisions based on that. The metrics that we are collecting from our production are helping us out to ensure that we are hitting our yield targets. We are ensuring that materials are brought in our workplace on time, and our labor is being monitored closely to ensure that we can keep our costs low.
Last but not least, let's look at supply chain. In 2020, we're gonna spend over $50 million procuring our materials. That spend is gonna increase significantly in coming years. We are getting ready. We have globally multi-year supply agreements with our key suppliers. Another cool thing we are seeing, we have tier one suppliers entering the supply chain f or fuel cells.
They're bringing in the sophistication, they are driving us towards operational excellence. Our collaboration with Weichai is providing us the supply muscle that we need in order to bring the right quality at the right price for our products. We have a goal to be carbon neutral by 2030, supply chain management is going to play a huge role within that.
Actions we are taking, such as the way we are bringing in the materials, where the materials are being procured, how are we shipping it out, and end-of-life considerations. These actions are not only being applied to within our supply chain, we are also taking same kind of requirements to our suppliers. Given tier one suppliers are coming in, these discussions are becoming easier and easier.
In summary, we have been investing in our processes, in our people, capabilities, technology, automation. We are getting ready, and we are ready to deliver on our vision of sustainable planet. With that, I would like you to watch a video with us that showcases all the activities that we have been profiling this morning, what's happening in our product development, what's happening in our advanced manufacturing, cost reduction type projects, and at all of our locations. With that, let's play the video. Thank you.
A global transformation is underway. Decarbonization to combat climate change is now a global priority. Countries and companies around the world have committed to a net zero carbon pathway. Hydrogen and fuel cell technologies will play a key role in this transition, and we at Ballard Power Systems are ready. With passion, hard work, and dedication, Ballard is delivering zero-emission fuel cell power for a sustainable planet.
There's a growing industry consensus that fuel cells offer the only viable solution to electrify certain medium-duty and heavy-duty vehicles. For more than 20 years, Ballard has delivered safe, durable, reliable, and high-performing proton exchange membrane fuel cell for the most challenging mode of applications. Buses and trucks powered by Ballard technology have on-road experience that totals more than 50 million kilometers.
Ballard's unmatched experience through 8 generations of fuel cell power modules and a wide range of duty cycles, climate, and road conditions, has enabled an effective feedback loop for our product design and development efforts, resulting in the fuel cell industry's highest performance products. Ballard's product development and testing facilities are world-class. At our extensive 160,000 sq ft campus in Vancouver, Canada, we leverage our unparalleled intellectual property portfolio and deep technical know-how to continuously innovate, and we're investing in our future.
New capital equipment at our Vancouver facilities is expanding production capacity of proprietary membrane electrode assemblies, or MEAs, a core element of every cell, by 5 times. A new, fully automated sealing process, currently being commissioned, produces a finished MEA in less than 8 seconds, and we're putting the infrastructure in place to double capacity again to meet future market demand.
At Ballard, we're committed to ambitious and achievable cost reduction through our focus on advanced manufacturing processes, technology innovation, and strategic industrial partnerships. We're tackling cost reduction of our fuel cell stacks in four key ways. First, we're increasing the power generated by each individual cell, using less material where possible. Second, we're working with our suppliers and modifying our processing equipment to maximize the utilization of materials supplied in rolls.
Third, we are designing and operating manufacturing processes that have a high first-pass yield. Ballard has made significant progress in improving our processes, including more than a 70% reduction in the sealing yield loss in 2019 alone. Finally, we're reducing the amount of labor needed to manufacture MEAs, plates, and stacks, and this is where product design, simplification of processes, and automation are the key drivers.
Of course, growing production volumes will also contribute to product cost reduction through economies of scale and supply chain leverage. Sustainability is a global challenge, and we're taking our technology global. We have a simple, shared vision with our partners, Weichai Power, for the Weichai Ballard Joint Venture, to create the leading fuel cell stack and module technology and manufacturing operation in China for buses, commercial trucks, and forklifts.
The fully operational fuel cell module factory enables large-scale manufacturing of fuel cell products and underscores our drive to be at the forefront of zero-emission fuel cell vehicle deployments in China. We're not stopping there. Our Denmark facility provides support to customers across Europe and manufactures systems for backup power applications. We have now also established a Marine Center of Excellence for the design and manufacture of fuel cell modules for the emerging marine sector.
This center, leveraging our extensive experience and knowledge in heavy-duty motive applications such as buses, trucks, and trains, will position Ballard at the epicenter of this critical transition in the marine market. As the world moves toward a future of zero-emission mobility, Ballard is striving towards sustainability across the entire life cycle of our products.
We are committed to environmental leadership, establishing the goal of becoming carbon neutral by 2030. Our people drive our success and contribute to our distinctive culture. We strive to continually strengthen our values and focus on making this a great place to work. At Ballard, we believe that together, we have the power to change the world.
Hope you enjoyed the video. We have a few questions for our recent speakers, so Jody, Lee, Kevin, just a few, and if there are any more, please send them in. Perhaps I'll start a question for Kevin, and Lee will want to pile on as well. This is with regard to the investment in the technology advantage or competitive advantage, particularly in MEAs and stacks that we've had.
We've heard quite a bit about that, but there has been a fair bit or some written recently about the potential commoditization that might take place in the MEAs and stacks. Perhaps you could comment on, you know, what's Ballard doing to stay ahead of that, and what your view is on that area.
Thanks, Tony. Yes. Well, first of all, I think an important point is, hopefully a point I made during my presentation, was how we are continuing to invest in the latest and greatest in terms of new MEAs, new stack designs, et cetera. There's no question, you know, that the MEA, as I think I said in the presentation, is the heart of the fuel cell, and I'll let Lee maybe build upon that a little bit in a moment. I think the other thing that hasn't been discussed as much today is the number of interfaces that actually are involved within the stack.
We talked about the bipolar plate coupling with the MEA. When you get down to the membrane electrode assembly level, there are literally, you know, many, many interfaces on different scales, whether it be GDL coupling with the catalyst layer and the CCM, whether it's the catalyst layer with the ionomer. All these interfaces are something that need to be well understood and drive so much of the operational performance and durability of the MEA and the stack more broadly.
I don't think by simply buying these parts separately and combining them, you're going to understand the performance challenges that would come with those interfaces. Maybe I'll turn it over to Lee to talk a little bit more about the stressors.
Yeah. Thanks, Kevin. I love your analogy of the MEA being a bit like a heart. If you think it has the power of a vehicle for its lifetime. To perform that duty, there's addresses the fuel cell stack, and the system will see. Things like free start, extremes of high temperature. You've got lots of start-up and shutdown events. Clearly, the stack has to survive all of these stresses like a human heart to maintain the lifetime.
One of those real challenges is the durability that you need for the bus market and the heavy-duty truck market compared to the passenger car. As an example, a passenger car is designed for anywhere between 3,000-5,000 hours of durability.
As you transition to those new technologies or emerging technologies of buses and trucks, we're going into the 20,000-30,000 hours, potentially even out to 50,000 hours for the heavy-duty trucks to meet the TCO cases. Ballard is uniquely positioned, I think, in the industry, because of its history of operating buses for over 12 years, and the amount of data mining it's been able to do, collecting information from the field on the stresses with the environment, and using that data mining to then create complex models, using AI to help structure the new generation of MEAs, as well as stacks.
Great. Thanks, you guys. Question for y'all. I'll start with Jodi, we've referred to it a few times today, which is the investment that was made to get a sixfold increase in MEA capacity. I think on a slide, Jodi, we talk of roughly 6 million MEAs per year now, I guess, beginning next year. One of the questions that's come in is that, where we are today, how quickly will we, you know, ramp up to use that capacity? What would be the incremental investment that we talked about going to $10 million? What kind of incremental investment to go, you know, up from 6 to 10?
Thanks, Tony. Great question. Our current capacity, which should be in place fully by Q1 2021. Based on our current knowledge of the requirements coming in, we should be good with that till 2023, but we will need to start planning before then that. In order to take that $6 million to $10 million plus, the investment is gonna be fraction of what regional investment was. It's gonna be roughly around $1.5 million to take it to 10 million MEAs annually.
Great, thanks. Lee, yeah, please.
Yeah, just to add to what Jodi said, the limiting process that we have is the final, sealing process. As you saw in the video, there's a robot, the capability to add a second machine, still access from that robot, using a common in-feed and out-feed system that have been designed already for double the capacity, and that investment would be very modest, as Jodi said.
Great, thanks. Just a couple more questions, maybe Jyoti, for you. you know, obviously, COVID-19 has impacted all of us in many ways. One of the questions was just around the manufacturing facilities as well as supply chain. Just how has COVID-19 impacted the company and how is it expected to impact us going forward?
Thanks, Tony. Thank you for the question. COVID-19 have been challenging for all of us, and of course, Ballard was no exception to that. However, our team has done a great job in ensuring that our operations continued throughout. We did not shut it down. Our supply chain team, great job ensuring we were able to get materials out of our suppliers before any shutdowns happened into those countries where we were getting our materials from. There was impact earlier, but modest impact, not where it impacted any of our customer deliverables at this moment. We have been doing well so far.
Great. Thanks, Jodi. Just one last question that's come in, unless I see another one's popped up. No, just one last question, it's actually about, actually maybe two questions here. One is about hydrogen and safety, of course, you know, there's the legacy of stories on how explosive hydrogen is. Just one of the questions just is really about education and what the hydrogen, I'll say, the ecosystem is doing to better educate the market about hydrogen and hydrogen safety. I'll just throw it open to any of you who wanna comment on that. Or...
Sure. I think, you know, while Ballard's products aren't dependent on any specific supply of hydrogen, you know, it is, as we talked about today, part of the ecosystem. Certainly, we're involved in a number of different committees and so on, to provide our expertise in terms of fuel cell safety. You know, our safety record at Ballard, over certainly my tenure, 26 years, is 100%. We certainly want to provide more and more education with respect to that learning. You know, I can't name specifically all the different committees that we're on at the moment, but we're certainly active in the area.
Great. Thanks. Thank you, Kevin. I don't have any more questions at the moment. Obviously, if anybody has any, send them in, and we'll make sure we get back to you later. I just wanna thank each of the speakers, and we'll move on to the next section now, if we could. Great, we're gonna turn now to the topic of environmental, social, and governance issues, or ESG.
As Randy mentioned at the outset, you know, I think Randy said underreported. We certainly think it's an evolving, important area, both for investors, but also for Ballard. You know, this is something that we've embraced. We heard a little bit about EH&S earlier. Today, we have joining us to speak to our ESG initiatives, is Jayshree Vaidya.
Jay has been with Ballard for 17 years and is currently our Vice President of Human Resources, and was appointed in that role in March 2019. Jayt has responsibility for a number of areas, including talent acquisition, compensation and benefits, leadership development, employee engagement, immigration, and expat management. Jay, over to you.
Thank you, Tony. I'm really pleased to be talking with you today about Ballard's ESG commitment and our people. As Tony mentioned, I started at Ballard around 17 years ago, what attracted me to join Ballard, and what continues to motivate and engage me, is being part of a purpose organization with power to change the world. The reason I share my perspective is because it's a similar perspective to that of many of our team at Ballard.
I think that this is one of the things that contributes to Ballard being an amazing organization and a great work. We published our first ESG report in April. We have momentum within the organization related to environmental, social, and government issues, our team is also very excited about our ESG commitments.
We understand the focus on ESG is important for investors, and it's also critically important to our board, our executive, and our whole team at Ballard. When it comes to the environment, our goal is to be carbon neutral by 2030. We're looking at areas that you would be expecting that we would look at, including minimizing waste streams, being energy efficient, and reducing consumption.
Our energy team has identified 38 opportunities for continued energy savings, reducing raw materials in the design of our products, continuing to advance fuel cell refurbishing and recycling. We have a life cycle analysis team looking at our product life cycle. Our Mission Carbon Zero team is focused on our environmental commitments. The team was formed about a year ago, and it's composed of 30 people across all functions in our organization.
They volunteered to work together on the goal of being carbon neutral by 2030. The team is a passionate group of individuals who have brought innovative ideas and enthusiasm. We're also being supported by external expert consultants, who've helped us to establish a baseline to measure against, and to build focused actions aimed at advancing our Mission Carbon Zero. We're actively working on actions aimed at the 3 scope areas, as outlined on the slide.
Our social commitment, our people. Our corporate culture is founded in our vision. We deliver fuel cell power for a sustainable planet. Our focus on innovation and safety, along with our corporate values, are core to what we do and how we work. Our values are incorporated into everything we do. It's important that we are advancing our vision consistent with our values.
Our cultural values provide focus on key areas, including listen and deliver. This is related to driving customer success. Quality always in our work, in our products, in our services. Inspiring excellence, our achievement focus. Row together, this is about team and collaboration. Own it, this is related to our accountability. Our employee value proposition highlights the promise we make to people. Ballard's success is aligned with our employees being successful, too.
Our employee value proposition includes five key focus areas. First, it's our purpose or our vision, delivering fuel cell power for a sustainable planet. We are a purpose organization. Our people perspective. We care about people. We care about career growth and development, work-life balance, well-being, and flexibility. Culture and values. We continually focus on delivering towards our vision in alignment with our core values and our focus on innovation and safety. Total compensation.
We provide competitive benefits and total compensation aligned with a performance-driven compensation philosophy. Team. We are more than the sum of the parts. We celebrate our diverse team and recognize diversity is a key strength. Teamwork and inclusion are critical to our future success, our culture, and delivering on our vision.
These are a few of the faces from our global team. We implemented our diversity and inclusion policy in 2018, and since then, we've continued to focus on initiatives aimed at further enhancing a culture of diversity and inclusion. D&I best practices have been incorporated into key people programs, including talent attraction, promotions, performance management, training and development, with particular focus on expanding our perspective on psychological safety and its importance to inclusion.
In addition to initiatives related to diversity and inclusion, we're focused on driving actions aimed at increasing employee engagement across the themes of career, quality, innovation, communication, and compensation. Improving leadership effectiveness to support the execution of our strategy and achievement of goals, and recognizing the key role leadership plays in talent retention. Continuing to work on team effectiveness, with expanded focus on increasing self-awareness and team building.
Our training curriculum is aimed at reducing and eliminating gaps related to technical competencies, leadership, and soft skill capabilities. We have an amazing mentoring program for our leaders and our future leaders. We've been running a mentoring program for about a few years now, and we have excellent participation across the organization. It's aimed at increasing capabilities from a business, technical, and leadership perspective. Well-being. Our focus on well-being expanded this year in response to the pandemic.
We've provided increased focus on well-being initiatives, with training and resources to help our team and leaders deal with the impact of the pandemic, particularly as it relates to stress, mental health, and our newly expanded world of remote work. We've been growing, and we're currently at about 9,900 people.
The past two years, our team has increased by about 35%, and we're anticipating continued growth of about 25% over the next couple of years. We're also expanding our people metrics and continue to assess our programs and practices for barriers that could detract from our focus on diversity and inclusion. Employee engagement. It's absolutely tied to organizational success. We know that people drive our success and contribute to our distinctive Ballard culture.
A key part of our people strategy is continue to strengthen our employee value proposition and focus on Ballard being a great place to work. One way we track our performance and progress is with our annual employee survey. This survey, a way to measure our progress on employee engagement indicators, including ethics, safety, quality, leadership, communication, collaboration, innovation, compensation, and psychological safety.
We see year-over-year positive trends in the results. We have high participation in our survey, about 95% this past year. Employees take the time to provide their feedback and suggestions. The word cloud on the right of this slide represents our employee response to the question: What do you like about working at Ballard? As you can see, our team is engaged by themes related to technology, the environment and sustainability, and our people and team focus. Retention. Retention is a really important metric to us.
In many tech organizations, the retention rate could easily be 10 points lower than our current rate of 97%. From an employment brand perspective, Ballard is well-recognized within the fuel cell sector. This brand recognition, coupled with our high retention rate and employee value proposition, are key enablers for attracting top technical talent.
In addition, we focus on retaining the talent we have, and look for ways to highlight and reinforce the reasons people choose to stay with Ballard. We also analyze and create actions aimed at the reasons that people choose to leave. One recent area of action has been to provide our leaders with training and a toolkit focused on conducting career conversations, including asking key questions related to talent retention. Our governance commitment.
From both a management and board perspective, we monitor developments and trends related to governance, and we adopt new governance initiatives proactively. We operate with a perspective on board governance best practices, including diversity and having highly qualified board members with varied and complementary backgrounds and skills, who demonstrate integrity in their board governance.
Our board is comprised of three standing committees: the Audit Committee, the People, Corporate Governance, and Compensation Committee, and the Commercial Committee. The committee members bring significant board governance experience to their responsibilities and provide excellent oversight, views, and recommendations to supplement our management's viewpoints. Our Ballard team. We deliver fuel cell power for a sustainable planet. Ballard has incredible technology because we have a team of incredible, innovative, and passionate people. Thank you.
Great. Thanks very much, Jen. This brings us to the last presentation of the day. It's been a long day, and I greatly appreciate everybody's attention. Again, a reminder, for those who haven't been able to listen to the entire presentation, or even if you have, the video and slides will be posted and available in the next couple of days.
As the Chief Financial Officer of the company, again, I've been with the company a little over 10 years. I feel a bit like a rookie, having listened to some of the tenure of some of my colleagues. I wanted to provide a bit of a vision for what we think this company could look like from a financial point of view over the next 10 years.
I do want to stress, before I start the numbers, a couple of things. number one is this is a vision. It's not a forecast or an outlook, but I think we want to give you a sense of what we think the opportunity could look like, particularly on the revenue side. The other one is just there's some references in some of the slides to our 2020 or the 2020 revenue outlook. I just want to make a note that that is the analyst consensus for 2020. Many of you know, we did withdraw our revenue outlook for the year, back in Q1 as a result of COVID. Just wanted to make that point on that, any numbers you see.
As we think about the revenue profile of the company over the next decade, really, I want to go back to what Rob and Randy talked about, which is this, what we call the scaffolding effect of revenue in our key four markets, particularly bus, truck, rail, and marine. As we think about the revenue profile from 2020, it's very heavily tilted right today towards bus, and it's been that way for many years.
We've talked about truck. Kevin's talked about, you know, an introduction probably in 2021, 2022, we'll start to see some increased truck revenue outside of China, where we're already quite active, followed by train and marine over the course of the decade. That's not to mention some other opportunities, and I'll touch on some of those. This is how we think about it.
As we think about how do we look at the numbers behind it, in the near term, we have our, you know, our order book, our pipeline. We talked earlier on the call, or last call rather, about a 50% increase in our sales pipeline this year. We're quite bullish in over the next couple of years. We also have a number of new programs.
Kevin talked about the TS opportunities, and obviously, with Molly coming on as a partner, that could help even further accelerate some opportunities. In the near term, we have pretty good visibility. As we think about the sort of 2024, 2025 to 2030, a couple of ways we think I'd like to, well, think about it, look at it. One is, what can we learn from the solar industry?
If you look at the solar industry in the last decade, from 2010 to 2020, the solar industry grew at roughly a 49% average growth rate over that decade, and also achieved, during that same decade, roughly 70% cost reduction. Interestingly, you've heard about our outlook on cost reduction, but look, we'll come back and think about what does that 49% look like for Ballard, and I'll show you that in a second.
That's one way to consider it. The other way to consider it is looking at what we've heard earlier today as about the total addressable market. Again, this slide, you'll recall, Rob and Nicolas and others have talked about the $130 billion total addressable market in just the four key heavy-duty markets that we're focused on.
Again, bus, truck, rail, and marine. That number is $130 billion of annual fuel, annual engine opportunity by 2030. You know, again, a lot of these numbers are in the public domain, so this is, you know, some of it, we've done some analysis. Even if we took a relatively conservative assumption of a 20% fuel cell penetration in these markets, which are the best suited for fuel cells, take a 20% fuel cell penetration, 20% Ballard market share.
Again, today, in some of our markets, we talked about enjoying 80%+. Even looking at using that solely at that $130 billion, with that type of market penetration, that could show us roughly a $5.2 billion market for revenue by 2030.
Again, that excludes things like the off-road opportunity. Rob mentioned and Nicolas, I think it was $30 billion TAM alone in off-road, doesn't include material handling, pass car, and other market opportunities. This is just to sort of scope out what we think this could look like. Interestingly, this is about a 46% CAGR from, we'll say, the jump-off point of the analyst consensus of about 115 for this year. The sanity check for us is, you know, does this make any sense? Is it possible? Again, with that 46% CAGR, you know, admittedly, things last year or two have been a little...
The growth hasn't quite been anywhere near that. We do expect that to ramp up, as is shown on the slide. We think that's quite achievable. Again, very consistent with the solar industry. That's kind of how we think about the opportunity on the revenue side. In terms of gross margin, here we have much more visibility, much more in our control. You know, we're running at about 20% gross margin this year. As we think about gross margin to 2025, we have good visibility to getting to what we have talked about several times, about a 30% target in the near term.
The two things that are going to drive that, one is the cost reduction program, about the 70%, roughly, cost reduction, that we will outpace the average selling price reduction that's going to be required over the next few years. About half of that, so we'll call it about 5 points of gross margin improvement, and the other half is just simply getting better leverage off of the investment we've made in our capacity. That can get us to 30%.
We feel quite confident with that number. The question is, what happens in the back half of the decade? Here again, you know, where that leads us, we, you know, that we don't have a forecast, but we think confidently we should be able to get in excess of 30% as we start to move into new, higher-margin markets, get better overhead absorption.
An area we haven't talked at all about, which is the after-sales market, the customer service revenue. Right now, we have a significant investment in that area, but we're not currently generating a tremendous amount of revenue. The longer we have product in the field, you'll hear us talking going forward about that as an important revenue and margin source. Operating expenses, the other thing that we have in our control.
Today, our OpEx today is roughly about $50 million-$55 million per year, and that's about 35% of our revenue, which is relatively high at this level. We have good visibility even to invest in OpEx over the next number of years. We could see our operating cost leverage coming down below 10% by 2030.
When you roll together the types of revenue profile, gross margin targets, as well as our OpEx leverage, we could see a significant wrap up in our profitability over the coming years. We're still, as I'm sure all of you know, EBITDA negative, and we will probably be that way for a couple of years until we hit that break-even revenue level.
After that, with the scaling of revenue and margin, we have fairly good confidence that we'll start to move from, well, say, negative EBIT margin to potentially as much as 20%. That is our target, our objective, to 20% EBIT margin by the end of the decade. Lastly, on cash reserves, the balance sheet. You've heard us talking every quarter about our balance sheet.
It's really, you know, from a financial point of view, one of our competitive advantages is to have a very solid balance sheet. We ended the second quarter, a little over $170 million of cash and no debt. As we think about the next two years or 18 months from June, we have about $100 million-$120 million of cash requirements, both in our business. About 35 of that at the end of June, was to finish off or commit us in our China joint venture with Weichai, and then the rest of this will be to get to operating break even, as well as working capital and some modest additional CapEx.
The takeaway there is, even if at $100 million-$120 million of cash requirements, with the $170 million of cash we had in the bank, we have a fully funded business plan to get us to cash flow break even. That, for us, that's not good enough. We have some very, very, you know, ambitious plans to grow organically and non-organically, and as Randy talked about, we'll be back to you talking about some of our M&A strategy over the next number of months. We did announce earlier this month, an ATM program, an At The Market program, was a $250 million program that we announced in early September.
you know, if we fully take advantage of that could bring our cash balances up well north of $300 million. I can say today quite comfortably, we're well advanced in that ATM program, and expect to be announcing shortly that we've completed that program. Stay tuned on that. We'll certainly update in Q3, if not before then.
That's basically what I wanted to comment on quickly. We're very confident, very excited about the future on the financial side. I'm not taking any questions. With that, I'm gonna turn it over to Randy to do a wrap up on the day and talk a little bit about the investment thesis. Randy, over to you.
Great. It's been a long session today, and it's been very content rich, so I really wanna thank everyone for your sustained interest, and I just wanna offer a few summary comments on Ballard's investment thesis as well as potential catalysts. On the investment thesis side, what we've seen today is a strong policy complex coming together that's not only supporting decarbonization, but supporting adoption of hydrogen and fuel cells.
We're also seeing large, attractive, addressable markets with significant TAM of $130 billion plus. We see global leadership at Ballard in terms of our technology, our talent, our products, our field experience, our customer base. I identified earlier the seven sustainable competitive advantages we have at Ballard. As Tony just highlighted, a very high growth trajectory going forward.
You know, decent growth over the next few years, but then 2023 through 2030, we're gonna see a very steep growth curve. A very strong financial position, Tony just highlighted in terms of revenue scaling, gross margin leverage, operational leverage, and moving to profitability with the balance abilities that we have today.
A lot of embedded optionality at Ballard in additional geographic markets, a different, additional applications as we move forward in our business. As you look over the next 12 months, some potential catalysts. Continued public policy support, particularly favoring not just hydrogen fuel cells, but the deployment of fuel cells in heavy-duty motive applications. The completion of our advanced manufacturing program that you heard about today, is scheduled to be completed in Q1 2021.
Continued progress on what I think is probably the industry's leading product cost reduction program for fuel cell technology. Significant progress over the coming 12 months at our Weichai Ballard joint venture, particularly with the Chinese policy landscape and our positioning there. Progress with our new collaboration with MAHLE that we're very excited about.
Further product development activity that you'll hear about in the coming 12 months, and then a growth in our order book and our sales pipeline as some of the sales activities start to really move through our pipeline. Finally, M&A transactions. We believe that over the next 12 months, you're gonna see a lot of consolidation and a lot of big bets being made in the hydrogen fuel cell industry, and be a key part of that as well.
I would like to comment that 2020 has been an unusual and a challenging year, and our team has come through this really doing great things in difficult circumstances. I really want to on behalf of the Ballard board and the Ballard executive team thank all of the employees at Ballard for the great work in 2020 in these difficult circumstances.
`I wanna thank today all of our speakers, not just at Ballard, but a special thank you to our panel, so David and Ken and Bernd, who I think provided extraordinary value and a lot of color and texture and content to some complicated issues. Finally, we look forward to speaking to you again on November sixth, when we review our Q3 results. With that, thank you, everyone, and good day from Vancouver.