Good morning. Welcome to Ballard's 2023 Capital Markets Day. I'm Kate Charlton, Vice President of Corporate Finance and Strategy, and I'm thrilled to have you join us for today's event. I'd like to acknowledge we are holding this event here in Ballard's office in Burnaby, British Columbia, which is on the ancestral and unceded homelands of the Tsleil-Waututh and Hən̓q̓əmin̓əm̓ peoples. Throughout this presentation, we will be making forward-looking statements that are based on management's current expectations, beliefs, and assumptions concerning future events. Actual results could be materially different. Please refer to our most recent Annual Information Form and other public filings for our complete disclaimer and related information. Before we begin, I'll run through an agenda for the day.
Over the next approximately 90 minutes, our leadership team will be providing a comprehensive review of our business, including an update on our corporate performance and milestones, a walkthrough of Ballard's exciting commercial developments and outlook, a presentation of our in-house total cost of use modeling and competitive conclusions, a discussion on our corporate product and technology achievements and roadmap, an outline of our global manufacturing plans, a review of organizational growth and ESG commitments. Finally, a walkthrough of our financial outlook and targets. Following prepared remarks, we will open it up to an hour-long Q&A session, where virtual attendees can submit questions via the online portal, and virtual, and in-person attendees can ask questions live. I'd like to now hand it over to Randy MacEwen, Ballard's President and CEO.
Thank you, Kate, and good morning. We first of all, wanted to extend a personal thank you and recognize those particularly attending in person here today, the covering analysts and those joining virtually online. We have, I think, a very exciting day outlined for you, as Kate just profiled. For me, the opportunity for you not just to hear what we're doing, but to hear it from the Ballard leadership team. The Ballard leadership team inspires me every day with their commitment to Ballard's vision to deliver fuel cell power for a sustainable planet and their dedication to Ballard's cultural values. Now, I want to share with you two important corporate milestones. Last week, we celebrated two thirty-year anniversaries.
First, June 8, 1993, Ballard rolled out the world's first fuel cell bus, and this was really Geoffrey Ballard's vision. The hydrogen economy of decarbonizing energy, industry, and mobility applications, including fuel cell buses, crystallized in the world's first fuel cell bus. This has been an enduring vision. I think we're much closer today to realizing this vision. Secondly, also 30 years ago, we celebrated our 30th anniversary last week for the listing of our stock on our shares on the Toronto Stock Exchange. An important corporate milestone. Now, I wanna share with you and spend a bit of time talking about Ballard's business model and our strategy. We are developing fuel cell engines and manufacturing these engines for a variety of market applications and geographic regions.
We design and manufacture the entire fuel cell engine, including the control or software strategy. Inside that engine, we have core fuel cell stack technology, which is comprised of bipolar plates and membrane electrode assemblies. We also have inside of the fuel cell engine, balance of plant components that we specify and procure from third parties. This vertical integration is critically important because we understand at the material science levels of membranes, catalysts, gas diffusion layers, ionomers, and key balance of plant components, what the implications are for performance in the field. Secondly, by having this vertical integrated model, we are compressing costs along the value chain, so compressing and eliminating margin stacking.
Now, we offer this fuel cell talk technology importantly and leverage across multiple market applications, six verticals: bus, truck, rail, and marine, the four medium and heavy-duty motive markets, plus the off-road markets, including heavy-duty mine hauls and select stationary power markets. Now, this sounds like a lot of work to, you know, address many market applications, but there's significant leverage embedded in our business model by offering the same core competencies, the same technology, and a substantive part of the bill of materials for different products across these different verticals. We also offer our products in three different key geographic markets, so North America, Europe, and China.
I think it's important to understand, too, we focus on the geographic markets where the policy landscape and the market adoption signals are strongest, and we're focusing on these applications where the fuel cell value proposition is strongest as well. Where you have you know, heavy vehicles, long range requirements, high daily utilization, a need for fast refueling, these are the market applications where we see fuel cells expressing their strength most strongly. These are also applications and geographic markets that are investing in hydrogen refueling infrastructure. Where do you have the opportunity for centralized depot refueling rather than a need for distributed refueling architecture? This is an ability to attract the markets with the highest value propositions for fuel cells and the lowest barrier to entry on the refueling side.
As we look out to 2030 and even beyond, what we see is a very resilient, robust business model, where we're selling this technology and products across these multiple verticals, across these geographic regions, and with the diversification of customers. A lot of resiliency and diversification in our business model as we move forward. The last Capital Markets Day was in September 2020, and much has happened since then, and we wanna share with the significant progress that we've made since that time. There were five key priorities we had highlighted. First, executing and expanding on our partnerships and customer relationships.
You're gonna hear from Dave Mucciacciaro, our Chief Commercial Officer, today, on the impressive progress we've made with existing customers, moving them from demonstration projects or even development work demonstration projects, and in some cases, through to deployments, as well as attracting new customers, what we call platform wins. This is critically important concept for us. We've secured platform wins across our different verticals, particularly bus, truck, rail, and marine, where customers have designed their vehicles with Ballard fuel cell technology in mind. We believe this offers us a lot of stickiness with these customers as we move forward. Secondly, developing new stacks and modules, so next generation investments. Today, unlike any other company in the world, we have our thirteenth generation of fuel cell stack, and we're in the process of deploying our tenth generation of fuel cell module in 2023.
This is a significant achievement for Ballard, and just reflective of the investment we've been making in our technology and product roadmap. You'll hear more about that today from Dr. Colbow and Dr. Gradu, both on the stacks and module front. Associated with that is a significant corporate investment in product cost reduction. We often joke here that the two key priorities are cost reduction, cost reduction. We would also highlight, of course, the importance of growing the order book, but these are really important deliverables for us. This has been a heavy emphasis on product cost reduction. They haven't translated yet to our cost structure, but they are coming into production in the very near term.
A lot of work done on our 3x3 stack cost reduction program we profiled back in 2020, and you'll hear an update on that today, as well as exciting progress we're making on module cost reduction as well. We have been investing in advanced manufacturing processes, literally looking at all of the process steps for MEAs, for bipolar plates, for modules. How can we lean those processes out, introduce new equipment, new automation? You'll hear more about that today, and you saw our press release on the manufacturing initiatives, including scaling and advanced manufacturing implementation for our bipolar plates that went out on Monday of this week. Finally, we talked about improving our financial performance, which, candidly, we have not been successful at achieving over the last few years.
I think a key factor here has been the deferred or delayed demand that we expected to see in China, and with a complicated policy dynamic, and with COVID, really, I would say, hindering the ability of local governments to fund the deployment of vehicles, this has been a challenge in the China market. We've also increased our investment as compared to plan in 2020, based on the growth of the, I'll say, constructive policy environment, as well as an increase in competitive dynamics during this time period. Now, on the discussion point of constructive policy, we have seen a sea change, literally, since September of 2020.
If you think about the changes over the last 16 months since Putin's invasion of Ukraine, we have seen, really, energy security come to the forefront, a reshuffling of priorities, effectively, with energy security now at the top of the list and the climate crisis as a very close second. This is translating to policies that are favoring decarbonization and energy security, and policies that support hydrogen. We now have 30 countries and 23 more on the way with clear hydrogen strategies and hydrogen roadmaps. This is a significant indicator of the unified opinion globally now, that hydrogen will play a key role in decarbonizing energy, industry, and mobility. Over $100 billion of committed funding for these plants. We are seeing targets now of over 160 gigawatts of electrolyzer and green hydrogen production by 2030.
I think that number is gonna increase significantly over the next number of years, and that target will be revisited annually for 2030. Importantly, I think a significant change in the landscape on the availability of low cost, low carbon hydrogen. We're seeing now over $320 billion of funding announced for projects, and now many of them are at different stages of the project development, and we're seeing some migration, with a significant emphasis, particularly in the U.S. market, as we'll comment on in a minute, as well as in Europe. I do wanna highlight as well, there's been a step change in the implementation and rollout of hydrogen refueling infrastructure. Some of you joining us here today may have seen a number of fuel cell cars out front of Ballard.
We have only three fuel stations here, but there are now 1,000 globally. We're expecting to see a significant rollout of hydrogen refueling infrastructure, including for the commercial vehicle market between now and 2030. Just where is the current state of the hydrogen fuel cell industry? I just commented on the constructive policy environment. I wanna add a few more important points. I think over the last number of years, there's been a consensus view moving towards, I think, the thought leadership that Ballard has had on this, that the heavy-duty motive applications are the mobility applications of choice for fuel cell technology. I would say there's a consensus view on that today. Secondly, I would say there's a growing conviction around the opportunity set, particularly based on real deployment of fuel cells.
We've talked previously, you know, 10 years ago, 15 years ago, about whether fuel cell technology has been validated. It's validated today. Today, there are 80,000 fuel cell vehicles, passenger cars, buses, commercial trucks in operation. Another 50,000-60,000 fuel cell-powered, hydrogen-powered fuel cell forklifts. We are at a TRL level, technology readiness level, that indicates it's now about scaling and cost reduction, not about validation. I wanna really highlight something, and you'll hear this from David Mucciacciaro, our Chief Commercial Officer, there is significant interest from end customers on finding zero-emission, heavy-duty mobility opportunities.
There's been a delay, in my opinion, on a number of vehicle OEMs, but that ESG pressure from the end users is, I think, tangible, and we're now seeing OEMs really pick up and kick into another gear in terms of exploring and starting to develop solutions with fuel cell technology in mind. Now, I wanna profile each of the U.S., European theater and China. The U.S. market really has seen a sea change over the last 12, 24 months, with the BIL really supporting hydrogen hubs and a build-out of refueling infrastructure, as well as support for manufacturing of fuel cell and electrolyzer technologies in the U.S. I think we're gonna see significant announcements on this front in 2023. We also, of course, have the landscape change with the implementation of the IRA, Inflation Reduction Act.
With $3 US per kilogram of hydrogen, for green hydrogen, this is going to really change the economics and the value proposition for all hydrogen applications, and particularly for the heavy-duty motive opportunities, where fuel represents a significant portion of the economics, typically 60%-70% of the economics, and you'll hear more about our total cost of ownership model later today. Also profile California as really leading the way from a state perspective, with policies around banning diesel engines, you know, passenger cars, more importantly, buses and heavy trucks. We're seeing other states adopt this.
We're gonna see 2024, 2025 timeframe, where the requirements for zero emission, not low emission, but zero emission, start to kick in and really scale up between that timeframe in 2030 and 2035, where we expect all new buses, city buses, all new haul trucks to effectively be zero emission on that timetable. Very exciting changes in the U.S., and I would say the whole hydrogen fuel cell industry has shifted focus to the U.S. over the last 12 months. Over the last 16 months, energy security has been, I'd say, heightened, nowhere, perhaps more important than in Europe. We are seeing, I would say, changes driven by energy security, but also a very acute sense of addressing climate change in Europe.
The REPowerEU, which is a very significant focus on renewables coming online and removing barriers to the accelerated adoption of renewables, as well as specific policies for the adoption of hydrogen in Europe. This is very exciting. We pair up that, I would say, with the recent definition of green hydrogen in Europe, the world's first definition of green hydrogen. I think this paves the way for clarity for funders and project developers to make sure they're gonna have the type of support, the policy support, subsidy support they expect at the end of a project. Importantly, the AFIR, which has recently been announced, which is basically the world's first announced rollout of hydrogen refueling stations for commercial trucks. This is on corridors we're expecting to have heavy trucks transporting.
There's been a report published that estimates the AFIR, effectively meaning 650 hydrogen refueling stations in Europe by 2030. I just came off a 3-week trip, 2 weeks in China and 1 week in Japan, including attending the Hydrogen Council meeting. I have to share with you, there is a significant intensity in China right now on hydrogen and fuel cells. It's difficult to express that intensity without actually being there. What I heard from meeting with the CEOs of the largest renewable energy companies, the largest players in the fuel cell industry, the largest mobility players, policy makers, is there is massive investment occurring in renewables in China. There is massive investment occurring in electrolyzers. By some counts, between 100 and 200 electrolyzer companies now in China.
There is a significant scale up, multiple gigawatts in the next two or three years in production capacity, you know, we're gonna see a step change in production capacity of electrolyzers and fuel cell technology in the China market. What I also saw was a very active supply chain across MEA, supply materials, membranes, gas diffusion layers, catalysts, as well as balance of plant components, compressors, pumps, hydro recirculation blowers, sensors, valves. There's a lot of work going on in China's supply chain. China has the most aggressive targets for the adoption of fuel cell vehicles, with 1 million fuel cell buses and trucks by 2030, and 1,000 hydrogen refueling stations by 2030. I believe we'll see 1,000 hydrogen refueling stations in China by 2025.
Just in my meetings with Sinopec, they're planning between 600-1,000 independently by 2025. There's massive investment going on in the China market. It's been a very challenging market over the last number of years, with policy that is, lacks clarity, lacks certainty, and frankly, isn't as strong from an economic value proposition as we'd like. I expect to see more activity in the China market to address some of the policy challenges to put China back on track with high growth between 2025 and 2030. Kinda where is Ballard going and what to expect? There are two key message that I want you to take away from today. One is the growing customer interest, translating to sales pipeline, translating to order book.
This is very important, and this is a pivot away from a business that was a split historically between technology solutions and power products, more to a power products business. This is exactly the type of business we had envisioned as we set out our strategy, about eight years ago. You're gonna see significant customer scaling occurring as well, in the development, demonstration, and now deployments. The second key message beyond the customer uptake and order is really around cost reduction, and I think you're gonna see that, you know, pasted throughout today's discussion. With that, I wanna pass it over to David Mucciacciaro, our Chief Commercial Officer, who's gonna provide an update on the, I think, impressive progress we've been making with our customers and the markets. Dave?
Yes. Thank you, Randy, welcome everyone to Ballard's Capital Market Day today in person, and those of you that are participating online. My name is David Mucciacciaro, the Chief Commercial Officer at Ballard. I joined Ballard in May of 2022. I come with 25 years of experience in the automotive industry, most recently as the Vice President of global sales and marketing at Magna. I'd have to say, this transition from the automotive industry into the hydrogen space and being able to play a role in the adoption of fuel cell, is simply a remarkable opportunity and something that I'm very excited about. Randy touched on this a little bit, too, and I think Jyoti will talk about it a little bit later in terms of our people.
The passion that we have at Ballard, all aligned with our goal to make the world a sustainable planet, is extremely inspirational. It's very, very impressive. It's my honor today to walk through the tremendous success and progress we're making from an order book, revenue, and backlog perspective. One of the key themes of my presentation today is gonna be diversification, and you're gonna see this across multiple leaders that present today. Diversification from the region, not only does that mean success across all the different verticals, but also a transition intentionally and successfully from a TS, technology service company, into a product-centric company from a vertical perspective. We're gonna highlight diversification on a regional basis and also within our customer base.
On the subsequent slides, you're gonna see some very telling information in terms of the number of platform wins that we've secured, where we were a couple of years ago, and where we are today. It's truly a seismic shift, one that we could all be very proud of. Let me first take a look at diversification from a regional basis. When you look at 2019, the majority of our revenue was from bus. It was the most mature market by far, which we believe to continue through the end of the decade. As you see, as we progress through the time period, we see much more diversification and success and customer platform wins across all of our verticals.
The intention is that we will be able to be viable in each vertical, have successful wins, and be able to leverage that core technology and sell similar products across all of our different verticals. That diversification from a vertical basis, from bus to truck to rail, marine, stationary, and emerging markets, is progressing very nicely. Secondly, let's take a look at a diversification from a regional perspective. The last Capital Market Day in 2020, our revenue was primarily dominated by China and then Europe. Currently, our revenue shows that 60% of our revenue is in Europe. As Randy mentioned, the policy that we see in North America, there is a tremendous increase with this policy that we believe will yield increased results and revenue, both in the short and midterm from a revenue perspective. Thank you.
From a diversification on the customer base, what we can see is, since Q4 of 2020, we've seen over a 60% annual growth rate in our deferred customer backlog. 60%! Again, a very significant number that shows true diversification across our verticals, with our customers in our different verticals. That 60% accounts for 80% of our current backlog. This is remarkable work and a very leading indicator of our ability to have success going forward. When you look into the backlog quarter by quarter over the last several years, you'll see a couple of very important trends. Number one, it looks relatively flat across the two-year period. You do see a trend of increasing over the last year, quarter by quarter, which we anticipate will continue going forward.
What you really see is a tremendous shift in TS Project, our legacy business from Tech, Technology Services, which had its place, was very relevant at the time, but a complete shift into our product-based company. This shift, as I mentioned earlier, was not only intentional, but it's successful. It ends up being that our current total backlog for power products is the most in Ballard history. I need to repeat that. That's a very telling comment. The total amount of our product backlog now is the highest in our 44-year Ballard history, something that all of us are extremely proud of. I want to now take a couple of minutes to implement this 3D approach, we talk about customer platform wins and why that's important.
Customer platform wins drive revenue with key customers, again, across many verticals. It's gonna be recurring revenue that's gonna allow us to have sustained growth. You look at the different stages, you look at development, demonstrating, deploying, you take a look at the duration for each one of those segments, some of which will take many, many years. A key telling point of this in each section is the amount of fuel cells that are required. In developing, you're going through, you're designing it, you're validating it, and then the volume is very low. As you transition to demonstrating, now you're talking about proof of concept. This could take many, many years, and we're starting to talk about maybe double-digit fuel cell.
Exciting, though, when you transition into deploying, now we're talking about volume that could be in the triple digits, again, depending on the customer, the application. I'm gonna show a couple of examples that actually indeed result in triple-digit volume. This, again, is a very telling indicator for our success going forward, well beyond just the press releases that we introduce. The ability and the, and the details in terms of the number of platform wins that we have now versus where we had a couple of years ago, is substantial. In 2020, we had 13 customer platform wins. 13. The majority of which were in the developing initial stage, some transitioning into demonstrating and a few in deploying. The few that were in deploying, not surprisingly, were bus.
A bus, again, being the most mature market, again, not really showing a lot of diversification. Fast forward to today, 2023. In 3 short years, we now have 31 customer platforms, which is just simply a remarkable number, significant increase in the number of platform wins that we've seen over just 3 years. What's really telling about this is you see a significant number in the developing stage, which will translate to midterm, long-term growth as it goes through the different stages. We see a significant also in demonstrating and in also deploying, which is driving the revenue. Another key aspect to focus on is these bubble chart of these customers that you see is diversified across our individual verticals. It's not just bus anymore, it's bus, truck, rail, marine, stationary, and emerging markets. Again, further as a proof point for diversification.
I'd like to now take a couple of minutes to walk through 3 individual specific customer examples of going through this 3D evolution of a customer platform. Solaris, first, a leading bus customer in Europe. I had the pleasure to spend some time in Poland and meet with the executive team in Poland, and what they're doing in terms of their commitment for hydrogen fuel cells for buses is extremely exciting, extremely inspirational. It took a few years, a lot of work in terms of developing and validating it, and the result is 100 orders received from Solaris in 2022. We expect that number to be very similar in 2023. Equally important to note, Solaris has open tenders for close to 1,000 buses.
We're very excited about this partnership, which, between Ballard and Solaris, I believe that it will continue to bear substantial revenue growing forward, and more to come on that in the coming quarters. Siemens is another example. This one is really, really special. Six years ago, long before me, I joined one year ago, as I mentioned, Siemens started as a technology service TS project. Many, many years it took to develop the Siemens train, to develop the Ballard-specific module, a 200 kilowatt module, of which, by the way, there's two Ballard 200 kilowatt modules that go into each train for a total of 400 kilowatts. A lot of work was done to be able to go through, validate that, and the end result is in 2022-...
We re-received an order for 100 modules from Siemens, a PO, 100 modules. Also further, an LOI for an incremental 100 modules. I'd have to say, again, thinking about it from a Ballard and a Siemens perspective, the many, many years, Kevin, you know, you played a big role in this, and your team, of the years and years of hard work, I had the opportunity to ride that train. To ride that hydrogen train in Germany and celebrate together with Siemens and be a part of that success story after many, many years of hard work, was one of the proudest moments of my career. Lastly, one example, and of course, there's many, many more, as you can see, as we transitioned up to 31, is Anglo American and First Mode.
Anglo American, many of you are probably aware, is a leading mining platinum global company, has worked together with First Mode, who's developing the powertrain for hydrogen fuel cells. 2023, we received an order for 35 modules. It's the HD Plus 100 kW module to be delivered in 2023. Again, triple digits, 100 modules. We also have already received an order for 60 more in 2024, HD Plus modules. That's tremendous progress in just a couple of years. More importantly, First Mode has made this very well known, and in one of their press release, announced a commitment to change over and retrofit 400 of their mining trucks to fuel cell power. What does that mean? Each of those mining trucks has 1,000 kW or 1 MW of power.
That equates to 10 plus buses. 10 plus bus modules times CAD 400 is substantial revenue. Our partnership with First Mode, located in Seattle, they spent a lot of time together in Ballard. We spent a lot of time cultivating this relationship, and it's truly an exciting story. I wanna now focus on each one of our verticals, and why does each one of our verticals make sense and what's the value proposition? I'm not gonna go through in the specific details and take the time, but of course, the intention is that each one of our verticals is viable on its own. Each one of our verticals, the expectation is to continue to secure customer platform wins. That's an indicator of success.
One key item that is important to note is that we're able to leverage our core technology and sell our modules across many verticals. Why is this important? Well, it's important because if we're able to sell those modules, leverage that core technology, and sell those across multiple verticals, we're able to get volume of scale, and we're able to improve the volume, with the volume of scale resulting in significant cost reductions, which the ultimate goal is to also be able to make sure that we're competitive to the market and have improved financials. Each vertical has a very compelling total addressable market, as you can imagine. Bus isn't the largest TAM, however, again, it's the most mature market. We believe that bus will continue to be the most mature market through the end of the decade.
Truck, very, very exciting, total addressable market. We also know that truck will be the most competitive by far, and there's been a substantial amount of interest in this truck vertical, and there's a lot of competition already. I'll lump rail and marine together. Rail and marine will come with smaller orders, smaller frequency of orders, but a larger order in terms of the magnitude, and we've seen that with Siemens. Siemens is just one example for rail. In emerging markets, emerging markets is actually a vertical, a segment that's very exciting for me because you talk about the success we've had with First Mode.
We've also talked about the success in working together with Caterpillar, and also the ability in emerging markets to branch out across just mining into commercial, perhaps into material handling, even the light duty vehicle commercial market, potentially as well. There's a tremendous amount of opportunity to have success in emerging markets. Lastly, I'll conclude with stationary power, and again, having been here a year, I've heard the history with stationary power. The majority of our focus was a mobility company. You know, we weren't sure about the pace of adoption on stationary. One thing that we've seen is a tremendous amount of interest in stationary power.
We've had success with key plus, key customer platform wins, and the amount of interest that we continue to see, the quote activity for large volume in this vertical is extremely compelling. I wanna focus for a second. When you take a look at this chart, it's a little bit confusing, but the key takeaway of this chart is, we get asked a lot, are we spreading ourselves too thin? I can tell you assuredly, we are not spreading ourselves too thin. I talked already about our ability to leverage our core products, our core technology, and sell similar products across multiple verticals. That's extremely important, right? The other key aspect, the focus of this slide, though, however, is that understand that each vertical has different power requirements.
Each power requirement is unique, especially when you look at even just bus into stationary. It's tremendous, the magnitude of the different power requirements. We are able, again, to not only sell our current product technology across multiple vertical, resulting in volume and scale, but we're able to combine our current product portfolio, combine modules to be able to support the larger fuel cell power needs for some of the other segments. I now would like to take a couple of moments to talk about each vertical individually, where we are and where we're going. Of course, the number 1 proof point for each vertical and the viability of the success is continued platform wins. What are we seeing with bus? In bus, we have substantial market share, primarily in Europe and North America. We want to protect that market share.
How do we do that? Well, we've added seven new OEM partnerships just in the last year, and a lot of work is being done to increase that number. We wanna continue to be the market leader in bus. We wanna have more opportunities and add more customers. Adding the more customers then would allow them to transition from the developing to the demonstrating, and then, of course, to the deploying stage. One other key item, something that we're all very, very excited to hear about at Ballard, is in April, we shipped our first Buy America product built in our Bend, Oregon, facility to New Flyer, and that's the first of many, many more to come for that customer. Shifting now to truck. Truck, I talked about the importance of having such large opportunities in terms of the total addressable market.
We do have an XD module that is very, very, fits the truck market very, very well, has got a lot of attention and a lot of excitement, and it's been a key focus of us to accelerate that development of that XD module. The other key aspect that I wanted to highlight on truck is that we've been able to proactively work on cost reduction. Randy talked about the importance of cost reduction. One of our three major tasks going forward is cost reduction, cost reduction, and revenue. I might put revenue first, but I'm a little bit biased there. It's clear that revenue and cost reduction are our most important activities, and for us to be successful in the market of truck, that's gonna be highly competitive, we must have a competitive XD product. Rail.
We've had significant expansion with CPKC, that's CP Rail, located in Canada. What's exciting about rail as well is that we've had interest, growing interest from locomotives, rail OEMs, but also the end users. I think everyone might be aware of the recent ZEV mandate in California for locomotives, which we believe will drive incremental revenue towards the end of this decade. Shifting to marine. A very exciting accomplishment. We have the first commercial ferry for PEM cell technology and liquid hydrogen operational in 2023. I know there's a lot of attention, there's been a lot of press releases, a lot of eyes on this, and this is something that we find fascinating, and we're very excited about this progress.
Ballard also in the marine vertical, was the first to achieve a DNV type approval for our FCwave 200 kW product in 2022. We also have had some key wins. I'll note just a couple here, Norled, Future Proof Shipping, and MOG, and we believe that we'll see continued success with more customers adopting to our technology in this marine segment. Emerging markets. I talked about First Mode already, 10 MW worth of modules ordered today, 60 modules to be ordered in 2024, are already ordered, and then those 400 mining trucks to be retrofitted.
We have also developed our first generation mining truck, for field deployment. We believe that together, again, with just First Mode, Caterpillar and other segments, material handling, construction, there is a viable opportunity for us to have success in this emerging markets. What makes emerging markets so interesting is it's emerging, and it's evolving, and it's interesting to see how that will continue to evolve over time. Lastly, stationary. This is one that, surprisingly, again, has generated the most amount of interest. So far to date, we have 15 megawatts of orders secured with delivery in 2024, 2022 to 2024.
We have the right product portfolio to be able to support our customer needs with our 200 kilowatt FCgen module, and then our unique ability to take those FCgen modules and containerize it into a 1 megawatt solution, which we call the MegaBlock. We will be delivering those first 2 megawatt units by Q4 of this year to an unnamed customer that we're very, very excited about and hopefully can name in the coming future. Again, the first delivery of our 1 megawatt MegaBlock, which we believe has also translated into success for many other customers, of which I know below, Caterpillar, Microsoft, Vertiv, HDF, and Shell. Shell is actually using this megawatt MegaBlock solution as their product that we will be delivering to them in the 2024-2025 time frame.
Lastly, I'd like to just spend a couple minutes as a segue also into the next sections in terms of competing technologies. Obviously, when you look at hydrogen ICE, you look at battery, and you look at hydrogen fuel cells. Battery has its place, small fleets, certain duty cycles, perhaps would lend itself for battery application. We acknowledge that, we understand that. I believe that there's a case to be made for multiple technologies depending on the application. I also think it also shows the reimportance and the need for hydrogen fuel cells, large fleets for higher duty cycles. Mark is gonna talk about this and give a couple examples in the TCU section. I also just wanna say a couple words for hydrogen ICE, because there's been a reemergence in this technology and a lot of dialogue and a lot of discussion.
Hydrogen ICE does not have the efficiency, in my opinion, to make it a real viable bridge to hydrogen fuel cells. It definitely does not have the efficiency that we have with hydrogen, and more importantly, I wanna reiterate, I think everyone knows this, but hydrogen ICE is not a zero-emission technology. The last comment is, when you look at the different bubble charts, perhaps it's hard to see, but the ICE and battery has already had the benefit of going down the cost curve over years and years of development, where the PEM technology is just beginning that journey. Again, we talked so much about the need for cost reduction. We expect PEM will go down that cost curve and get cost out appropriately. From a competitive pricing perspective, my next two slides kind of go together.
Of course, there's a lot of interest in this very exciting industry. We've seen a total of 20 new fuel cell competitors join this market since 2019. Some of them is more of a bet for their incumbent technology as a side play. Some of it, they're just learning and just coming up to speed in terms of their hydrogen fuel cell capabilities. Of course, some have made important partnerships to help leverage that and improve that. What sets Ballard apart from the competition, clearly, is we have 44 years of experience, focusing solely on hydrogen fuel cells. 44 years experience.
I think Kevin talks about we're on our 13th version of our stack development, and the maturity and the maturation of those products, and the lessons learned over those 40 plus years cannot be taken away, and is extremely valuable for our customer when they're making a decision. Not only the experience we have, the maturity of our products, but also the amount of vehicles that we have on the road with real-life data, with real-life learning, and the ability for us to make enhancements to further improve our product. This kind of goes along with the previous comment, ultimately, what makes a customer make a decision? What drives them? Of course, pricing. I'm not gonna take away that pricing is not an important aspect. We need to be priced to the market.
At the end of the day, the OEM needs to have a value, a value proposition that's in the money. That's clear. There is many, many other factors that play a role into a customer making a decision beyond just pricing. Technical. Talked about performance, power requirements, power density, and then qualitative. Ballard's proven track record of success, our aftermarket sales, our customer care group, are here for life, which is our tagline, because we're here for you.
You don't just buy a module from us, we're gonna support you through the entire journey. I believe, just as a closing remark, that is another one of the key differentiators for Ballard versus some of these new entrants. With that being said, I've walked through a lot here. Look forward to the Q&A section. I'm gonna hand it over to Mark Verstraete to go through our TCU in much more detail. Thank you, Mark.
Thank you, Dave. Good morning and welcome from my side. My name is Mark Verstraete. I'm the vice president for the truck and bus business. I've joined Ballard a year ago, and I have 22 years' experience with Daimler and Daimler Truck, and 25 years of experience in the automotive business. You may ask two questions this morning, and that is: Why does Ballard invest into modeling capabilities? Also, why do we call it total cost of use case and not total cost of ownership? Well, modeling capabilities are a competitive advantage in the absence of decades of empirical data. We have investigated total cost of ownership models, and we found them incomplete, and they're kind of a black box. You put in a handful of numbers, some magic happens, and you get a result.
We think that this is not reflecting the complexity of today's world and makes it too simple. Oversimplification is not giving us the insights we need to take the right decisions. We want to understand what we model, the good old business school wisdom, build your own model to get the results that you want to have. In a diesel world, total cost of ownership was a product-centric and sufficient measure, because the diesel engine, it can go long distance, it can go short distance, it can drive in mountains, it can drive on the flat land, hot climate, cold climate. It doesn't really make a difference, it works all the time. With the new technologies, the world is getting more complex. Not every technology is suitable for every use case, and in particular, not every technology is economical in every use case.
Good decisions need to understand how customers use their trucks. We need to expand the TCO model and include customer and other specifics to move forward to represent the complexity of the world today. The World Class model allows us to use real and actual data, Ballard data. We can change the inputs flexibly, depending on the customer's discussions, and we can adapt to developments. In addition, we can account for new elements that were not relevant in the past, infrastructure, and very important, I come back to that later, policy, and it is more customer-centric. The Ballard TCO model allows us to discuss with customers on a completely different level than in the past, but we don't stop there. We'll take it a step further. We translate customer centricity into internal technology steering. We understand the value proposition levers.
We can develop products according to those value propositions, and we can develop products that make our customers successful, based on real data, based on performance and cost data, and not based on high-level industry assumptions. If you want to look at that in a graphical representation, in the diesel world, you had a good old 2x2 matrix, application and region, and that was sufficient. Now, with new technologies, you get into a Rubik's cube, and the Rubik's cube gets into another Rubik's cube, and finally, you get to the Rubik's cube that is relevant for the customer. We can model for the customer, we can model with the customer, and that is a big advantage that we see, and this is why we invested into our own modeling capabilities. Enough of this talking. Let's get to the case studies.
I brought 2 case studies today. The 1 is a long-haul fleet in Germany, and the other 1 is a long-haul fleet in California. We chosen the long-haul truck fleet as an example because it might be easiest for you to relate to models and results you know, and it is also what you see in the Hydrogen Council, and maybe as a point of validation. When you feed our model with the Hydrogen Council data, you will end up in the same results. We've taken a truck operator that owns 100 trucks and uses external infrastructure. What you get out of that is our data donut. Our data donut consists of six toppings. It's the vehicle CapEx, the cost of the vehicle. It's the application cost, the cost that are specific to the use. It's the energy cost.
It's all the operating costs like tolls, insurance, and maintenance, and it's the driver cost. Finally, as the new element, it is infrastructure. The one thing we did not model is the carbon tax, because it's relatively complicated and too unclear. Let's look at the data. I think that's the most interesting part. Not surprising, for a truck purchased in 2023, the diesel engine is still the most compelling cost of use case. What you see across all technologies is that energy cost is actually the biggest cost factor in the TCU. When you go away from the energy cost, the distribution is very different. In the TCU of a diesel truck, at $1.45 per kilometer, maintenance and tolls, so OpEx, is the second biggest cost lever.
If you move to battery electric trucks that are roughly 30% more expensive in TCU, in this application, driver OpEx becomes the second highest impact on your cost. It is not that we pay more for a battery truck driver, but it is the regulation that says charging time is driving time. If you want the customer or if you want to drive the same distance with a battery electric truck, you need to pay the driver more because he takes longer for it. Finally, coming to the fuel cell electric truck, and this is representing a Ballard fuel cell costs. The hydrogen costs, the energy costs, are higher than in all of the other use cases or in all the other technologies, it is followed by the CapEx.
The CapEx, the cost of the truck, much driven by the cost of the fuel cell. What you can see there is very clear what is important for us in Ballard. It is the cost reduction Randy mentioned, it's Dave mentioned it. Cost reduction is a must in a fuel cell electric truck, but then immediately, the key success factor following is efficiency. Efficiency of the fuel cell to reduce the consumption of energy. Now, the donuts are a point in time. They show 2023. Looking forward, it's a 4-year holding period assumed. How does it look over time? Well, in our analysis, we will have a fuel cell electric truck and a diesel truck cost parity in 2027. This is driven by two main factors, and you've seen it in the donut.
The hydrogen pricing is a significant impact. We have assumed at the moment the cost reduction of EUR 1 per kilogram per year, starting in 2023. We will have parity at EUR 9 per kilogram with a diesel truck. These assumptions are conservative because you can see here we have assumed stable diesel prices, so no increase in the diesel price, no carbon tax, and we have also assumed stable electricity prices going forward. Now, we all don't know the price development of energy, and if we knew, we would probably be in a different place and do different things. It is really relevant to see, and what you see, the impact of sensitivity of energy prices.
We have assumed a 10% ± sensitivity on our assumptions here, and what you see is a relative change between diesel price and hydrogen of 10% changes the cost parity by 1 year. We'll be 1 year faster in cost parity if the diesel price changes 10% upwards and the hydrogen price changes 10% downwards. We have an extreme sensitivity to energy prices in the game, and with the conservative assumptions of flat diesel pricing and flat energy pricing, electricity pricing, we think we are conservative. We did not include a carbon tax in the diesel price, and we assumed electricity prices on the level of today, not considering all the investments necessary into the electrical grid to support charging of thousands and thousands and thousands of trucks in the countries.
I'd like to move on to the California case. In California, we very much modeled the policy impact. Here you see, like in the energy, the sensitivity to policy is significant. With all the support available in California for zero-emission vehicles, we foresee that there's a 2-year change in the parity between a fuel cell electric truck and a diesel truck based on the support given by the government. There's one thing I'd like to mention that we cannot model, but which we have a lot in the discussions with our customers, and that is operating procedures. Our customers, our fleet operators, have over years optimized their internal procedures to run their fleet, and they don't really want to change it because it has been optimized to the comma to make their business successful and profitable.
Let's take the example of a transit authority in the U.S. They want a 1-to-1 replacement of their diesel transit bus with the other technology. They don't want to think about, "Oh, I can only use a battery electric bus on this route, but not on this, and the fuel cell there, and here, and there." It gets very complicated for them, and they would like to keep this complexity out. They would want to keep everything as it is and replace the diesel bus by another truck. Now, this is something we are unable to model, but it is a significant driver for the adoption of fuel cell electric vehicles. Now I would like to conclude. I think what you... Oh, sorry.
In order to be successful in the marketplace, what you need to do and what we're doing with our modeling capabilities is we need to know our customers. We need to optimize our product development to benefit the customers, to offer them superior value propositions. That is important, we need to focus, and we will focus on those use cases where it is attractive to have a fuel cell electric vehicle. Thank you very much for listening, and with that, I would like to hand over to Dr. Kevin Colbow, our Chief Technology Officer.
Thank you, Mark. Good morning, everybody. My name is Kevin Colbow, as Mark pointed out, and I serve as Ballard's Chief Technology Officer. I've been with the company for 28 years, so the tagline, "Here for Life", has a special meaning for me. I'm excited now more than ever because we are well-positioned with our technology and products and our plan on cost reduction to capture the growing worldwide market opportunities. You have heard about our evolution to a product-focused company and how critical TCU is to drive adoption and performance, and how the market environment is increasingly competitive. We'll walk through technical milestones, what we are investing in, and how it is driving TCU optimization and cost reduction. Breaking down our products, we have MEAs and bipolar plates, which comprise up a unit cell.
Multiple unit cells make up a stack, and we work closely with suppliers to develop and procure balance of plant components, which in turn are integrated around the stack to create a module, typically made up of hundreds of parts in total. Ballard designs and manufactures MEAs, bipolar plates, stacks, and modules. Let's start with the MEA. MEA technology is one of the pillars of Ballard's intellectual property. Advancements in MEA technology drive TCU improvements as it dictates power output, durability, and fuel efficiency. If you get the MEA wrong, then the whole engine will struggle to meet customer expectations and provide competitive performance. Recent investment in the MEA has driven a 15% increase in areal power density, that's a measure of the power per square, per unit area, since 2019. This is a significant achievement.
I can tell you that being in this field for so long, these kinds of exciting developments, particularly when they haven't been calculated into our 3x3 cost reduction just yet, provide even more promise for future improvement. We will continue to invest, increasing performance through new and emerging membrane and catalyst technology advancements. Next, the bipolar plate, we have a very diverse and, you know, the term diversity has come up in a number of times in a lot of contexts, and it includes in terms of our technical experience, and expertise in this area. The bipolar plate is actually made up of two half plates.
It's providing a means to uniformly distribute the reactants across the active area of the cell, to provide coolant to the cell, to collect the current, and finally, to effectively manage the removal of the product water. We model this, we experiment with this in great levels of detail, as right behind the curtains behind me, quite frankly, is our laboratory. There are two primary categories of bipolar plate materials: metal, typically in the form of coated stainless steel and coated titanium, and carbon, in both flexible graphite form and molded carbon. Through my lengthy career, there has always been a lack of industry consensus on ideal material for all applications. Today, most use metal. Metal plates certainly lead in power density, but are poorer in durability and free start metrics, often leading to more frequent replacement.
Ballard has experience with both metal and carbon, building and testing stacks using both types. Among those 13 generations, some of the ones we haven't counted are some of the experimentation with metal. Investment in improving making flexible graphite bipolar plates thinner has been successful. We've reduced the thickness by over 30%, now making it competitive with higher power density applications, including heavy-duty trucks. Mark Biznek will later discuss the investment in the next generation bipolar plate manufacturing, which we just recently announced. Let's put this together now from the stack perspective. We take our MEA and our plates and stack them, add in hardware and an enclosure to create the stack.
Stack and hardware is made up of bipolar plates to conduct electricity, and compression springs, and laser welded steel straps to contain compression over the long lifetime of heavy-duty applications. This is just one example of Ballard's stack design, as it enables improved durability and performance for the life of the product. I will say it again, we have done into our 13th generation of these fuel cell stacks. Turning now to cost reduction and more details on our cost reduction program. At our 2020 Investor Day, we unveiled our 3x3 cost reduction program to achieve a 70% cost reduction relative to a 2018 baseline by 2024. For those not as familiar, the 3x3 simply describe a three-year plan to drive down cost in three categories: manufacturing, materials, and engineering design.
To date, we have achieved all but one of our goals in our stack reduction program. If you can see the little yellow circle right at the bottom of there, that's the one that we haven't achieved. Automation in our manufacturing processes, reduction in plate thickness, and improvement in catalyst loading were the most significant cost reduction achievements to date. One facet of the original goal was to reduce the stack catalyst loading. We found during the development process that this would reduce costs, but it would adversely impair the TCU. As a result, we intentionally chose not to implement this design change. We are always conscious of switching lanes with our development streams if we feel it will negatively impact what our customers value the most.
Our success with the 3x3 program covered advanced manufacturing processes and capital investment, increasing our capacity, changing to the design of our fuel cell components and the selection of new input materials. Further advancements will follow similar themes, facilitated by working hand in hand with key component suppliers, particularly in the areas of gas diffusion layers, catalyst, ionomer, and membranes, as you've already heard. A greater than 60% stack cost reduction using the 2018 baseline conditions has been achieved. With increased in volumes anticipated in 2024, we are forecasting achievement of the original 70% cost reduction target. Now, we expect these cost improvements to begin to impact our margins in our products in the 18-24-month time frame, and this is time is necessary to, for full implementation and scale into the production lines, including full supplier qualifications.
Looking out to 2026, with further implementation of the next generation bipolar plate manufacturing and additional MEA design improvements, which I just highlighted earlier, we have the next tranche of cost reduction opportunities underway and de-risked that will amount to an overall 80% cost reduction. This is massive. This is absolutely massive. Beyond advancements in the MEA and bipolar plate, we are actively working on opportunities in the design and manufacturing of the stack to further improve cost. Shown here is just one example, where a change in our stack enclosure design has the potential to improve volumetric power density by greater than 10%. With that, I'd like to introduce Dr. Mircea Gradu, who will take you through the balance of plant and module cost reduction activities.
Thank you, Kevin, and good morning, everyone. My name is Mircea Gradu, Chief Engineering Officer at Ballard, and my background spans over 30 years in the mobility industries, including powertrain and vehicle-level executive leadership positions with major OEMs, including Daimler, Hyundai Motor Company, and Fiat Chrysler. Kevin emphasized the importance of development in cost reduction at the stack level. I will address similar topics and emphasize the cost reduction importance for the balance of the plant. The balance of the plant certainly is the other major component of the module. It includes major sourced components like air compressors, like hydrogen recirculation blowers, like sensors, like pressure sensors. Again, this is a very complex set of components that we are sourcing, and the emphasis on cost reduction spans now over our entire supply base.
Not only are we reducing the parts and the manufacturing time, but we also emphasize a lot the power density that is expressed in the gravimetric and volumetric characteristics of our product in terms of power density. In other words, for the same power level, you have a more compact and lighter product, or at, if you want, at the same volume or weight level, you can have a significantly higher power level. The next generation product, which is shown on this slide, on the right side, the XD, that has been referenced extensively by David and actually made the highlight of the International Auto Show last year. That product, in particular, emphasizes this achievement in terms of power density and reduction in parts count, which at the time was 20%.
We are continuing on that as the product progresses to its development pace. In addition to that, we also included in this product additional functionality, which is the DC-DC conversion and other power electronic functionality, which actually expands the capability of our customers to incorporate that into the end vehicle or application. You can see on this slide the significant reduction we achieved in the balance of the plant. The diagram shows 70% module cost reduction, and the point here is that we are applying the same methodology, which we successfully applied within the fuel cell stack at the balance of the plant level. We're going through component reduction, and we're going through a very extensive collaboration with our suppliers. That is a global supply chain that Randy also referenced. Certainly, very diverse in terms of...
The geographic location and do include China or includes China suppliers, and we apply the same concept as we did with the MEA components. That applies to the design, manufacturability, performance, and cost efficiency of each of the components. As a system-level developer, we are actually trying to help our suppliers with the very intricate technology that goes into each of those components, and a very good example is, for instance, air compressors. They do include power electronics, controllers, and in this case, or very sophisticated air bearing technology. We are actually trying to work jointly with our suppliers to kind of bring up the technology level at the component. This roadmap that we are showing on this slide is actually also illustrating our next phase of engine development.
The major step that we are taking here is to consolidate the 7-plus products that we currently have into four core products. You can see here, illustrate the small core product, which will replace the MD and HD product with the respective power ranges. The medium core product, which will replace the HD plus and XD. Large core product, replacing some of the FC applications in marine, in stationary, and rail applications. Ultimately, we're creating a combination of those products that aims to power levels that we currently achieve with our ClearGen product. Those are actually stationary power generations, power generation units that are in the 1 megawatt-plus range. Also very important here is the modularity and flexibility concept that we developed and illustrated certainly with the XD product.
That gives us the opportunity to couple those modules, as Dave also mentioned, in case of the XD product, which you'll also see on the tour. That was the power source or the powertrain in a heavy-duty truck, in the long-haul truck, that was introduced at the International Auto Show, and it consisted of two of the XD product. We harness the power of software to improve the performance of our products by using the sophisticated analysis of the duty cycle and operating conditions for the module functionality optimization. In other words, everything what Mark explained, in terms of the TCU and the valuable input that we developed into modeling the use of our or the customer use of our applications, that also certainly translates into how we control the module.
That is not only in terms of the fuel cell module, but also the entire hybrid powertrain, the battery fuel cell, hybrid powertrain on the vehicle. Software also helps with the functionality of the entire powertrain of the vehicle. We also believe that again, as demonstrated also by Mark, the total cost of ownership and total cost of use can be impacted by this control strategy. That's a tremendous benefit that software can bring. Ultimately, if you think about the radar diagram that was shown before, with all the characteristics of the product, all of those can be influenced positively by the software and the controls that we are developing.
Aligned with our strategy to become a fuel cell product-focused company, we have substantially increased our investment in engine development over the past three years. The slide shows the increase by more than 280% since 2020. The module investment is critical for improving the fuel cell performance, certainly the total cost of use, application fit, and manufacturability. That was also emphasized in David's presentation because all of those are critical purchasing criteria by our customers. Ambitious yet achievable plans in cost reduction, supplier development, capacity scaling, product development, and portfolio rationalization require continued investment to maintain the pole position.
We are in the pole position currently. Given the increasingly competitive dynamics that David also has shown, both by technology and by other players that certainly are significant, we need to keep up with the pace, and we do by upping our investment in modules. Ballard has demonstrated a strong technology commitment. Overall, if you noted the emphasis that we are putting both on the stack and module development, that is coupled certainly with everything that pertains to the manufacturing of our product. We are pursuing the commitment into preparing the fuel cell manufacturing for scale and for delivering on the cost reduction, quality initiatives that are abundant within Ballard. With that, I thank you for your attention, and I would like to introduce Mark Biznek, our Chief Operating Officer.
Thank you, Mircea. I'm Mark Biznek. I serve as the Chief Operating Officer for Ballard, and I just joined earlier this year. The prior 30 years I spent in power generation and engine development at General Electric, General Motors, and most recently, Kohler Power Systems. It's fair to say I burned my fair share of fossil fuels in the past, and it's really good to be part of Ballard team, who's a leader in clean energy.
Today I'd like to share with you just a little bit of the manufacturing plan, the near-term and midterm plan that we have laid out for you. As Dave mentioned earlier, we have a large amount of backlog, historic backlog for Ballard, which is great for the company, selfishly, it puts me on the spot to now deliver to these customer commitments. My plan is now to really put together a plan that I'll show you today. For those who are in the room today, you'll see this slide again when you do the tour of the facilities, North Fraser, across the street here.
For those joining us online, this is basically a four-year snapshot showing our investment we've made to really pivot from a, kind of, a technology company to a commercialization company, where we are today. Which really goes back to Dave's 3x3 point about going from deployment to, or sorry, from demonstration to deployment, and that's where our customers are moving into these fleet vehicles. With that, I'll start on the far left, which shows the 2019 investment into our pilot production line, which you'll see again from people who are here. You'll see across the street. That was really signaling the start of that beginning of building power products here at Ballard.
We have an automated line that has quality systems built in and manufacturing execution systems for torque control and lock control as well, so traceability is there. That really was our start of building big products here. I would characterize the COVID years, 2020-2022, as the investment in plate and MEAs, where we got the joint venture with our Weichai partner online in 2020, which gave us an 8x improvement in plate production. The MEA investment, which we just kind of finished up that this year, we call it LIM sealing, which you'll see again on the tour, our sealing process for our MEAs, which gave us a 6x improvement. Those are really vital for kind of the infrastructure.
2023 is characterized really in stack and module capacity as we continue to grow our work there. Opening up our Bend plant in the USA, which is really a module building, engine building facility, bespoke, that really gives us a lot of flexibility at a low cost level, as well as our stack and module fat testing, which we'll implement this year, which will give us some more stack volume. Finally, on the far right is our commissioning of our next gen plate line, which we announced just yesterday. Very exciting news for me, particularly, because it gives us about a 10x improvement in capacity for plates. It also gives us a cost reduction of about 35% on the plates, which gets us. Sorry, 35% plate thickness, I'm sorry.
35% plate thickness reduction, which gets us online to be at the 4 kilowatt per liter on power density, gives us 70% cost reduction on the plates, which gets us really on a clear path to that DOE target, the US DOE target of $5 per kilowatt. Those are great. Power density, of course, and cost are great, but also it reduces our raw materials by 45%, which really puts our money where our mouth is for our ESG commitments. It's really a great step forward, and that really gets us prepared for our 2026 timeframe, which I'm calling the midterm timeframe, and that really will help us, where we are today internally, give us about a doubling of our capacity.
If you look at, kind of just a 2x4 matrix, a very simple, what I call mid, near term and midterm range. On the left axis, you can see that the four main processes, MEA, plate, stack, and module, or engine, as we call it, as well. The near term is what I just explained, basically utilizing our current footprint, our manufacturing footprint we have today to manufacture and capacitize in those places. Those include, of course, Burnaby, which you'll see again, people in the audience will see this afternoon across the street, the Hobro, Denmark, facility, our Bend, Oregon, facility, which does engine assembly, and then our joint venture in Weifang, China, where we're doing plate and stack and engine assembly.
That's really our near term, just again, getting us ready for that next, for the next wave of capacity. The midterm is really characterized by improving our processes and getting the equipment ready to really go into the high volume manufacturing. Expanding our global MEA capacity, utilizing our plate, which we just described, but adding more stack and engine manufacturing capability in those, in kind of called the future wave that we're going for. With that, we're really looking at some key areas, of course, and using our global for local strategy. As they say, every great journey starts with the first step, and we want to put our first best foot forward in where we're going to invest into the next volume, the high capacity, bespoke plant for manufacturing.
Looking at our capital allocation and where we want to put that money first. We're really reviewing the U.S. and European markets to see if those are a good fit. We're going to be talking about the characteristics down below on the slide, but we'll be using these characteristics to really evaluate the regions and see where we want to put our first plant, with our look back at really where we are with the China MEA localization plant, which we announced last year. Kind of using that as the stake in the ground and comparing that against the U.S. and European markets. Our local for local considerations really are the five main big buckets. The access to low cost, low carbon hydrogen. Of course, the infrastructure is key.
We consume hydrogen in the production of our of our cell stacks and modules. Every stack and every engine gets tested 100%, and that consumes hydrogen. We want infrastructure, let alone our customers want the hydrogen as well, which talks about the second point, which is this market considerations. Where the hydrogen infrastructure is, will drive demand and drive certain companies to convert to the hydrogen fuel cells. We'll look at that. Interesting to me is the access to funding support, where we get regional and country support to, for either capital or employment or for, you know, facilities as well. Who's going to fund us or help us get to into those regions? The proximity to customers, but also suppliers and talent, right?
Reducing our transportation costs and making sure we are in the right market. Of course, mitigating all the geopolitical risks as well, so we had to put that in consideration. With those five main things, we're going to be evaluating, again, U.S. and European markets to see how those compare to our what we announced last year with the China MEA plan. Really goes into this slide here, which on the left-hand side, you can kind of see where we were, call it beginning of 2022, just 18 months ago, where China was the lead horse in this. It had the best, strongest business case, and the hydrogen outlook was strong. Certain European verticals were very interesting, as Dave Mucciacciaro mentioned earlier as well. Europe always had some interesting parts.
Now with recent policy changes, as we've just seen with the European and U.S.A., the IRA Act as well, and the really great support of hydrogen infrastructure going in. Now we're really looking at all three and really comparing and contrasting where we wanna put our first step. We're gonna look at that to see our capital allocation, and we'll look at that for the local, for local manufacturing strategy. Again, it's all good to have a good capital plan, a good manufacturing plan, but it really needs the people and the culture to really go forward. Today, we have Jyoti Sidhu, who's gonna be taking us through the P&C. Thank you.
Thank you, Mark. Welcome to those of you who are joining us in our beautiful facilities here in Burnaby. Warm welcome to those of you who are joining us virtually. Thank you for being part of our story. I'm Jyoti Sidhu, Chief People Officer at Ballard Power Systems. I would like to now take you through what's happening on few of the items. One of the items is going to be around our people. Then we will move it into how are we keeping our people safe. Then culture we have at Ballard, as well as ESG achievements. First of all, there has been a lot of activity happening at Ballard. We have been busy. As you have heard from Mircea, Kevin, Mark, we have been significantly investing in product development, process development, as well as cost reduction activities.
These activities not only require team members, but also evolving skill sets. With that, what you can see on the graphs, we have 1,300 employees right now at global level. 80% of those employees are in two key functions: technology and product development, as well as operations, which includes our advanced manufacturing engineering as well. Our workforce is evolving as well. Given that we are kinda getting into automation as well as digitization, we are bringing the skill sets from external, but at the same time, we are focusing on ensuring our current workforce's skill sets are getting upgraded, so they can be ready for the future as well. We do not expect step change in our team size going forward, only very few incremental hires to continue to deliver on our strategy.
That kind of team size growth, we need to make sure that we are also ensuring safety of our people. We are very proud of the culture of safety we have at Ballard. Our goal, that everyone goes home safely at end of each day, remains unchanged. As you can see, we did not have any lost time injuries year to date. That's 160 days without lost time injury. Impressive. We also wanna make sure that we are continuing to nurture the safety culture we have already in place, so we ensure everyone, regardless of their role in the organization, is going through the training. As you can see, over close to 3,000 safety courses were completed in 2022. Even with year-over-year increase in staff and product manufacturing, our safety performance has improved. Great achievement. We are very proud of that.
I will turn it over and to walk us over through into our people side of stuff. Our people drive our success. As we have heard from David Mucciacciaro, that we have diversified our portfolio when it comes to products. What we are really proud of, the diversity that we see in our team. Over 32 countries are represented in our global team. Why is that important? It's important because that provides us with rich, different perspectives from our team, which translates into great better decision-making, and great employee engagement. All of those are critical requirements to be a successful company. According to Randstad, only 15% of management in science, engineering, and technology are women. We are very proud to share with you that we have a strong representation of women in our senior leadership team. 32%, double of the industry average.
Our work in this area, we don't feel is complete. We refreshed our DEI policy last year, and work will continue in coming months and years, and we'll be happy to continue to showcase how we are progressing in this area. Next, again, with people driving our success, we firmly believe having great engagement actually is one of the key differentiators when you are wanting to make sure that you have key skill sets in the organization to deliver on your story. Demonstrates when you have a high engagement, it demonstrates the passion for the purpose that we have as a Ballard and the alignment of our team members with the values that we have at Ballard as well. We have been conducting our engagement survey for last 16 consecutive years with exceptionally participation at global levels above 95% in most cases.
It is very, very important for us to receive the feedback from our people so we can make sure that it's a right input into our people strategy as well as programs. You can also see our retention rates. We have demonstrated employee retention rates over 90% for last five years in most cases. This is a competitive advantage, in our opinion, in a robust labor market for technical skill sets. I would also like to kinda share with you what we have done from a hybrid work model perspective. Those of you who are in our facilities, you are sitting in upgraded facilities, and those of you, we would just like to take a minute to recognize that. New hybrid work environment has allowed Ballard to substantially grow its team without increasing its footprint. It's allowing us to ensure that we.
Our collaboration, actually, at global level has increased. Even with a hybrid environment, we have been able to maintain high engagement. We are very proud of that, and great retention rates as well. Now let's start to walk into E side of the ESG. The foundation of Ballard's business is to help our customers decarbonize. What a great story, eh? Not only that we minimize the use of precious metals and recycle product components at end of life, we are also ensuring that our customers are successful as we go along with that. Even with high carbon hydrogen, fuel cell buses have lower lifecycle emissions compared to diesel buses. When we actually are able to use green hydrogen, fuel cell buses are going to have lower lifecycle emissions compared to battery electric buses. We help our customers decarbonize, but we don't stop there.
We are committed to becoming carbon neutral by 2030, and our ESG report is going to be published end of this month. You will see that our ESG ratings continue to improve as we continue to disclose more and more, and these are going to be obviously part of the ESG report that would be available for all of us. Now, I would like to move it into what's happening on the commitments to the planet side or our carbon neutral plan. During 2022, we established implementation plan and roadmap, which defines the scope of the our efforts, material investments, and the timing. Our plan consists of six key goals that are focused on key emitters. These are carbon-free energy and electricity to our facilities, transitioning to low-carbon company vehicles, using green hydrogen in our research and development facilities, business travel, and employee commuting.
We are focused on not being only environmentally sustainable company, but also a financially sustainable business for the long term. With that, I would like to turn it over to our CFO, Paul Dobson. Thank you for your time.
Thank you, Jyoti. Good morning, everybody. My name is Paul Dobson. I'm the chief financial officer here at Ballard. I've been here for 2 years, and I have 30 years of finance and management experience at various companies, including CIBC, Direct Energy, and Hydro One. Before we get started today, just a few comments about guidance. Today, we provide guidance on total operating costs and CapEx, as well as order book. As you've heard today, and likely already knew, the industry is still maturing. Many internal and external factors that need to come together for us to comfortably and confidently be able to predict and forecast where margins and revenues are going to be within a reasonable range.
This industry is still very much in the early innings, we look forward to providing specific guidance on revenue and gross margin in the future when the industry matures a bit more and visibility on our orders is a bit more predictable. As mentioned by Dave in the commercial update, Ballard is more diversified today in terms of the revenue mix by vertical, geography, and customers. We are firmly a products company now. Shown on the graph, you see the increasing proportion of product revenue and product revenue and backlog. This shift in the revenue was always part of the strategy and does require more investment to support product and market development and manufacturing capacity as well.
Technology solutions certainly did have a purpose in the early fuel cell market, but we're now moving away from fuel cell technology development for third parties towards supporting fuel cell integration into customers' vehicles, and we purchased Ballard Motive Solutions, or formerly Arcola, for this very purpose. More specifically on the revenue split, in 2019, Power Products revenue was about 45%. In 2023, Power Products revenue is about 20 or 80%, and by 2025, we expect that to be over 90%. Looking at the anticipated revenue ramp, we expect to see growth throughout this decade and beyond 2030 as well. We believe that the step change increase in demand for the products will occur in the 2025, 2026 time frame. Why?
As discussed by all of my colleagues in their presentations, we see a number of catalysts coming together at that time, including the order book growth as we attract more platform customers moving towards a hydrogen strategy and more customers who are taking action to get closer to their decarbonization commitments. We see existing platform customers moving towards deployment. We see the product cost reductions and pricing moving to parity with diesel and with battery. Externally, we see rapid scaling and access to low cost, low carbon hydrogen as well. We'll likely see increases in carbon pricing as well. Looking at gross margin, we're targeting gross margin in the mid-20s by 2030. We expect gross margin to break even in the 2024-2025 time frame as volumes ramp up.
Gross margin expansion, driven by the product cost reductions, which we talked about extensively by Kevin and Mircea, outpacing the decline in selling prices, also volume, supported by the investments in manufacturing capacity and automation, as discussed by Mark, which will lower our unit costs and bring more economies of scale. Beyond 2030, we see opportunities to expand gross margin even further through increasing volume, as well as growing revenue opportunities from service and extended warranty sales. Our guidance on total OpEx for 2023 is $135 million-$155 million, which compares to 2022 of $146 million, roughly flat. Beyond 2023, we're expecting total OpEx to grow generally in line with inflation for the next few years.
The majority of the growth in OpEx has been driven by product development activities and also the build-out of our manufacturing footprint, as discussed by Mark. Looking at capital expenditures, our guidance for 2023 is $40 million-$60 million, and in 2022, we spent $35 million. We're planning $300 million of CapEx investment over the next five years, so roughly $60 million per year, spent roughly evenly over that time period. 70% of that $300 million is allocated to production capacity, in line with the global manufacturing strategy, as referenced by Mark. The remaining 30% is for, of the CapEx, is for product development, such things as test station and development equipment, as well as ERP and IT. We've looked at these forecasts carefully, and we believe this is what we need to invest to achieve our strategic plan.
We do have some flexibility on timing and location of certain investments, depending on where and when volume is most likely to ramp up. Our pathway to profitability, when we combined what David was talking about in terms of the commercial team's work on building the backlog and customer platforms, what Mark Verstraete was talking about in terms of our TCU forecast and when parity is expected, Kevin and Mircea's product improvements and the cost reductions when they come online, Mark's global manufacturing strategy, and Jody's focus on investments in our people, we see EBITDA profitability in the 2027, 2028 time frame. Revenue growth and expansion of gross margins are the key drivers for EBITDA profitability, as we do not see material increases in our total OpEx needed to meet this future demand. Finally, a word about balance sheet management.
At the end of Q1, we had $864 million in cash and no debt. As I said before, we have the funding in place to make our investments to support the customer platform wins that support our high volume product sales. We take a very disciplined approach to cash flow planning and capital allocation throughout the company, and we have deprioritized any inorganic investments as well. We also are exploring other funding opportunities, such as government funding in different locations, that support either product development and/or local for local manufacturing and growth. Overall, we believe we have a very strong strategy with the funding in place to support our goals and deliver our plans. I'll now turn it back over to Randy for his closing comments. Thank you.
Great. Thank you, Paul. We're going to conclude with two summary slides, and I think the first point we'd like to make is we are growing our customer base, and there's diversification and resiliency that comes in that with the different verticals, the different geographic markets, and the different customers. We're transitioning to a power products business. The stack cost reduction, basically baked, and now moving to module cost reduction as we move forward. We're increasing our investments, given the opportunities that we see in the competitive dynamics. I really want to leave you with two key takeaways. One is that the macro environment is very supportive for the adoption of fuel cell technology. That's really based on three key things: constructive policy, low cost, low carbon hydrogen is on the way, and strong customer interest.
These are really three important, critical things that shape the environment. These are all new to the industry. Secondly, I want to leave you with Ballard's competitive positioning. We're strongly positioned, I think, with sustainable competitive advantages, with the talent we have, with the technology and continued innovation, product development, with the roadmap, I think, for next generation products and significant cost reduction, with the capacity that we're building to meet customer demand, and with the capital that we have to invest against the opportunity set. I believe we have strong, sustainable competitive advantages. The Ballard brand continues to be the leader for fuel cell technology. With that, I'm going to invite Kate and David Mucciacciaro to come up and join Paul and I for a Q&A panel discussion.
Excellent. Thank you, everyone, to our speakers. Thank you, Randy. Now we're going to open it up to Q&A. For those online, please use the online portal to submit a question, which will be moderated in the back. For everyone in the room, if you'd like to ask a question, feel free to raise your hand, and we can bring a microphone around to you. Okay, Michael Glen.
Hey, thanks for taking the questions. Randy, maybe first of all, you talked about being in China for 3 weeks and a lot of meetings over there. Are you able to give any insights into what you heard regarding the Weichai JV and how we should think about volumes coming out of that JV over the next, say, 5-10 years?
Michael, thanks for the question. I think the Weichai-Ballard JV is very well positioned currently for opportunities in Shandong province. We know there are five cluster regions. Weifang, which is where the JV is located, is in one of the five cluster regions. We feel competitively positioned for that market. I think what we're looking to do with the Weichai-Ballard JV and with Ballard as well, is how do we access the other cluster regions more effectively? Importantly, this isn't just related to Weichai-Ballard JV, but more importantly, the industry in total, is the availability of that low cost, low carbon hydrogen and hydrogen refueling stations.
I feel with the policy landscape that we have and the investments that we expect to see in renewable power, in hydrogen production, the scaling that will occur in electrolysis, there's no doubt in my mind, zero doubt, particularly based on the few weeks in China, that China will be the largest hydrogen market and the largest market for fuel cell vehicles by 2030. You know, I think the plan always for Weichai-Ballard JV has been to have the leading technology and leading products, both in terms of performance and cost for the long term. We expected, clearly, to have a much higher volume ramp in the near and midterm. That hasn't happened as expected, I do think the complicated policy environment and the local government funding challenges post-COVID have exacerbated that.
No changes in strategy. I do want to highlight, actually walking through the Weichai-Ballard JV joint venture, invite all of you to a visit if you're in China and want to visit the JV. It's an extraordinarily impressive facility. To see it in person, and some of you here today will see a video of our Weichai-Ballard JV joint venture, and we'll see if we can get that posted on the internet for viewers as well. It's an extraordinary facility, and I think Weichai deserves a lot of credit with some of the implementation of robotics and additional automation and the ability to produce 20,000 stacks and 20,000 fuel cell engines. I believe it's the largest manufacturing facility in the world.
At the same time, while bringing up that facility, optimizing the processes, we've also seen Weichai have a lot of muscle with supply chain, and that's gonna help not only the Weichai-Ballard JV joint venture products, which we're seeing around 45% cost reduction for some of the supply chain we're seeing in China on the balance of plant components, taking that learning and those opportunities to our global product offering as well. Can't really give you a specific number on what we expect to see. The JV candidly doesn't have significant backlog at this time. We're certainly working against that, I think probably by the end of 2023, we'll be in a better position to provide an update on the sales outlook for the JV.
I don't expect it to be materially, like, some type of step change this year or even in 2024. We do see particularly in Shandong Province, where recently there was over 1,900 fuel cell buses and trucks that have been approved for deployment in Shandong Province itself. We expect to get the JV to get the lion's share of those modules.
Just one more follow-up on China. With respect to the $130 million investment in Shanghai for the MEA facility, can you give an update on some of the timing surrounding that capital spend?
Yeah. Let's be very clear. I think Mark profiled today that we are looking at the U.S. and European markets now, and I just wanna contrast what's happened in the last year. Mark did a very effective job at this. On the one side, you've had delays and uncertainties in the China policies, you had a heightened geopolitical environment. At the same time, you've seen policies emerge in the U.S. and Europe that are supporting the adoption of hydrogen, supporting the adoption of fuel cell vehicles, and supporting domestic manufacturing across the hydrogen and fuel cell value chain in the U.S. and Europe.
We are doing a comparative study in 2023, supported by Deloitte, that's looking at where should we be manufacturing in the US market or in Europe, and then doing a comparative assessment against our plan of record for MEA localization in China to see whether that should be revisited. It's effectively what we're doing, and the big question we're asking is, with a $130 million planned investment in the Shanghai MEA facility and with all these variables, does that represent a disproportionate risk to our balance sheet? I think we'll have a conclusion on that question and this comparative study by the end of 2023.
Okay, Rupert.
Hi, good morning. Your cost reduction plans seem to be well on track, but you do need to build volume to recognize the benefit of that program. Can you talk about your pricing strategy? How do you plan to build up volumes over the next few years? How would you prioritize your volume versus gross margin?
Maybe I'll start, and then I'll ask Dave to supplement. I'd put the two things separate. First of all, significant work going on on product cost reduction, and then secondly, our pricing strategy. Our pricing strategy clearly has had an impact on our gross margin in 2022 and 2023. What we saw in 2022 and 2023 is these customers wanting to develop or moving from development to demonstration or moving from demonstration to deployment, facing a very challenging circumstance in terms of the economic value proposition. Our customers, still without an economic value proposition that strong, saying, "We know that you're gonna get there on cost. We know that you're investing in production capacity.
We'd also like to see together us jointly investing to get these deployments out. Not just Ballard, but other partners, in the ecosystem and the value chain, have leaned forward on the cost structure effectively to, you know, see this transition to deployment. It's still very early volumes, but the pricing strategy is really designed to help enable those customers. What we see, though, is as our cost reduction initiatives move to production, we start to see, significant gross margin materialize. Clearly, selling prices are gonna come down, as Paul alluded to, our cost reduction initiatives will outpace selling price reductions. I think this is gonna lead to a step change on the gross margin front.
It's gonna take a bit of time, obviously, 2025, likely, when we'll see that crossover, but I think this is critically important. In terms of just the overall pricing strategy, I would say, too, we're pricing to market certain conditions. I think as we embed more value and looking at things like how do we optimize our fuel cells with the powertrain so that you're getting higher efficiency, longer durability, we have an opportunity for value pricing for customers, that, you know, perhaps at a premium to others because we're delivering more, value to the customer. I'll just turn it over to Dave to see if you want to supplement.
Yeah, I think Randy, you articulated the point very well. I would just highlight that with the lower volumes currently, we have a pricing strategy with understanding that the value proposition for the OEM needs to be in the money as well, and we know that once that volume materializes and we execute our cost reduction strategy, we will be in a position to have improved margins. Again, Randy also brought up with our BMS, the acquisition, and our ability to optimize the powertrain is a differentiator that would allow us to also price that in, not only to enable sales, but also to enable pricing that will help our margins going forward.
Well, one other thing I'll add on pricing is that pricing is different in each vertical. What I would say is that the transit operators have seen a, unfortunately, hydrogen prices go in the wrong direction over the last 16, 18 months, given the elevated cost of natural gas. That's impacted the value proposition there, and we've had to think very carefully about that for the end customer. The other thing is that the truck market, we expect to be a very competitive market for the long term. You know, thinking about the pricing strategy, where we can add value, and then making sure we're working down our costs, and having the best total cost of use for an application, is gonna be critical for our pricing strategy.
A quick follow-up on that. When you're pricing, obviously, you need to be competitive with other fuel cell companies. Where do you think the competition is on its cost plan? Are they going to be able to match the plan that you put out over the next few years?
Maybe I'll start, and Dave, again, can supplement. Just in terms of the competition, I just wanna highlight, of course, we're competing against incumbent technologies. We're competing against other zero emission technologies, like battery electric, and then we're competing against fuel cell pure play fuel cell competitors. It's important with relative total cost of ownership, comparative total cost of ownership against all both the legacy technologies and battery electric as we think about our pricing strategy. In terms of competition in the fuel cell space, I'd highlight here you have, I would say, two auto manufacturers, Toyota and Hyundai, that are positioning to the heavy-duty motive market applications. You're also seeing a number of Tier One automotive suppliers.
Here I'm thinking about companies like Bosch and Faurecia and Michelin, and Linamar and MAHLE, a partner of ours, both Linamar and MAHLE, that are now looking at the opportunity to participate in this fuel cell market. I, we do see some competitors. I would highlight Bosch and Cummins as the two Tier One competitors that have offerings today. Candidly, I don't believe they're as mature as ours. It doesn't mean they're not aggressive on pricing, because in the bus market, where we have, you know, over 70% market share in Europe and over 90% market share in North America, they're trying to penetrate those OEM accounts and trying to get the transit operators to come online with their technology.
We have a very, a significant position in that marketplace, and so one of the ways they need to compete is to be aggressive on the pricing. There are a number of other players as well, some emerging competitors from China. Plug Power is looking not only at hydrogen, green hydrogen production and electrolysis, and the forklift market, but also considering some of the heavy-duty motive market applications. We haven't seen them show up in a material way in terms of deployments, but they're there with pricing. Dave, anything you want to supplement?
Yeah, just I think real quick, I mean, you brought up a couple of good points, like pricing. The pricing dynamics across all the different verticals is unique, and we do see some competitive pricing from a Cummins and from a Bosch, really trying to take some of the market share that we've had, and we need to protect that, right? Which is why the cost reduction activity that we're engaging in is so very important. We're confident that, again, we talked about all this a lot in terms of the differentiators, for Ballard versus the competition, the maturity of our products. It's not strictly a pricing decision. Of course, there needs to be a price in line with the market.
We do believe some of these competitors are trying to take some of our market share, but we need to price it such that it's a value proposition that's somewhat in the money for the OEM and then just execute against our cost reduction strategy.
Thank you. You had a good slide with the different platforms moving from development to demo to rollout. I think you had 31 customers. How are you seeing that maturation and movement in that? Is that speeding up? How quickly can we see those development customers moving into the next stages?
I'll take this one on, if you don't mind, and then, Randy, if you wanna add anything. Yes, 31 customers currently, going from 13, three years ago. There's a couple of key points to highlight, just to reiterate on that slide. When you look at the development stage, there's a number of customers, very well-known customers, that's gonna translate into revenue in the 2027 timeframe. We look at each section, each customer that's in each section, and we look at our record backlog from our products, power products perspective, we think we're poised very well for continued growth, both in the short term, the midterm, and the long term. I look at those 31s, I would foresee that in the next year or two years, you're gonna see a drastically higher number than 31. We're gonna continue to progress going forward.
I think we'll take some questions from the online audience. kind of going back to China, could you specifically describe the risks that Ballard is facing in China as a result of today's geopolitical climate?
Yeah, I think this is an important issue, and one of the things that we've been seeing, observing, really over the last four or five years, but I would say heightened in the last 12 months, is really this theme of decoupling. We've studied this very carefully, and we believe the China and Western world economies are very interdependent and interrelated, and decoupling is not possible. There is some de-risking that's occurring, and I think it's important to have manufacturing and supply chain resiliency, so in an event of geopolitical collapse, and assets in China become non-addressable or supply chain in China becomes non-addressable, that you have an alternative. For us, we see the work we're doing with Weichai-Ballard JV is specific to the China market.
Ballard has the rights to use those modules and excess capacity for outside of China. We are thinking very carefully about making sure we have appropriate capacity and supply chain outside of China, and particularly focused on the European theater and North America.
We'll take another question from the online audience. This is from Praneeth Satish at Wells Fargo: Can you elaborate on the trends you're seeing in the stationary power market? Seems like you're seeing traction here. Any feedback you've received from stationary power customers that are switching over to hydrogen? Additionally, can you comment on the competitive landscape for the stationary power market?
Maybe I'll make a few comments and ask Dave to supplement here again, and maybe tie in Rob Brown's question as well, about the platform wins. I do think it's important to understand it takes time to move from development to demonstration to deployment, and each vertical is different. I'll give you one example. We have a very large stationary project with a company called HDF. This project has been underway for many years. We shipped to them a 1.55 megawatt product. It's an impressive system, and that product goes to a renewable site, and they have renewable power they'll generate. They'll produce hydrogen. They'll use our fuel cell system to take that hydrogen and regenerate it back into power as needed.
This relationship with HDF has been about a six year, seven year relationship. This is the first major deployment, and it'll take, in my opinion, another one year or two for them to commission and validate that system. Different applications, even within or different segments, even within a vertical, have different maturation times. I do think one of the things that we're seeing on the stationary power side, and stationary has really surprised us to the upside, and candidly, I was dismissive about the stationary power markets a number of years ago. What surprised us is really, you know, the electrification theme is really stressing grids, and the congestion and resiliency in grids is something that, I think, leads to a number of applications where people want more secure power. We're seeing this with data centers.
We're seeing this, ironically, with car recharging or vehicle recharging stations. On the data center front, this is a massive market opportunity. The amount of renewables that are being dedicated to data centers and their displacement of diesel technology over the next 10, 15 years, in my mind, is gonna be something that we need to find participation in that market. We're very fortunate to be partnered on a critical project with Caterpillar for Microsoft, which will be a demonstration of our technology in a critical data center backup application for Microsoft in Washington State.
Again, it'll take time for this to get validated. You know, Caterpillar is a company that goes through a lot of testing, validation. Microsoft is a very sophisticated end market customer, so it'll take time for this evolution. We're well positioned, I believe, with leading technology, and now a real understanding of the market requirements in stationary power. Dave, anything to supplement?
Yeah, just a couple quick comments. Coming into Ballard one year ago with a fresh eyes approach, my very first business trip was to Vertiv in Ohio, to see the tremendous amount of potential with stationary, not understanding the historical context and the focus perhaps on mobility, it has completely surprised us in terms of the customer interest. You have to break out stationary in a couple segments. There's small stationary, but there's really mid and there's large stationary. As I talked about it in my presentation, we have the right product portfolio.
The MegaBlock, which is 5 FCgen modules together, one containerized solution, of which we're shipping this year to a customer, a very well-known customer, is the proof point that there's a lot of interest in that product going forward and substantial customer interest for future modules to be shipped, MegaBlock modules to be shipped in 2024, 2025 and beyond. The ClearGen, the 1.55+ MW opportunity product that Randy mentioned with HDF, we're also seeing a lot of interest in that product for higher scale, large amounts of MW power. That's another area that has a significant amount of potential that could really drive revenue, really even to, through the latter half of this decade.
I want to punctuate the point again, we're in these different verticals, bus, truck, rail, marine, off-road, stationary. We see, you know, as we look out at 2030, growth in all of these market segments contributing to a very resilient business model. I think we probably will see an upside on the stationary power market side compared to our current plan. The interesting thing about a couple of these verticals, rail, marine, and stationary, even off-road, those four, is that, again, as Dave alluded to earlier, large systems. You don't need the volume as you do in the bus and commercial truck market to get the same type of revenue in those large market opportunities.
Thanks for taking my questions. I'm gonna oversimplify here, so stick with me on this, but if you think about your commercially available stacks and modules today, what, you know, of the 3x3 cost reduction initiatives are embedded in that cost structure today? Then, sort of forgetting the scale-up efficiencies, you know, what's gonna be the difference in that product cost in that next generation, and at, you know, what time frame should we expect to see that in actual sales, you know, for commercially available?
Sure. I'll start, and then I'll ask Kevin, if you wanna supplement at all at the podium, feel free. Just in terms of what's actually implemented today, I would say a very small portion is implemented today. You know, we've implemented new materials. We are introducing new materials. We're introducing new production processes. You'll see some of those production processes today. Some of them have just been optimized, but very low volume going through the facilities today. I would say a very low portion today, so you're gonna see significant cost reduction in the 2025 time frame, particularly as the materials get through. We get through our existing products and the inventory we have for those existing products, and start delivering new product with new materials and new processes. Yep.
Great. Thanks. Paul, you've been pretty quiet, so maybe I'll ask you a question.
Thank you.
$300 million of CapEx, you know, forget the timelines, forget the locations, but, like, is it 1 MEA facility? Maybe it's in China, U.S., or Europe. Like, what are the kind of big building blocks of that $300 million, without getting into, like, too many specifics, I guess?
Sure. Yep. I did reference in there that the $300 million, roughly 70%, was for production, call it $200 million-$210 million. We have announced an MEA and also a plate manufacturing line. We were also looking then at assembly facilities, you know, in one of the geographies as well, which will take up a lot, you know, a part of that capital allocation. The balance, roughly 30%, is all around product development. Test stations, as more products are developed, we wanna make sure we have the test stations and test them thoroughly. Other equipment needed in the lab for testing and for development. A small envelope of capital, then, for ERP systems and IT.
I should mention, too, I think it's worthwhile, because we do sometimes get the question about, you know, are we overspending? Are we, are we too far ahead of where the sales are? A lot of these platform customers, it's really important for them not only to understand our technology and how it works in their product, but they wanna make sure that we have the scale or will have the scale, because they're talking about, you know, not buying 10 products, they're talking about thousands. We have to be able to convince them.
These are very sophisticated buyers. We have to be able to convince them that we have credible plans to be able to manufacture at the volumes and support their programs aftermarket, you know, well into the future. Otherwise, there's no point in them, you know, interacting with us, right? Having those credible investments in place and being able to discuss that with them is extremely important.
Okay. Another question from the audience.
Thanks, Kate. Maybe a natural little segue here. With respect to your move to simplify your product line, can you just maybe walk us through, like, how your thinking evolved in order to kinda come to this decision? In terms of time and, you know, invested resources in order to lay this out, just maybe if you could give us a little bit more color on this transition?
Sure. Mircea, I might ask you to supplement as well. If you want, you can use the podium. I think what's important to understand is that we basically mapped the different verticals and what the requirements, particularly the power requirements, are for those different verticals. With that, we said: Okay, how can we rationalize our product suite going forward, so that we cover as much market as possible with as few products as possible? A significant amount of work, this was about a year effort to conclude on this, and the conclusion was these four products that Mircea profiled earlier, where we'll have small, medium, large, and extra large.
The fact that we designed them with modularity, you can put them together, and also, even within a product, there's some flexibility on how far up and down the power curve that product can go. I think a lot of effort went into this, including not just what does that mean from a stack perspective? Are there any limitations known or that need to be worked on from a balance of plant component perspective in order to achieve that type of rationalization? If you look at the diesel engine industry as an example, they have engines for all sizes, and that's the result of 100 years of work, right?
I think what you see in the battery industry, as well as in the competitive fuel cell landscape, is there were more this modularity approach. I think 50 years and 100 years out, when no one will remember what diesel was, and we're talking about fuel cells, I expect we'll have a much broader portfolio at Ballard at that time. This is the right approach from a capital efficiency perspective, to cover as much of the market as possible from a vertical and geographic market perspective, with modularity and flexibility within the power output ranges.
Thanks. Then maybe just a quick follow-up. You think you'll be able to, you know, maintain that value-add, customization aspect of your business while also kind of simplifying and, you know, getting the benefits of this standardization?
Yeah. I don't think there's a customization approach we're taking now, and there certainly won't be one in the future. It very much is focused on standardized core products that have the durability, safety, reliability, and cost dynamics that meet the market requirements. A lot of effort goes into assessing the market requirements, and this has been very dynamic over the last couple of years, and I think customers are still trying to understand what the market and customer requirements are. We take those market requirements, we translate them to product requirements, and develop a roadmap against those product requirements. I don't know if there's anything additional. Dave, you wanna add?
I think you summed that up perfectly, though. The only other thing that I would say is, again, the here for life, the mantra for Ballard, we're gonna continue to support our customers, make sure they have the right products, and then support them from a service perspective and training and all that goes with that. Again, another key differentiator versus our competition.
I just wanna highlight one important point. We've touched on it, in a couple of ways, but I'm not sure it was clearly stated. We acquired Arcola Energy, now Ballard Motive Solutions. The clear strategy there is twofold. Number one is to help customers that don't have in-house capabilities to take a fuel cell engine and integrate it into their powertrain and integrate it to their vehicle, to help them accomplish that. We have an example this year of a European-based bus OEM that has retained BMS to do just that. They didn't have the in-house capabilities. In some cases, they have the capabilities, but perhaps they're tasked doing other things. That's number one. Number two is a very exciting and potentially high-value outcome for Ballard.
This is where we look at how do we optimize the hybrid architecture of batteries and fuel cells for a powertrain? How do we effectively prescribe to the customer, based on their duty cycle and load profile and climatic conditions, all the stuff that Mark's loading into the TCU. How do we prescribe to the customer, which module should you have? How should that be operated? What's the operating strategy for that module and the battery pack and the DC-DC converter? Effectively, what you want is to operate the vehicle in a way, to operate the technologies in a way that don't stress and present failure modes to the technology. How can you, for example, avoid deep states of discharge on the battery? How can you avoid running a fuel cell at high power output for extended periods of time?
By optimizing this approach, what we see is higher efficiency, which translates to better fuel economy and better overall TCU. We see higher durability, both for the battery pack and for the fuel cell, which again, leads to better TCU. Really providing more value to customers than companies that don't have that optimization approach.
I would even just to add to that, and on some of our mature existing customer base, there is opportunities to optimize further the battery and the fuel cell. I know, Mircea, we're working a lot towards further improvement, and it's just another way in which we can add some value to our customers.
Okay, we'll go back to the online viewers. We have a question from Greg Wasowski. Kind of going back to the stationary power market and the different value propositions between fuel cell electric and battery electric vehicles, can you compare and contrast the infrastructure benefits or drawbacks between electric vehicles and fuel cell electric vehicles? Essentially, what are the grid constraints versus availability of hydrogen fuel infrastructure?
I love this question. You know, a few years ago, we were talking about tip-of-the-pyramid issues or tip-of-the-iceberg issues, I'll call it. Above the surface, we've been talking about the relative advantages of range and refueling and payload, these type of aspects. Below the surface, we have a number of other variables that are critically important. What's your cost of energy? Importantly, what's the certainty of your cost of energy? I think one of the things the hydrogen industry is gonna be able to deliver is not only low-cost, low-carbon hydrogen, but delivered at a certain rate. Think about if you have electrical input, you've got renewable energy, you can take that with a PPA at a fixed rate. You take your fixed capital costs, including your electrolyzers, you convert to hydrogen.
You can offer to a customer a fixed hydrogen rate, and to me, that's a compelling advantage compared to the volatility of traditional oil, natural gas supplies. So that's one other aspect below the surface that I think hasn't been fully appreciated yet. You have the challenges of scaling infrastructure, and this was dramatically punctuated to me when I visited Transport, sorry, TfL in London. They operate 9,000 buses in London. They typically have yards or depots with about 100 buses per yard or depot, all inside the city confines. You know, you introduce one battery electric bus, you know, you need a recharging station for that. It's a long recharge cycle. What happens when you take 30 or 50 or 100 buses at that yard, and they're all battery recharged?
Now they're coming into the yard at different states of discharge. They're completely disrupting the operating model, which before, first bus in would diesel refuel, get a wash, go to the back of the yard. First in would be last out in the morning. They're coming in at different states of discharge and effectively need to have different times for recharging. You need to have a number of recharging stations, and maybe you need a $5 million substation located beside the yard, because where it's located, there's congestion already on the grid. Transmission and distribution didn't contemplate high voltage recharging of 100 buses. This is the type of dynamics I think we're gonna see.
On the recharging or refueling infrastructure debate, it's very clear that as you scale up recharging for battery electric, it becomes more complicated and more costly. In low volumes, I think it's more compelling from a recharging infrastructure than hydrogen. As you scale up 50, 100 plus buses or trucks or large trains and marine vessels that consume significant fuel, now you're talking about recharging or refueling infrastructure that heavily favors hydrogen. Once you have your production of hydrogen, and that hydrogen is delivered to site, you have your storage and your refueling infrastructure on site, it's very easy to incrementally add storage and dispensing. That's a sharp contrast with the scaling implications of recharging networks. The other aspects below the iceberg surface is sustainability.
As you look at the value chain for critical minerals, rare earth metals, you think about recycling at end of use, you think about, as well, the security of where some of these materials are from a geopolitical perspective, and where the processing of these materials are from a geopolitical perspective. I think there's a very strong favoring of hydrogen from an ecosystem perspective. The last thing I'll comment on below the surface that hasn't been discussed, is really the cost reduction advantages that fuel cell technology has over battery electric. Battery electric has been significantly cost-reduced. A battery pack, 70% of the battery pack is rare earth, precious metals, nickel, lithium, manganese, cobalt, et cetera.
A small fraction of fuel cell engines, you know, less than 8% are platinum and precious metals. We have a much higher opportunity without the dynamic volatility of that rare earth, precious metal supply chain to drive costs down. I think when you factor all these things together, coming back again to above the surface, range, refueling time, payload, et cetera, there's a very compelling argument for hydrogen. Our view is that both will play a role. We're gonna have green electrons and green molecules to decarbonize mobility applications.
Thanks to Greg, he already submitted a follow-up question. The follow-up is, "Why should we have more confidence in hydrogen developing versus the grid improving?
Yeah, I think one of the things that we're gonna see happen between now and 2025, and 2030, is that the supply of hydrogen is gonna surprise well to the upside. When you go back to the so-called experts, including the IEA and others, that forecasted what was gonna happen for uptake in solar, and wind, and battery electric, and got them all wrong. They underestimated market adoption. I think we're gonna see the same thing happen with hydrogen. I can tell you, just based on meetings with participants across the value chain, the ecosystem, the Hydrogen Council, there is tremendous activity occurring, not just on renewable, but on the development of hydrogen projects in the U.S. and in other markets, not just Europe and China, but in Chile, in the Middle East, in Australia.
a number of markets like Canada, that are investing for green hydrogen production, and the scaling effect that will occur by 2030. The current forecast, 160 gigawatts by 2030. I think we'll all look back at 2030 with a much higher number realized, wondering why the estimates were so low. That, in my mind, is gonna be the key differentiator. Again, this is low cost, low carbon hydrogen in this, particularly in the U.S. market. $3 PTC for green hydrogen is a massive enabler for these initial projects to get off the ground, and for availability of that hydrogen to green, gray hydrogen industrial applications, and for incremental hydrogen supply for mobility applications. I think we're gonna see a pivot to cement and steel and other applications long term as well.
going back to the online questions coming through. looking at emerging markets, which segments do you see as most promising for the so-called segment? Construction, mining, agriculture, or others?
Yeah. I, we touched on First Mode as an example, with 35 modules in 2023, and then the 60 modules on the retrofit of 400 mining trucks. I would first and foremost say just that alone on mining is gonna drive tremendous revenue. I think from a construction perspective and the work that we're doing together with a very strong partner, Caterpillar, also has a lot of opportunity and some merit for success there. We're also talking about material handling. We're working with a couple of very large material handling customers, and even perhaps the light commercial duty market. I know we have slightly different opinions, perhaps, on that, but there are a lot of RFQs and a lot of interest that's going on in that segment, and we'll see how that progresses.
I wanna punctuate the mining market opportunity. This is very compelling. 7.5% of all global emissions annually come from the mining sector. About 3% of that, so almost half, is coming from vehicles used in mining, and mining haul trucks are a significant portion. Just the 400 vehicles from Anglo American Platinum is a massive market opportunity for Ballard by itself. Look at all the other mining companies that are now talking about hydrogen and looking at hydrogen. You know, their emissions are probably top of mind for their ESG investors. And, and this is the, I would say, the primary way they can help address a significant portion of those emissions.
Going back to some more of the online questions. Can you describe or provide an overview of the warranties and service-related obligations as you enter into an increasingly high number of deployments, kind of going to more of the service and warranty side of the business?
Yeah, I'll give a response, then maybe Mark or Randy, if you wanted to add anything. Number one, we have specific warranties and obligations that we quote to our individual customers. The warranty and the service durations are different for each vertical, and the customers also get an opportunity to extend the warranty and pay for a longer length of service of the warranty. The other aspect that I'd like to comment on, as we look at all these customer platforms and the substantial increase in the number of customers, and also the diversification from a regional perspective, we're significantly expanding our aftermarket sales group to be able to support our individual customers in each region for each one of our different segments.
Maybe just to add, we spend a lot of time at Ballard because we have such rich data, you know, with 3,500 vehicles in operation with Ballard technology, over 150 million km of on-road service, we get a lot of data. That informs our warranty model. We're very prudent, first of all, on setting warranty commitments. Secondly, as we think about service longer term, you know, I wanna use one of our customers as a really good example, and I'll get the numbers wrong, but they're directionally right. If you look at someone like New Flyer, maybe 20% of their revenue is from service, but more than half of their profitability comes from service.
This is the type of model we see, not in 2030, but 2035, 2040, as real volume gets out into the marketplace, that we start to see replacement parts and components service really adding to our gross margin, not just our revenue stream, but our gross margin profit pools as we look forward.
Excellent. A question from the audience.
Hey, Randy. If we think about Europe, and we go back to, you know, that 2020 timeframe when they put together these hydrogen plans that were very detailed and spoke about a lot of electrolyzer capacity increase, a lot of green hydrogen coming to market, it just doesn't feel like a lot of this has happened as was originally intentioned. From where you sit now, like, thinking about Europe in particular, because that's where there were these very well-defined plans, what gives you the degree of confidence that we're now gonna hit that inflection and start to see these, this capital come around to scale up this green hydrogen production?
Yeah, it's a good observation. What I would say was really challenging European hydrogen project developers was the definition of green hydrogen. You know, capital wants to invest knowing that the policies and the, whether it's tax treatment or whether it's subsidies, that they are gonna be available. I think, about two months ago, Europe announced the definition of this green hydrogen or renewable hydrogen. To me, that is a big unlock for the European market that we've been waiting on for some time. The other thing I would comment on is, yes, it's been delayed, but it's also been accelerated. What I mean by that is Europe originally had plans.
They were already aggressive, you know, with REPowerEU, and over the last 16 months, with energy security at top of mind, they now have increased their plans for low-carbon hydrogen for 2030. Also added to that a portion of that needs to be domestically produced in Europe as well, so having some supply chain resiliency.
In the past, you've talked about using M&A to enter into parallel markets or to access capabilities to help your customers. Are you still looking at any opportunities? Do you have a pipeline of M&A potential?
Yeah. I'll make a few comments. Paul Dobson can follow up as well. You know, what we've seen in the last 12 months is quite a change in the macroeconomic outlook, quite a change in the geopolitical environment, quite a change in the ability of companies to raise capital. With that, we thought it was prudent to deprioritize corporate development activities and effectively make sure we have the balance sheet strength to execute against the strategy on products, manufacturing capacity expansion, product cost reduction that's been outlined here today. Could we engage in an M&A opportunity? Yes, but that would have to be very strategic and would have to have positive implications for our economic model and financial model, including our cash position. Right now, deprioritizing opportunities on the corporate development front.
The other thing I'd comment on is we actually made quite a few investments in 2020 and 2021, including our acquisition of Arcola that I referenced earlier, including an investment in a key partner, Forsee Power, and a couple of hydrogen infrastructure funds. One of the objectives for 2023, and likely into 2024, is to make sure we're harvesting value from those investments. Paul, anything you wanna add?
No, I think that really covered it. I mean, you look at, you know, what is available, you know, what companies and what sort of CapEx match that with what we need as a company, whether it's, you know, manufacturing or product development. There simply aren't a lot of companies out there, you know, that are doing it better than we think we can do it ourselves. You know, combine that with, you know, what expectations are on valuation as well as, you know, their funding position. It isn't just the initial investment, it is probably subsequent rounds as well. It's, you know, it comes together to say, you know, we think if we can do it better ourselves and more efficiently, more efficient use of capital, we're much more likely to do that.
To Randy's point, though, that's not to say never, but I would say to find, you know, something that lines up with what we need at the right value, that's already generating cash, is probably, you know, unrealistic or unlikely to happen.
Hydrogen, hydrogen supply is improving, but the chicken and egg problem is still a problem. How do you help your customers to find the fuel that they need? Are you active with other supply or suppliers of hydrogen fuel, or do you consider getting involved in any offtakes in the future for hydrogen fuel, as an example?
Yeah. To be clear, where we are in the value chain is we design and manufacture fuel cell engines. We sell those typically to the vehicle OEMs, or in the stationary power markets, to systems integrators or to end users. Typically, when we're selling an engine to a vehicle OEM, that vehicle OEM is then selling a bus or a truck or a train, like Siemens, to an end user. We are a couple steps removed from the conversation with the end customer on hydrogen supply. What I would say, again, is that we focus on the market opportunities, initially, where you need only centralized or point-to-point refueling rather than a hydrogen refueling infrastructure.
Many of the end users, like transit operators, like transit fleet operators for commercial trucks, like operators of trains, they already have the capability to procure fuel or have on-site refueling infrastructure. It's already within their capability set and competency. What they need to do is translate that competency to a new fuel, and many of them have learned how to do that, you know, with natural gas and with other fuels as well. We are very rarely asked to provide hydrogen refueling infrastructure support, given our value chain positioning. That being said, we're very active in the ecosystem. We're partners with all of the industrial hydrogen gas companies. Think about Linde and Air Liquide or Air Products, as illustrative examples. Partners with all of the major energy players.
Think about Shell and Engie and Total and BP and Chevron, many of them, who used to be oil and gas companies, and all of a sudden, are molecule companies. We're seeing a lot of different players enter this market. To be clear, we are not putting any capital to work and have no plans to be an energy company. We think you need to have deep pockets and real EPC capabilities in order to. You know, the ability to have infrastructure to support that. That's not our business model, we are partnering with the ecosystem, and many of the end customers, end users, are already capable at talking to those counterparties directly.
I would just add, and Nicolas, our vice president of marketing strategic partnerships, you and your group do a very good job, I don't know if you wanna add anything, in terms of helping some of our newer customers get access to the availability of hydrogen that can help support their transitions.
Yeah. Yes, that's a really good point. We have a team we call a market development or market activation team, where we go to the end user. We talk to transit operators, to truck operators, and help them to deploy. We want to educate them that there's an alternative to battery electric vehicle, to battery electric bus, for example.
The first question they ask us is: Where do I get hydrogen? How do I deploy infrastructure? We have created that network of partnership with hydrogen refueling station, with hydrogen provider, with company who are doing studies on how do you put your depot to norms or to certification, so we can handle the maintenance of the fuel cell buses. We have this network. We have a list of references, of contacts, per region, per application. We help the end user in order to remove this, quite a major adoption barriers.
Thank you, Nicholas.
Excellent. We just have time for one more question. Randy, could you talk a bit more about the assumptions in the updated Total Addressable Market calculations? Is this contemplating a revenue perspective or income perspective over the coming years?
Yeah. One of the interesting things about the total addressable market is we didn't provide a number for stationary power, which is a massive market, as everyone knows. What I would say is that the total addressable market, as we think about the market size, and then think about what does that mean for electrification? What does that mean for fuel cell electrification? What does that mean for Ballard's participation in that fuel cell electrification? One of the things I think we did was we were very conservative, in my opinion, on the fuel cell assumption, as well as Ballard's market share. To me, those would be the areas where I see some upside.
Where I see some potential risk is the timing. You know, does a market, you know, develop as fast as we would expect it to develop?. Stationary is a good one, for example. The 23 TAMs could be pulled in a little bit. They could also be pushed out a little bit. It's, in my mind, the variability would be more around the timing as opposed to the values.
Excellent. Well, that wraps up our Q&A session. Randy, do you have any closing remarks before we wrap things up?
It's been a, I think a, hopefully an instructive, time here for you. Our objective was really to provide, really an increased or enhanced understanding, increased transparency on Ballard's business, and also an opportunity for you to see the, meet a number of the Ballard executive team members. Thanks again to those joining virtually, and, again, special appreciation to the covering analysts joining us here in person today. We look forward, for those here today, to a tour of our impressive facilities here at Ballard in, the Greater Vancouver area. Thank you.
Excellent. Thank you very much.