Plug Power, a fuel cell manufacturer, already powers the forklifts at Wal-Mart. Now it will be powering Amazon’s forklifts too. This is of strategic nature, since adopting fuel cell technology could help Amazon free up human resources and space.
Plug Power Inc, a hydrogen fuel cell manufacturer has disclosed, Amazon.com Inc has acquired the right to buy upto 23% percent of the company stake.
Plug Power has also disclosed that it will be supplying batteries to Amazon for its power forklifts that are extensively used in its warehouses.
With the news hitting the market, Plug Power’s shares shot up by 73% to $2.25 in heavy trading. Amazon’s shares bumped up by 1.9% to a record high of $923.72 before settling down to $909.28.
As of Tuesday’s close, Plug Power was valued at $319 million. For its warrants to fully vest, Amazon will now have to spend at least $600 million over the life of its contract with Plug Power.
Amazon has chosen Plug Power’s fuel cells to equip its forklifts at eleven of its warehouses in 2017. This will allow the forklifts to not only lift more but the fuel cells have a faster charging rate as well, compared to traditional batteries, said Andy Marsh, Plug Power’s Chief Executive in an interview.
He went on to add, in 2017 Amazon is likely to spend $70 million on this deal and is likely to spend the double of that next year.
“Fulfillment centers are traditionally fairly low tech,” said Marsh, explaining that moving to fuel cells could help Amazon free up labour as well as physical space, since traditional batteries require more human intervention and space compared to fuel cells.
Fuel cells manufacturers had been the darlings of Wall Street in 2014, as the technology was expected to be widely adopted by forklifts and electric vehicles. However, with the technology failing to gain traction, investors lost interest in it.