Ceres is looking to expand in China through Weichai and Bosch

Ceres Power, a solid oxide fuel cell inventor, had its stock soar over 25% on the London Stock Exchange this morning, on news that it had agreed on preliminary arrangements for two joint ventures in China.

The Surrey-based company has expanded its cooperation with Weichai Power, China’s largest engine and power train producer, to include its shareholder Bosch. The three companies will work on technology licensing under the non-binding agreement:

Weichai, the largest stakeholder in a new China-based joint venture to manufacture low-carbon solid oxide engines for automobiles and stationary power, will license Ceres and Bosch’s know-how. Ceres will spend £20 million over time in exchange for a seat on the joint-board venture’s of directors.

Ceres will license its technology to a second Bosch-Weichai joint venture, which will produce stacks of solid oxide fuel cells, albeit it will not be a direct stakeholder. Ceres will be compensated with royalties.

Ceres expects to earn over £30 million in licensing fees from both businesses over the next three years, as stipulated in the original Weichai-Ceres deal in 2018. Once each JV begins functioning, minimum payments and yearly royalties will begin to flow.

In this morning’s statement, no production objectives were mentioned.

For both collaborations, detailed agreements are now being developed in preparation for the signing of formal contracts.

Phil Caldwell, CEO of Ceres Power, couldn’t be happier. “This exciting cooperation marks a significant step forward in Ceres’ objectives for the Chinese market, as well as a vital component of supplying global production capacity for our technology,” he added.

“We are confident in our cooperation with Weichai, and with Bosch’s expertise in industrialization and manufacturing, we have the potential to build one of the strongest fuel cell partnerships in the world.”

Bosch increased its stake in the Surrey engineer from 4 percent to 18 percent in January 2020.

Weichai Power, a Hong Kong-listed subsidiary of the Weichai Corporation, was founded in 2002. In 2019, it made a profit of 9.11 billion yuan (£ 1.06 billion) for its parent.

Ceres Power’s share price had climbed almost 24 percent to 642p by mid-morning on the London Stock Exchange, valuing the firm at £ 986 million.

Ceres’ solid oxide electrolyzers have a crucial potential production of hydrogen. The carbon-free gas is created by reversing the action of the fuel cells. Caldwell stated in September 2020, “Ceres has a plausible route to supplying hydrogen at scale.”