John Sheridan, Ballard's president and chief executive, said his company has signed an engineering services deal with the German automaker for the development of fuel cells to be used in demonstration cars.
"The announcement of this research agreement with Volkswagen Group, a recognized global leader, is a major step for Ballard both strategically and financially," Sheridan said.
"Ballard's focus with Volkswagen in this new automotive fuel cell research program will parallel our continuing work in commercial fuel cell markets for backup power and material handling — enhancing product durability and performance while radically reducing product costs."
Juergen Leohold, head of group research at Volkswagen AG, said Ballard's expertise will help his company move ahead faster with new power transportation technologies.
"I anticipate accelerating our automotive fuel cell program as a result of this collaborative effort, which will bring together additional fuel cell skills and expertise in both organizations," Leohold said.
The four-year contract, which includes an option for a two-year extension, is worth between $60 million and $100 million.
The work will include the design and manufacture of a fuel cell for use in Volkswagen HyMotion demonstration cars.
Ballard engineers will lead key areas of fuel cell design along with testing and integration work.
Fuel cell technology accelerating forward
Guy McAree, director of marketing for Ballard, in Burnaby, says the cost and performance of the cells are now competitive with other eco-friendly technologies.
"Everything from being able to turn the fuel cell on and off frequently, like you do with a car, being able to run it in cold conditions, hot conditions and so on," he said.
"Over the last 10 years tremendous advances have been made in the technology itself."
McAree says Ballard fuel cells are 60 per cent cheaper than they were three or four years ago.
Ballard made a name for itself as a maker of fuel-cell powered buses and rode high hopes for its automotive fuel cell business.
However, adoption of the technology was slow and Ballard sold its automotive fuel cell business to Daimler AG and Ford Motor Co. in 2008.
The company instead shifted its focus on its core commercial markets including forklifts, backup power and co-generation though it continued to provide services to the automakers.
Shares in Ballard closed up 48 cents or 55 per cent at $1.35 on the Toronto Stock Exchange.