02/11/2015 02:26 EST | Updated 04/13/2015 05:59 EDT

Ballard Power stock jumps 57% on Volkswagen fuel cell deal

Ballard Power Systems stock jumped 57 per cent today after it announced a deal with Volkswagen Group to transfer its fuel cell technology.

VW will pay $50 million for the automotive-related portion of fuel cell intellectual property assets Ballard previously acquired from United Technologies Corp. and another $30 million to extend an engineering services contract for next-generation fuel cell stacks.

Burnaby, B.C.-based Ballard has developed leading edge technology in critical areas of hydrogen fuel cell product design — including the membrane electrode assembly, plate and stack components as well as testing and integration.

It retains the rights to this technology for buses and non-automotive uses.

VW introduced four VW and Audi fuel cell concept cars at the Los Angeles auto show in November.

The concept cars — Golf SportWagen HyMotion, Passat HyMotion and Audi A7 Sportback h-tron quattro — used technology and components developed with the engineering support of Ballard Power Systems.

Ballard CEO Randy MacEwen hailed the “growing positive sentiment toward fuel cells within the automotive sector, along with the outstanding progress made to date in our work with Volkswagen Group on its fuel cell car programs."

Hydrogen fuel cells cars are considered a promising alternative as zero-emission cars to electric vehicles. Honda, Hyundai and Toyota also are exploring fuel cell cars.

Ballard has had an engineering contract with VW for the past two years, which has been extended until March 2019.

Engineering services accounted for about 40 per cent of Ballard's third-quarter sales.

The company provides backup power systems to telecom networks as well as for distributed power generation. It also provides fuel cell stacks for forklift trucks and buses.

Ballard stock was up 96 cents at $2.65.