Hexagon Purus, a company well-known for its hydrogen storage and distribution solutions, has been making significant strides in the rapidly growing green energy industry. Focusing on hydrogen cylinders, systems, and modules, the company has established itself as a key player in the global shift towards a sustainable energy future. However, a closer look at their recent Q1 2024 earnings call transcript reveals a fascinating hint of a concurrent strategy – the potential emergence of a "battery empire" in North America.

While their hydrogen activities have naturally been the center of attention, Hexagon Purus' Battery Systems and Vehicle Integration (BVI) segment, though relatively new, is showing promising signs of a forthcoming surge. This business unit, responsible for the production of battery systems and the complete vehicle integration of battery-electric and fuel cell electric vehicles for the North American market, currently contributes a modest 5% to the group's total revenue.

Projected Revenue Split - Hydrogen vs. Battery

The transcript from the Q1 2024 earnings call provides some crucial insights that suggest this seemingly small segment could be instrumental in Hexagon Purus' future growth. The company is gearing up for a substantial increase in BVI activity, fueled by the upcoming start of production for Daimler and Hino truck programs scheduled for late 2024. This shift is supported by the CFO's projection of a 70/30 or 80/20 revenue split between the Hydrogen Mobility and Infrastructure (HMI) and BVI segments by 2025.

Furthermore, the transcript reveals a critical piece of information: the current production capacity for battery systems is at an impressive 1,300 units annually. Considering the higher revenue associated with complete vehicle integration, which includes auxiliary modules, electrification components, and software, the BVI segment could be on course to generate a significant portion of the company's targeted NOK 4-5 billion revenue by 2025.

Strategic Implications of Battery Expansion

The strategic implications of this battery-focused expansion are significant:

A key question is whether this battery-focused expansion will negatively impact the company's existing hydrogen business. The answer, based on the information available, appears to be a resounding no. The hydrogen business is thriving, driven by robust demand for their distribution modules and systems. The expansion of the Weeze facility, dedicated to hydrogen infrastructure, further solidifies their commitment to this core business.

Instead of viewing the BVI segment as a competitor to the hydrogen business, it's more accurate to see it as a complementary force. This dual-pronged approach allows Hexagon Purus to leverage its expertise in both hydrogen and battery technologies, serving a wider customer base and enhancing its market position.

Hypothetical Revenue Projection (2025)

This analysis suggests that Hexagon Purus' battery strategy could be a game-changer, accelerating their path to profitability and potentially exceeding current market expectations. The coming quarters will be critical in validating this hypothesis as the company navigates the production ramp-up and reveals the full extent of its battery-driven ambitions.

"Fun Fact: Hexagon Purus' battery systems are not just for trucks! The company's expertise in battery technology extends to various applications, including buses and even aerospace."