Ballard Power Systems Inc. · TSX:BLDP

Ballard Power Systems — Investor Day (February 2011)

38 slides from Ballard Power Systems's investor day presentation, Feb 22, 2011

1. Slide 1: Smarter Solutions for a Clean Energy Future

   INVESTOR & ANALYST DAY February 22, 2011 Smarter Solutions for a Clean Energy Future © 2011 BALLARD POWER SYSTEMS, INC. ALL RIGHTS RESERVED.

2. Slide 2: Forward Looking Statements

   Forward Looking Statements This presentation contains forward-looking statements, including: estimated revenue; cash operating costs, gross margins; adjusted EBIDTA; funding requirements; market growth projections; expected product and manufacturing development; expected product shipments; and antic

3. Slide 3: Table of Contents

   Table of Contents A. Putting Fuel Cells to Work B. Technology & Product Leadership C. Path to Profitability Smarter Solutions for a Clean Energy Future February 22, 2011 3

4. Slide 4: A-1 About Ballard

   A-1 About Ballard ƒ Total transformation 2007-09 (company founded in 1989) ƒ Listed on NASDAQ (BLDP) and TSX (BLD) ƒ Cash reserves of $74.4M (as of 12/31/2010) ƒ Market capitalization of ~$180M (as of 2/11/2011) MARKET FOCUS POSITION STRATEGY • Multi-market growth focus • Global leader in PEM fuel •

5. Slide 5: A-2 Product Portfolio

   A-2 Product Portfolio Fuel Cell S Stacks k ƒPower 500W‐2kW ƒ Power 2‐8kW ƒPower 4‐20 kW ƒ Power 100 kW ƒ Operating life 2,500‐4,000 ƒ Operating life 20,000‐ ƒ Operating life 8,000‐ ƒ Operating life >5,000 hrs hours 30,000 hours 12,000 hours ƒContract manufactured for ƒASP $650‐2,600/stack* ƒASP $2,8

6. Slide 6: A-3 The Transformation of Ballard: 2007-09

   A-3 The Transformation of Ballard: 2007-09 I. Shifted II. Re-Set III. Built Strong Strategic Focus Cost Base Liquidity Position ƒ From: Long term, high ƒ From: $75M in 2007 ƒ $100M raised through cost automotive fuel monetization cell technology ƒ To: current run rate of transactions: development ~$

7. Slide 7: A-4 2010 Performance

   A-4 2010 Performance ƒ Growth: 12-month Product Shipments Revenue Order Backlog ƒ Profitability: Gross Margin Adjusted EBITDA ƒ Strong execution in 2010: • Significant growth • Progress g towards p profitability y ƒ Momentum increasing in all four fuel cell markets Smarter Solutions for a Clean Ener

8. Slide 8: A-5 Multi-Market Growth Focus

   A-5 Multi-Market Growth Focus ƒ Multi-market focus provides: ƒ Commercialization timeline: • Greater revenue/margin potential… i l andd • Lower risk ƒ Fuel cell applications are expected to broaden considerably in the medium term ƒ Ballard focus will remain sharply on backup power, distributed gener

9. Slide 9: A-5 Backup Power Focus

   A-5 Backup Power ƒ Focus • Backup power for wireless telecom industry ƒ Addressable Market • Compelling value proposition driven by extended runtime & reliability at competitive lifecycle cost • Global addressable market is ~$1B+ ƒ Channels to Market • Dual access 1. Direct via Dantherm Power Networ

10. Slide 10: A-5 Backup Power 2010 Achievements

    A-5 Backup Power 2010 Achievements 2011 Outlook • Established direct channel through g • Significant g g growth Dantherm Power • Driving sales through Dantherm • Grew shipments 40% to 1,716 Power stacks • Continuing to build relationships • Sales to emerging system with indirect channels integrators

11. Slide 11: A-5 Backup Power Case Study – Direct Channel

    A-5 Backup Power ƒ Case Study – Direct Channel ƒ FCgen FCgen®‐1020ACS 1020ACS fuel ƒ Ballard SI and direct ƒ Fuel cell systems installed cell stack channel at off‐grid sites ƒ Low cost, air cooled ƒ Integration of fuel cells ƒ Used for primary power product facilitates into complete systems until th

12. Slide 12: A-5 Backup Power Case Study – Indirect Channel

    A-5 Backup Power ƒ Case Study – Indirect Channel ƒ FCgen®‐1020ACS ƒ Integration g of fuel ƒ Distributor ƒ > 250 systems fuel cell stack cells into installed on ElectraGenTM ƒSystem installation & Indonesian islands ƒ Low cost, air cooled systems customer support product facilitates ƒ 2 year payback

13. Slide 13: A-5 Distributed Generation Focus

    A-5 Distributed Generation ƒ Focus • Applications with available low-cost hydrogen in markets with FIT and/or SGIP support ƒ Addressable Market • Addressable market ~$3B+, based on ~1,000MW of by-product hydrogen available globally, primarily from chemical production • Also hydrogen from bio-gas (e.

14. Slide 14: A-5 Distributed Generation 2010 Achievements

    A-5 Distributed Generation 2010 Achievements 2011 Outlook • Delivered 1MW CLEARgenTM • “Building block” year system to FirstEnergy in Ohio • Commissioning of K2 Pure • Booked first CLEARgenTM system and product system t utilizing tili i b by-product d t shipments hi t to t RTE hydrogen – • Progressi

15. Slide 15: A-5 Distributed Generation Case Study – Direct Channel

    A-5 Distributed Generation ƒ Case Study – Direct Channel ƒ Complete CLEARgen™ system powered by ƒ Fuel F l cellll system t will ill convertt by‐product b d t FCgen®‐1300 fuel cell stacks hydrogen from bleach production into clean load‐following electricity ƒ High efficiency, liquid cooled product wi

16. Slide 16: A-5 Material Handling Focus

    A-5 Material Handling ƒ Focus • Battery replacement in forklift trucks trucks, in North American high volume distribution centres & factories ƒ Addressable Market • Plug Power indicates ~380 ~380,000 000 trucks of an installed base of 1.7M trucks in North American market • Market potential >$1.5B ƒ

17. Slide 17: A-5 Material Handling 2010 Achievements

    A-5 Material Handling 2010 Achievements 2011 Outlook • Extension of supply • Expect doubling of shipments agreementt with ith Plug Pl Power P i li in line with ith Plug Pl 2011 through 2014 guidance • Plug distribution agreement • Continuing Plug momentum: with Raymond Corporation ¾ 3rd PO from Sysc

18. Slide 18: A-5 Material Handling Case Study

    A-5 Material Handling ƒ Case Study ƒ FCvelocity®‐9SSL fuel ƒ GenDrive fuel cell ƒ Leading North ƒ 85 GenDrive cellll stack t k systems t for f forklifts f klift A American i forklift f klift f klift deployed forklifts d l d att OEM manufacturing plant ƒ Highly durable ƒ Improved in South Carolina pr

19. Slide 19: A-5 Bus Focus

    A-5 Bus ƒ Focus • Government Go e e t supported o ted zero-emission e o e i io transit t it programs o • Canada, UK, Brazil, Germany, USA, The Netherlands ƒ Addressable Market • Emerging clean bus segment of multi-billon dollar transit bus market – over 375,000 new buses manufactured annually ƒ Chan

20. Slide 20: A-5 Bus 2010 Achievements

    A-5 Bus 2010 Achievements 2011 Outlook • World’s largest fuel cell bus fleet • Important market for 2011 – large deployed in Whistler, Whistler BC revenue opportunity, opportunity driving higher margins • Sales to Tuttotrasporti (Brazil), Transport for London (UK), APTS (The • Shipments planned for

21. Slide 21: A-5 Bus Case Study

    A-5 Bus ƒ Case Study ƒ FCvelocity FCvelocity®‐HD6 HD6 fuel cell ƒ Bus OEM with SI ƒ Transit authority in Oslo, Oslo power module capabilities Norway ƒ Balance‐of‐plant ƒ Reputation for innovation ƒ Public & government components fully in the transit industry pressure to improve air integrated qualit

22. Slide 22: A-6 Summary – Putting Fuel Cells to Work

    A-6 Summary – Putting Fuel Cells to Work ƒ Transformation completed in 2009 ƒ Multi-market focus to drive revenue, mitigate risk ƒ Strong St execution ti in i 2010 ƒ Momentum in all four markets Smarter Solutions for a Clean Energy Future February 22, 2011 22

23. Slide 23: B-1 PEM Fuel Cells

    B-1 PEM Fuel Cells ƒ Ballard ll d lleverages lleadership d hi in i PEM across multiple l i l markets… k • Compact & scalable • Fast start-up and low temperature • Fuel flexibility • Rapid response to changes in power demand • Efficient,, reliable and safe • Durable across wide variety y of duty y cy

24. Slide 24: B-2 Unrivalled IP Portfolio

    B-2 Unrivalled IP Portfolio ƒ Extensive R&D development work over past 15 years – including joint development programs with Daimler & Ford • Over 2,000 patents / applications owned and licensed in strategic areas • MEA designs • Plate designs • Catalyst Coated Membranes • Gas Diffusion Layer Materia

25. Slide 25: B-3 2011 Product Cost Reductions

    B-3 2011 Product Cost Reductions ƒ Key Drivers: 1. Design g : Reduced platinum loadings, use of Ballard GDL material, … : Enhanced durability : Higher power per cell 2. Manufacturing : Continuous MEA, automated assembly, … 3. Supply Chain : Greater standardization of components across platforms : Dr

26. Slide 26: B-3 FCgen-1020ACS Product Cost Reduction

    B-3 FCgen®-1020ACS Product Cost Reduction ƒ 2008-10 • Automated sealed MEA assembly • Diffusion layer integration • Reduced stack assembly and test time ƒ 2011 • Higher manufacturing yields : Improved p GDL processing p g consistency y : Modified MEA lamination conditions • Seal and plate integratio

27. Slide 27: B-3 FCgen-1300 Product Cost Reduction

    B-3 FCgen®-1300 Product Cost Reduction ƒ 2010 • Developed new long-life, long-life low-cost liquid-cooled platform • Introduced continuous catalyst-coated membrane production ƒ 2011 • Shift to: : Continuous MEA lamination : Automated stack assembly New low-cost stack for large-scale distributed gene

28. Slide 28: B-3 FCvelocity-9SSL Product Cost Reduction

    B-3 FCvelocity®-9SSL Product Cost Reduction ƒ 2008-10 • New MEA technology with 50% reduction in catalyst • Hardware cost reduction of 76% • Reduced stack assembly & test time ƒ 2011 • Higher yields from semi-continuous manufacturing p materials • Reduction in MEA-related scrap • Material volume pri

29. Slide 29: B-3 FCvelocity-HD6 Product Cost Reduction

    B-3 FCvelocity®-HD6 Product Cost Reduction ƒ 2008-10 • Greater power density and durability leveraging improved automotive fuel cell stack technology • Transition from P5 to HD6 module platform ƒ 2011 • Higher durability MEA • Material volume pricing • Balance of plant component cost reduction & vol

30. Slide 30: B-4 Product Roadmap

    B-4 Product Roadmap 2008 2009 2010 2011 2012 2013 2014 V1 – Yield Improvement V2 – Reduced Pt Loading, Seal on Plate V2 Variant – 2X Life 1310 V1 – Low Pressure, Low Cost 1310 V2 2X Life 1330 V1 – Reformate Capable 9SSL V2 – Discrete Process Service 9SSL V4 – Reduced Pt Loading, Continuous Process P

31. Slide 31: B-5 Summary – Technology & Product Leadership

    B-5 Summary – Technology & Product Leadership ƒ Leveraging our competitive advantage in PEM ƒ A sustainable leadership position in technology and product development p p ƒ Delivery of 20-25% product cost reductions in 2011 Smarter Solutions for a Clean Energy Future February 22, 2011 31

32. Slide 32: C-1 Ongoing Disciplined Financial Management

    C-1 Ongoing Disciplined Financial Management ƒ Aggressively focus on growth and profitability ƒ Three overarching priorities: 1. Aggressive revenue growth 2. Continued improvement in gross margin 3. Maintain cash operating cost base at current run-rate … while hil focusing f i on maintaining i t i i

33. Slide 33: C-2 Gross Margin

    C-2 Gross Margin ƒ 2010 Progress • 16% in 2010; 3-point gain from 2009 and 6-point gain from 10% in 2008 • Significant improvement in Q4 2010 to 24% - reflects shift in product mix ƒ 2011 Focus • Continued improvement towards target of 30-35% in 2011,, with biggest gg g gains in 2H 2011 : Product co

34. Slide 34: C-3 Cash Operating Cost Base

    C-3 Cash Operating Cost Base * ƒ 47% reduction in cash operating ~$75 cost base (despite consolidation 47% of Dantherm Power in 2010 and stronger C$) ~$40 ƒ Maintain current cash operating cost run rate of ~$40M by: • Leveraging government research funding • Focusing product development • Optimizing

35. Slide 35: C-4 Revenue Growth - Guidance

    C-4 Revenue Growth - Guidance ƒ 39% growth in 2010 – met Revenue guidance $100 ƒ Guidance >30% in 2011 $84.5 • Trajectory: ~65% of FY revenue $75 $65.0 in 2H 2011, with successive revenue improvements p each $46.7 $M $50 $ quarter $25 • Mix: : Fuel Cell Products to grow to $0 ~70% of FY revenue … le

36. Slide 36: C-5 Adjusted EBITDA - Guidance

    C-5 Adjusted EBITDA - Guidance Adjusted EBITDA $0 2009 2010 2011F ƒ 33% improvement in 2010 Minimum ƒ Project >40% improvement in ($15) Adjusted EBITDA in 2011 ($15.6) • >30% revenue growth ($M) • Improved gross margins ($30) ($26.0) • Cash operating expense base maintained at ~$40M ($39.0) ($45) *

37. Slide 37: C-6 Liquidity & Cash Reserves

    C-6 Liquidity & Cash Reserves ƒ $74.4M cash reserves at 2010 year-end, with no bank debt ƒ Significant progress in Cash Flow From Operations (CFO) in 2010 • 30% improvement in 2010 (excl. Dantherm Power and negative FX impacts) - met guidance ƒ Remain focused on maintaining strong liquidity • Tight

38. Slide 38: C-7 Summary – Path to Profitability

    C-7 Summary – Path to Profitability Multi‐market ggrowth focus & first‐mover strategy gy Technology & product leadership in PEM fuel cells Optimized cost base (~$40M cash opex base) Aggressively moving towards profitability Strong liquidity position ($74.4M cash reserves at end‐2010) Management trac

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