(CN) – Shareholders claim in a class action that fuel-cell maker Ballard Power Systems overstated the number of its electric buses operational in China and misled investors about the viability of future business opportunities, causing its share price to fall 20 percent on the news.
Ryan Bishop filed a class action against Ballard, CEO Randy MacEwan and CFO Anthony Guglielmin in federal court.
In September 2016, Ballard announced the deployment of 12 electric fuel cell-powered buses in the city of Foshan, China.
It touted that the zero-emission buses would be able to drive 300 kilometers without recharging.
In 2017, Ballard announced cooperative ventures with two Chinese companies.
It partnered with Guangdong Nation Synergy Hydrogen Power Technology Co. to open a hydrogen research center in China’a Guangdong province and entered into a collaboration with Zhongshan Broad-Ocean Motor Co. that included a $28 million equity investment in Ballard.
But an on-the-ground report released by Spruce Point Capital Management found Ballard overstated the operations of its partners Synergy and Broad Ocean.
For example, “Ballard and local press releases indicate that [Broad Ocean customer] Foshan has produced 114 FCV buses…[but] a Foshan employee claimed that far fewer buses have been produced to date and only 11 are licensed.”
Further, investigators found that there is only one refueling station in Foshan to serve the electric buses and the costs of operating the station were prohibitively expensive.
Despite Ballard’s claims that its buses are in operation in Foshan, Spruce’s investigators found only one bus without license plates that remained idling for the full two-hour visit.
On this news, Ballard shares fell 20 percent from $3.79 to $3.02 per share. Shares have since somewhat recovered to close at $3.56 on February 1. The Canadian Press reported on January 29 that Ballard disputed Spruce’s findings, stating the report “contained a number of unsubstantiated forward-looking statements, assumptions and opinions, as well as other statements and assertions that are simply false.”
The class seeks damages due to Ballard’s alleged exaggerations and misrepresentations of its electric bus project in China.
The class is represented by Laurence Rosen in Los Angeles.