ACCELERATING FUEL CELL PRODUCT ADOPTION

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2 Forward Looking Statements This presentation contains forward-looking statements that are based on the beliefs and assumptions of Ballard s management and reflect Ballard s current expectations as contemplated under section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such assumptions relate to our financial forecasts and expectations regarding our product development efforts, manufacturing capacity, and market demand. These statements involve risks and uncertainties that may cause our actual results to be materially different, including, without limitation, the rate of mass adoption of our products, product development delays, changing environmental regulations, our ability to attract and retain business partners and customers, our access to funding, increased competition, our ability to protect our intellectual property, changes in our customers requirements, and our ability to provide the capital required for product development, operations and marketing. Readers should not place undue reliance on Ballard s forward-looking statements and Ballard assumes no obligation to update or release any revisions to these forward looking statements. For a detailed discussion of the risk factors that could affect Ballard s future performance, please refer to our most recent Annual Information Form. OCT 2008 P A G E 2

3 Historically Automotive Centric Primary market focus High power density liquid cooled stack focus Turnkey Solutions Automotive power-train Nexa power module Primarily Internal Development Fuel cell components System components Ancillary hardware OCT 2008 P A G E 3

4 About Ballard Ballard is a recognized world leader in the development, manufacture, sale and servicing of PEM fuel cells Founded under the name Ballard Research Inc Began developing PEM fuel cells Full-scale prototype demonstration (P2 Bus) Formed automotive alliance with Daimler-Benz and Ford Launched world s first volume-produced commercial fuel cell product, Nexa Power Module 2008 Divested from automotive business to focus on near-term growth markets ISO 9001 / Registered Revenue (2007): $67M USD 2008 growth expected to be ~15% OCT 2008 P A G E 4

5 Ballard Profile CLEAN ENERGY FUEL CELL PRODUCTS OUR COMPANY About 500 employees World-leading R&D & manufacturing facilities Locations in Vancouver, Canada (HQ), Lowell, MA & Fujisawa, Japan OUR BUSINESS Design, manufacture, sale & service of hydrogen fuel cell products OUR CUSTOMERS System integrators and OEM s addressing end-user needs OUR FOUNDATION Technology leadership Production expertise Expanding go-to-market capabilities OCT 2008 P A G E 5

6 Featured Products Mark9 SSL liquid-cooled fuel cell (4-20 kw) Derivative of automotive fuel cell (liquid-cooled) Mobile, backup & power generation applications Mark1020 ACS scalable air-cooled fuel cell (300 W 3 kw) Air-cooled prototype stack technology Mobile, backup & power generation applications Mark1030 fuel cell (1 kw) Long-life, water-cooled stack technology Residential cogeneration applications HD6 Module (75 kw, 150 kw) Integrated module for hybrid bus integration OCT 2008 P A G E 6

7 Lines of Business *Private company owned 50.1% by Daimler, 30% by Ford, 19.9% by Ballard OCT 2008 P A G E 7

8 Materials Handling Market Addressable market estimated at 40-50% of $1.5B annual spend on lead acid batteries for these applications Focus Ramp up sales to existing customers Add Systems Integrator customers & OEM relationships Reduce product cost OCT 2008 P A G E 8

9 A Case Study Fuel Cells in Materials Handling Increased lift truck uptime Eliminate need to change batteries Quick refuelling vs. long battery charging Extended runtime Consistent power Longer run times & constant power level, relative to batteries More productive warehouse floor space Eliminate need for battery room Frees up warehouse and factory capacity Environmental benefits Zero emissions Eliminate need to handle, store, and dispose of lead & acid OCT 2008 P A G E 9

10 Elimination of battery changing Materials Handling Improved Productivity & Operating Cost Battery Powered Fuel Cell Powered Elimination of battery droop Battery Powered Fuel Cell Powered OCT 2008 P A G E 10

11 Materials Handling Early Adopter Profile Target end users for early adoption High throughput distribution centers or large manufacturers Operate large fleets (>30 trucks) Run multi-shift operation (2-3 shifts/day) National accounts / corporate decisions Key factors affecting ROI & payback time Hydrogen consumption & hydrogen price/kg Battery changing characteristics Labour rates Duty cycle / operating environment Payback time of 1-3 years achievable with today s fuel cell battery replacement units OCT 2008 P A G E 11

12 Three channels to market: Fuel Cell Battery Emulator Replacement for lead-acid battery Materials Handling Market Approach Same form factor, voltage, center of gravity as lead-acid battery, with benefits of fuel cell performance and run-time Low-risk change for end user, can implement into existing fleet Fuel Cell Battery Hybrid Small fuel cell trickle charges lead-acid battery Same form factor, voltage, center of gravity as pure battery, with extended run-time and no need to charge batteries Low-risk change for end user, can implement into existing fleet Integrated Lift Truck Forklift truck contains built-in fuel cell engine Removes constraints of truck designed around battery, removes constraints of fuel cell designed around battery Longer-term path, enables clean-sheet design approach OCT 2008 P A G E 12

13 Materials Handling Industry Snapshot Fuel Cell Manufacturers System Integrators Forklift OEMs H2 Logic A/S End Users Battery OEMs OCT 2008 P A G E 13

14 Backup Power Market Addressable market estimated at 30-40% of $2B annual spend on batteries & gensets Initial focus on wireless telecom Drivers Focus Regulatory-driven extended run time Tetra-standards based telecom networks in Europe FCC requirements for U.S. telecom networks Ramp up sales to existing customers; add Systems Integrator customers & OEM relationships Develop reformate-based solutions Reduce product cost OCT 2008 P A G E 14

15 Fuel Cell Power Generation Benefits Advantages and Benefits Lower cost of ownership for extended duration backup power Minimal maintenance relative to diesel generator sets or even batteries Small footprint and weight (ideal for constrained spaces such as rooftops) Excellent start-up reliability Better high-temperature tolerance (can reduce air-conditioning requirement relative to batterybackup) Zero emissions with hydrogen; low emissions with alternate fuels (no combustion by-products) Quiet operation OCT 2008 P A G E 15

16 Case Study - Light-Use Model Fuel Cell vs Batteries 10,000 7,500 Hydrogen 10,000 7,500 Methanol Cash Flow, USD 5,000 2,500 - (2,500) (5,000) 8 hours hours Cash Flow, USD 5,000 2,500 - (2,500) (5,000) 8 hours hours (7,500) (7,500) (10,000) (10,000) Time, years Tim e, years 10, , Propane 10,000 7,500 Natural Gas 5, ,000 Cash Flow, USD 2, (2,500.00) (5,000.00) 8 hours hours Cash Flow, USD 2,500 - (2,500) (5,000) 8 hours hours (7,500.00) (7,500) (10,000.00) (10,000) Time, years Time, years OCT 2008 P A G E 16

17 Backup Power Industry Snapshot Network Operators OCT 2008 P A G E 17

18 Residential Cogeneration Market Electricity and hot water for up to 1.8M Japanese homes per year (multi-billon dollar market) Drivers Focus Primary energy consumption reduced by 20-30% (annual savings to homeowner ~$600) subsidies total $110M Reduction of CO 2 emissions by 30-40% Launch V3 product in 2008, leading to start of commercialization phase in 2009 Assess new geographic markets Reduce product cost, increase life, improve reliability OCT 2008 P A G E 18

19 Installations - Japan Subsidized introduction of residential fuel cell Energy diversification Primary Energy and CO2 Reduction New Industry generation Over 3300 units installed by end of 2008 estimate 7800 METI request for US$ 70 mil to subsidize sales of 4,000 5,000 units in 2009 Cumulative units OCT 2008 P A G E 19

20 Cogeneration outside of Japan German National Innovation Program Lighthouse Projects. 140 million Euro for demonstrations until Danish cogeneration program to demonstrate 100 units in Korean government project to demonstrate 300 units in Targeting 100,000 units by OCT 2008 P A G E 20

21 Japanese Cogeneration Industry Snapshot Consumers OCT 2008 P A G E 21

22 What s Next? Complementary technology improvements lead to ease of integration and new opportunities Advanced batteries and super capacitors Power electronics, hybrid drives, DC/DC - DC/AC converters Fuel reforming Balance of plant components H2 pumps, humidifiers Hydrogen fueling infrastructure deployments for multiple products Investment in infrastructure for one project reduces fuel costs for additional projects in immediate area Multi-product deployments materials handling, APU s, backup power, peak power shaving Fuel cell stack cost reduction Near term market adoption drives volume cost reduction and path to new markets OCT 2008 P A G E 22

23 What s Next? Asking the right questions Don t ask: How can we make fuel cells replace the battery or internal combustion engine Ask: What new benefits do the unique operating characteristics of the fuel cell offer a new application OCT 2008 P A G E 23

24 New Markets: Rail Applications Catenary-free operation (CFO) for passenger rail has become a critical attribute for the transit system suppliers Fuel cell propulsion offers distinct advantages over diesel and 3 rd rail options There are synergies between the transit bus and rail / tram propulsion systems (HD6) Japan s JR East has incorporated two 80 kw automotive fuel cell engines into hybrid fuel cell train capable of a travel at a maximum speed of 100 kph (60 mph) for up to 100 km. Currently undergoing field trials in Yokohama s Kanazawa ward Ballard has supplied two P5 modules to Vehicle Projects for integration into a fuel cell/battery hybrid locomotive for demonstration in 2009 as: a switchyard locomotive in the Los Angeles basin and; a mobile back-up power source for military bases and civilian disaster relief efforts OCT 2008 P A G E 24

25 Summary Focus on accelerating adoption Reduce stack cost through volume production in near term markets Leverage low cost stack technology to address new markets with new system integrators and OEM s Questions? nick.kovics@ballard.com C: O: OCT 2008 P A G E 25