Westport Q3 Loss Narrows as Cespira JV Ramps Up
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Westport Fuel Systems’ loss narrowed in the third quarter, due in part to the company’s decision to recognize its heavy-duty truck operations as an equity investment on its financial ledger.
The Vancouver, British Columbia-based fuel system component manufacturer posted a net loss of $3.9 million for the most recent quarter, compared with a loss of $11.9 million in the same period in 2023, it said after the market closed Nov. 12.
Westport’s heavy-duty truck operations are now part of its Cespira joint venture with Volvo Group, the parent company of U.S. Class 8 truck makers Volvo Trucks North America and Mack Trucks. The business venture was formally established in June.
Cespira’s goal is to commercialize adoption of Westport’s high-pressure hydrogen direct-injection fuel system. The setup injects a small amount of ignition fuel under high pressure to enable compression ignition before hydrogen is added to the mixture.
The partners hope to sell the technology to other truck makers. Volvo will be the cornerstone customer and plans to begin testing trucks with hydrogen-powered internal combustion engines with its own customers in 2026. Commercial production of trucks with hydrogen ICE engines is expected to begin before the end of the decade.
We announced our Third Quarter results, read press release: https://t.co/aG93Q2Pkoq — Westport Fuel Systems (@WestportDotCom) November 12, 2024
Cespira posted an operating loss of $5.3 million in the three months that ended Sept. 30. The business unit reported a $3.7 million operating loss in the year-ago period, when it was still functioning under the Westport umbrella.
In the most recent quarter, Cespira earned revenue of $16.2 million, while Westport’s heavy-duty OEM segment — which included its HPDI business — posted revenue of $13.5 million a year earlier. The revenue increase was largely driven by an increase in HPDI systems sold, Westport said.
Westport noted that a significant order for HPDI systems it was expecting before Dec. 31 from Chinese truck and engine maker Weichai has yet to materialize. Westport said it does not anticipate orders for any significant additional volumes will be received before the end of 2024 and said it and Weichai are in discussions on an existing agreement between the two and what “the obligations of each party going forward” are.
Sceli
Westport CEO Dan Sceli said the first full quarter of operations at Cespira and cost-cutting measures allowed the company to trim its research and development costs as well as sales, general and administrative expenses by about 40% year on year.
Sealing the JV with Volvo was a big step for Westport, but Sceli admitted there were some clouds on the horizon in the hydrogen space.
“We acknowledge the slowdown in infrastructure development in the global market, which has tapered the adoption of automotive and industrial applications powered by hydrogen,” he said.
“The success of this market depends on the installation of infrastructure and the production of clean hydrogen, both of which have been slow to materialize. However, we are steadfast in our belief that hydrogen as a fuel will prevail — although gradual as opposed to immediate — and become a clean fuel source that is adopted worldwide,” he added.
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