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Westport (WPRT), Scania Team Up for Hydrogen Research Project

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Westport Fuel Systems (WPRT - Free Report) recently announced that it will commence a research project with Scania to apply its high-pressure direct injection (HPDI) 2.0 fuel system using hydrogen to the latter’s latest internal combustion engine (ICE). Preliminary test results will likely be out in the second half of 2021.

Swedish truck and bus maker — Scania — is part of Volkswagen's (VWAGY - Free Report) Traton Group truck arm. Scania is convinced that hydrogen will play a crucial role in shaping the future of the automotive sector. The truck maker is highly optimistic about the project which is in sync with its goal of catering sustainable transportation solutions to the public. The company plans to use the outcomes and learning from this research project to provide premium offerings to its customers in the upcoming period.

Canada-based Westport is a developer, manufacturer and supplier of advanced alternative fuel systems and components. The company’s technology and products enable the usage of gaseous fuels, such as natural gas, propane, renewable natural gas or hydrogen in combustion engines. The use of natural gas instead of petroleum-based fuel reduces emissions and costs.

The adoption of stringent environmental regulations, mandating the reduction of carbon emissions globally, has augmented opportunities for Westport to boost revenues and market share. The company is banking on its market-ready products and customer base to capitalize on the opportunities to drive growth.

A few months back, Westport announced that Weichai Westport Inc. (“WWI”), the company’s joint venture in China, has secured the certification for its 12-liter engine integrated with the HPDI 2.0 fuel system from the Ministry of Ecology and Environment of China. This certification enables WWI to promote and sell heavy-duty natural gas engines equipped with the HPDI technology to various truck original equipment manufacturers in China. It marks a milestone in Westport’s commitment to bring HPDI to the China commercial vehicle market and is considered material to the company’s success. Apart from this, the company anticipates greater HPDI volume in the upcoming months, as it views the heavy-duty market much more guarded against the rising coronavirus cases as compared to the light-duty market and aftermarket.

Last November, Westport inked a next-generation HPDI development contract with its current Europe-based original equipment manufacturer partner to apply Westport HPDI 2.0 to an updated base engine platform. The program will incorporate enhanced features for the resulting HPDI 2.0 fuel system, as well as certification to meet Euro VI Step E emission regulations that will be effective 2024, helping the company develop a niche in the Europe heavy-duty truck market.

The latest research project will aid Westport, which already has an expertise in working with gaseous fuels, to further advance in its forte. The use of hydrogen in an internal combustion engine, along with the company’s HPDI fuel system, will offer a cost-effective pathway to slash carbon emissions from transportation. Furthermore, this overwhelming evolution of its patented technology will provide a viable and competitive alternative to fuel cells.

Nevertheless, the potential market for the technology in this latest project is still under speculation until proven otherwise. However, with clean energy gaining momentum with each passing day, the Westport stock is the big winner today.

Zacks Rank and Key Picks

Westport currently carries a Zacks Rank #4 (Sell). Shares of the company have soared 245.5% in the past year compared with the industry’s rally of 19.2%.

Better-ranked stocks in the same sector include BRP Inc (DOOO - Free Report) and Magna International (MGA - Free Report) , both of which sport a Zacks Rank of 1 (Strong Buy), presently.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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