Mr. Larry Stapleton reports

BALLARD-AZURE AGREEMENTS A FIRST STEP IN ADDRESSING CHINA BUS MARKET OPPORTUNITY - MARKET UPDATE

Ballard Power Systems Inc.'s Sept. 26, 2013, press release announcing multiyear definitive agreements with Azure Hydrogen for a China fuel-cell bus program represents an important first step in addressing the substantial opportunity for clean energy buses in that country.

The key elements of these agreements are:

• Ballard will provide Azure with a licence, associated equipment and engineering services to enable assembly of Ballard's next-generation FCvelocity-HD7 bus power modules in China -- providing revenue of approximately $11-million over the next 12 months.
• Once Azure has established an ability to assemble bus power modules in China, the agreements provide for Ballard to be the exclusive supplier of fuel-cell stacks used in those modules.

As Larry Stapleton, Ballard's vice-president of sales, noted: "There are three broader points about this deal that are exciting, in terms of the potential.

"First, it represents further engagement in the China market, which is one of the biggest and fastest growing economies on the globe and a country that desperately needs to start deploying clean-energy power solutions. For Ballard, the big opportunities in China are zero-emission buses and telecom backup power systems.

"Second, this agreement adds licensing to our existing business model of product sales and engineering services. People knowledgeable about licensing know this will be high-margin revenue, generated from Ballard's existing intellectual property and fundamental know-how. That is quite different from lower-margin revenue associated with traditional product sales. And, given our strong IP [intellectual property] portfolio, the licensing model is one that we can pursue in other market opportunities going forward.

"Third, if Azure is successful, this deal could be a broader catalyst to the deployment of zero-emission fuel-cell buses in other markets around the world."