Hydrogen fuel cell maker Plug Power said on Wednesday Amazon.com has acquired the right to buy up to 23% of the company, in a deal giving the retailer powerful batteries that promise to speed up work in its warehouses.
Plug Power’s shares jumped 68.5% to $2.19 in heavy trading before the bell. Amazon’s shares were marginally higher.
Latham, New York-based Plug Power was valued at $319 million as of Tuesday’s market close. Amazon (AMZN) must spend at least $600 million over the life of its contract with Plug Power (PLUG) for its warrants to fully vest.
The world’s largest online retailer will equip forklifts at 11 warehouses this year with hydrogen fuel cells so they can lift more goods before running out of juice, as well as charge faster, Plug Power’s Chief Executive Andy Marsh said in an interview. Amazon will spend $70 million on the deal in 2017 and likely twice that next year, he said.
“Fulfillment centers are traditionally fairly low tech,” said Marsh, explaining that labor as well as physical space could be freed up by moving away from batteries requiring lots of attention.
While only a tiny fraction of forklifts globally are powered by hydrogen fuel, Wal-Mart Stores already uses Plug Power’s technology in its warehouses and is a top customer, according to Marsh.
The retailer is locked in a fight with Amazon for share of U.S. shoppers’ wallets.