Nikola has long billed itself as a leading designer and manufacturer of hydrogen-electric semi-trucks. But the Phoenix-based company appears to have been overtaken by rival Hyzon Motors, slipping into a pack with several other truck manufacturers such as Cummins, Hyundai, Toyota, Daimler and Volvo.

Nikola has been pressured to streamline its product line in order to compete. The move follows dwindling cash reserves and the company’s share price falling to single digits—after hitting an all-time high of $93.99 in June of last year, briefly giving it a market value greater than US auto giants Ford and Fiat Chrysler—following a barrage of bad press associated with legal issues facing its founder and former CEO Trevor Milton.

"We do not deem anyone working towards our same goals of building a cleaner future for generations to come as a competitor" Winkelmann, Nikola

The firm’s core businesses are battery-electric vehicle (BEV) and fuel-cell electric vehicle (FCEV) versions of its short- and medium-haul Tre semi-truck; the FCEV long-haul Two; and hydrogen fuelling infrastructure, which Nikola views as pivotal for the sale of its trucks by lowering the cost of hydrogen fuel and overcoming the chicken-and-egg problem associated with it.

During its second-quarter earnings call in early August, Nikola slashed its revenue estimate for the year to $7.5mn compared with a previous estimate of $15-30mn. Nikola now expects to produce as few as 25 BEV Tre semi-trucks compared with 50-100 previously, due to the global shortage in computer chips and auto parts.

“The entire automotive industry is facing a global parts and material shortage, and the situation has only gotten more acute over the last 90 days,” Nikola CEO Mark Russell said during the call. This is to be the first revenue and sales for the seven-year old company.

Trucking wars

“Hyzon Motors is leading the charge,” Daniel Ives, managing director of equity research at Los Angeles-based investment bank Wedbush Securities, tells Hydrogen Economist. “As of now, all the rest, including Nikola, are one-to-three years behind Hyzon in bringing hydrogen-electric semi-trucks to market.”

Bernhard Winkelmann, global head of energy technology and product development at Nikola, played down rising competition in the FCEV arena in response to questions from Hydrogen Economist,

“In order for us as a society to transition from carbon based fuels to alternative fuels, we will all need to work together,” says Winkelmann. “Replacing diesel as the fuel of choice today with hydrogen is a monumental task that no company can manage on their own. We need everyone to participate. Therefore, we do not deem anyone working towards our same goals of building a cleaner future for generations to come as a competitor.”

Strategy shift

Nikola has taken several actions over the past year to streamline its product line and focus on its core businesses, including meeting targets for the sale of its FCEV semi-trucks—second half of 2023 for the Tre and sometime in 2024 for the Two.

“As of now, all the rest, including Nikola, are one-to-three years behind Hyzon in bringing hydrogen-electric semi-trucks to market" Ives, Wedbush

In the fourth quarter of last year, Nikola and GM cancelled development of the electric-powered Badger pickup truck shortly after the automaker backed out of plans to take an 11pc stake in the truck maker, and Nikola announced the discontinuation of its BEV refuse truck programme with Phoenix-based Republic Services. In the first quarter, Nikola also cancelled its powersports division, which included electric watercraft and an all-terrain vehicle.

During the company’s fourth-quarter earnings call, near the end of February, Russell indicated Nikola would save up to $700mn of capex through the cancellation of the Badger pickup truck, while the upfront development costs of the BEV refuse truck had “ballooned up over $200mn” and the project’s timeline had been pushed out by 12-24 months. Regarding the latter, Russell says “that additional time and resource needed to be dedicated to the programme would have distracted us from executing on our core deliverables.”

“The scaled down plan allows Nikola to focus its resources on its semi-trucks, which is especially important given rising competition and the company’s recent issues,” says Wedbush’s Ives. “The timelines for their hydrogen-electric trucks look credible.”

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Author: Vincent Lauerman