First off, Nanalyze had done a "More than you may care to know" article May 28:
All About Nikola Motor Company’s Stock Offering
In our recent guide to investing in fuel cell stocks, we reflected on how the hydrogen economy hasn’t quite matured and – according to Elon Musk – shouldn’t ever mature. Battery-powered vehicles seem to be working out just fine, so why reinvent the wheel? At least one company disagrees with Mr. Musk. Nikola Motor Company thinks that the killer use case for hydrogen fuel cells is semi trucking. And they may become publicly traded soon. (Nearly all of the below information was taken from the VectoIQ SEC filing, and a small portion from the Nikola Motor Company website.)
About Nikola Motor Company
Founded in 2015, Nikola Motor Company has raised over $500 million in funding so far from investors that include Bosch and the U.S. Department of Energy. Nikola is a self-described “vertically integrated zero-emissions transportation systems provider” whose core offering surrounds two types of Class 8 semi trucks.
BEVs and FCEVs have identical e-Axles and similar truck designs, representing significant synergies in the manufacturing process between the two. The main focus of this article is around FCEVs, which comprise a key piece of Nikola’s business model which is to offer a bundled lease, providing customers with the FCEV truck, hydrogen fuel, and maintenance for a fixed price per mile.
- Battery-electric vehicle (“BEV“)
- Hydrogen fuel cell electric vehicle (“FCEV“)
According to ACT Research, total cost of ownership for a diesel truck (excluding driver wages, benefits, and insurance), is typically broken down into cost of fuel (approximately 50%), purchase or lease payments on truck (approximately 22%), and repairs and maintenance (approximately 28%). By leasing an FCEV truck from Nikola, the entire cost of ownership is bundled into a single payment with per-mile granularity. (Each lease is for 7 years or 700,000 miles, whatever comes first.)
As for performance, the FCEV trucks take 10-15 minutes to charge, have a range of 500-750 miles, and come with some really cool features like a digital cockpit, regenerative braking, and torque vectoring which allows control of each wheel independently through drive-by-wire.
The reason why Nikola may succeed where others have failed is their planned network of hydrogen fueling stations....MUCH MORE
Hydrogen Fuel Cell Fueling Stations
Historically, investing in alternative fuel vehicles represented a high risk for both original equipment manufacturers (OEMs), and customers due to the uncertainty of the fueling infrastructure. Existing fuel providers have little incentive to develop an alternative fuel infrastructure due to a lack of known demand. The inability to tackle both sides of this equation has prohibited hydrogen from reaching its potential. Nikola’s approach aims to solve “the chicken or the egg” problem.
In our previous piece on investing in fuel cell stocks, we briefly mentioned a Norwegian firm, Nel ASA, which has more than 3,500 cost efficient electrolyzers installed around the globe. Nikola has partnered with Nel ASA to build their hydrogen filling base station which is expected to have a daily production capacity of 17,637 lbs. and will be capable of supporting approximately 210 FCEV trucks per day.
The initial plan for the station rollout begins with an eight-ton pilot station accessible to the Anheuser-Busch brewery in Van Nuys, California. (Construction is expected to begin in 2021.) From there, they plan to build up to 10-12 additional stations in California. These stations will supply fuel for their launch customers that have dedicated routes in California, a state that’s offering incentives to build out hydrogen fueling infrastructure and deploy zero-emissions vehicles, including opportunities for funding along major freeway corridors. These stations are expected to be in operation by 2023 (according to Nikola’s financial projections).
Through 2024, Nikola expects to incur up to $1.0 billion in capital expenditures related to hydrogen stations. Each station is expected to take 1.5 to 2 years to complete, and the average total cost per station to be $15 to $20 million, depending on station location.
How Many Trucks Has Nikola Sold?
The answer is none. As of December 31, 2019, Nikola had reservations for 14,000 Nikola Two FCEV trucks, all of which are subject to cancellation by the customer until the customer enters into a lease agreement. (While no deposits were taken for the reservations, the majority of order book represents large corporate customers with over 100 or more trucks.) If the company is able to sell or lease every truck which has been reserved, that would translate to $10 billion in revenues. (Nikola does not plan to begin production of their trucks until next year at the earliest.)
One customer name that comes up a lot is Anheuser-Busch (BUD) which plans to lease up to 800 Nikola Two FCEV trucks (Nikola’s investor deck calls the agreement with AB “binding,” whatever that means). If you recall, Anheuser-Busch and Nikola made the news last November when a semi truck full of Budweiser beer was delivered with zero emissions to be drunk by a bunch of people who could care less how their watered-down beer arrived.
Keep in mind that Nikola’s initial rollout is in a State that looks upon green stuff extremely favorably. And we’re not just talking about puffing the magic dragon. In The Golden State, the Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project incentives reach as high as $165,000 for a Class 8 BEV and $315,000 for a Class 8 FCEV. Other companies are also eyeballing this space....
And it was the lack of sales/leases where cash actually flowed into Nikola that was the factor tipping the scales toward don't post. It is not our type of stock. First off, a lot of hype-n-tout, and secondly:
You don't have to be in every deal!You can always come back to it when they've chalked up some revenues.
Last week the Los Angeles Times published "Electric truck maker Nikola looks like Tesla 2.0 — except even riskier".
While yesterday Bloomberg's headline was "A $26 Billion Truck Company With Zero Revenue Just Surged 103%".
We'll keep tabs on developments but from a distance.
Today in regular way trade the stock was up another $6.46 (+8.82%) to $79.73 while after hours it was all over the place, trading as high as $93.00 and as low as $71.00 before settling at $72.90 down $6.83 (almost exactly the day's upmove) from the close.
