Nikola Retools After Wild Ride, Keeps Focus On Big Rigs, Hydrogen And Range

Upstart electric truckmaker Nikola is quietly overhauling operations in the months since outspoken founder Trevor Milton resigned over accusations he lied about its products and technological capabilities. The company is trying to focus solely on getting battery- and hydrogen-powered semis to customers on time, opening hydrogen stations to keep them running and offering the market’s longest-range pollution-free trucks. 

This week, ahead of its fourth-quarter results announcement (after the close of Nasdaq trading today), it unveiled a revamped truck lineup focused on the shorter-range Tre, a battery-powered truck developed with European commercial vehicle partner Iveco due late this year, a new fuel cell version of Tre coming in 2023 that will go 500 miles per fueling and a modified, long-range Nikola Two sleeper truck that will offer up to 900 miles of range per hydrogen fueling. While the Phoenix-based company announced it was ending the Badger pickup truck program in November 2020 after a partnership with General Motors fell through, it’s also ended an electric trash truck program and suspended work on power sports products, a military ATV, side projects Milton that championed.

“Our priorities are the battery truck, the fuel cell truck and the hydrogen. Those are the three things we’re trying to deliver. Everything else is a distraction,” CEO Mark Russell tells Forbes. “That doesn’t mean we’re throwing things away. But we’re not allowing any distraction from those three objectives.”

Russell and the company still have work ahead to win over skeptics and investors in the wake of a September 2020 report by short-seller Hindenberg Research alleging fraud at Nikola, centered on Milton’s public comments, that hammered its share price and sparked reviews by the Securities and Exchange Commission and Department of Justice. Since the company is still a year away from generating significant revenue, to regain credibility it critical that Nikola keep business targets clear and hit product timelines, says Wedbush equity analyst Dan Ives. 

“We believe most of the negative catalysts we were fearing have now played out in the market with a more balanced risk/reward on the name looking ahead with some light now at the end of the tunnel,” Ives said in a research note. “We still believe the company’s EV and hydrogen fuel cell ambitions are attainable in the semi-truck market. Importantly, we also believe in a Biden Administration and Blue Senate the green tidal wave domestically will be massive around EV/hydrogen endeavors over the coming years and could significantly benefit and accelerate Nikola and its Arizona factory footprint build-out ambitions.”

“Our priorities are the battery truck, the fuel cell truck and the hydrogen. Those are the three things we’re trying to deliver. Everything else is a distraction.”

Milton had styled himself as a transportation industry disruptor in the mold of Elon Musk, with audacious claims for Nikola’s proprietary technology. And though there’s no bigger hydrogen skeptic than Musk, Nikola’s vision for the fuel to power heavy-duty vehicles has been dramatically amplified in the past year by competing plans by industrial giants including Daimler, Volvo Group, Toyota, Hino, Hyundai, Cummins, General Motors, Navistar and rival startup Hyzon Motors (which announced plans this month to go public via a SPAC merger valued at $2.6 billion). That’s because of a growing consensus among many manufacturers, including Nikola, that batteries will be a good solution for shorter ranges, up to 300 miles, while hydrogen is more appealing for long-range and fast refueling. 

“We will certainly need both technologies,” says Volvo Group CTO Lars Stenqvist. Along with short-haul trucking, batteries are a good option for a range of heavy vehicles, including trash trucks and service vehicles, he says. “If you take fuel cell applications, then you come from the other angle–when you’re really demanding long haul, really long driving distances, in cases where you don’t come home in the evening and so cannot rely on your own charging infrastructure. It’s in those applications that we really believe that fuel cell big trucks will serve a purpose.”

Knocks on hydrogen have been that it’s primarily sourced from natural gas, meaning that while it’s a zero-emission fuel when powering a vehicle (producing only water as a byproduct) making it creates carbon emissions (albeit less than compared to the use of diesel, gasoline or natural gas). The other problem is it’s more efficient to charge up batteries with electricity than to use that electricity to make hydrogen, which in turn is reverted into electric power for propulsion. 

Yet as ever greater amounts of electricity become available from large-scale wind and solar projects, the ability to make “green” hydrogen from water and renewable power eliminates the fuel’s carbon penalty. Relatively little hydrogen made in that way is currently available, though Nel Hydrogen, a Nikola partner that’s providing electrolysis technology, estimates it can produce low-cost hydrogen from renewable sources at large scale by 2025 at a cost of just $1.50 per kilogram, well below current fossil fuel prices.

Hydrogen power systems can offer greater range than batteries because of weight savings, says Jason Roycht, Nikola’s head of fuel cell electric vehicles. “An advantage we have is, once we package (the fuel cells) and integrate them into these vehicles, adding another 100 miles doesn’t come at a linear rate like it does in batteries,” he says. “On the hydrogen side, that extra 100 or 150 miles comes at hundreds of pounds, not thousands of pounds of additional battery.”

In fact, range targets for both the fuel cell version of Tre and the 900-mile Two may eventually get even better, Russell says. 

“I’m personally not satisfied with that. The number one selling natural gas truck in Europe which Iveco makes, by the way, is a 1,600-kilometer truck–1,000 miles. That’s the number one seller,” he says. “There’s now something like 200 natural gas stations in Europe. Pretty good coverage, and yet people still need the longest range they can get. We know the market needs a long-range truck. So I’ve been pushing the team to figure out how to get more hydrogen on board and increase our efficiency.”

Nikola shares fell 3.9% to $20.33 in Nasdaq trading at 2:25 p.m. in New York, ahead of the quarterly results release. They’re up more than 30% so far this year.