Nikola Tries to Ignite Market for Its Hydrogen Fuel-Cell Trucks -- WSJ
5:30 am ET October 1, 2022 (Dow Jones)
By Bob Tita
As Nikola Corp.'s founder stands trial on securities-fraud charges, a revamped management team is pushing to make the company the first to market hydrogen-powered commercial trucks in the U.S. -- and to overcome production and credibility challenges that have weighed on its shares.
The seven-year-old company's first battery-powered electric trucks rolled off the assembly line this year, and around 300 are expected to be built by the end of 2022. Nikola said it plans to begin producing heavy-duty trucks powered by hydrogen fuel cells next year. The Arizona-based startup said it has orders for about 1,500 trucks in total for its battery and hydrogen fuel-cell models, designed to pull semitrailers with freight.
Nikola's current order volume is far below the 14,000 hydrogen fuel-cell truck orders the company reported in 2020 when investors' optimism soared over Nikola's potential to dominate the market for electric heavy-duty trucks as Tesla Inc. had done with electric passenger cars. Nikola's orders at the time were mostly nonbinding, and the company was years away from having the manufacturing and hydrogen-fueling capacity in place to support that many trucks. Nikola's stock price, which has been falling for months, recently sank to a new low below $4.
Trevor Milton, who founded Nikola in 2015 and served as its CEO until 2020, captivated investors and other executives with ambitious forecasts of $10 billion in potential revenue from its early orders. Nikola merged with VectoIQ Acquisition Corp., a special-purpose acquisition company, and went public in the summer of 2020. The company's valuation soared, at one point surpassing Ford Motor Co. as Nikola's stock price reached a high of $79.73.
Shortly after the stock's debut, investors began questioning the company's processes and the timing for turning orders into revenue. A short-seller investor's report in September 2020 decried Nikola as an "intricate fraud," and said Mr. Milton exaggerated the company's technology. Nikola disputed the fraud accusations, but Mr. Milton resigned as executive chairman later that month.
Nikola in late 2021 agreed to pay $125 million to the Securities and Exchange Commission to settle allegations that it defrauded investors.
In July 2021, the Justice Department charged Mr. Milton with securities fraud and wire fraud, accusing him of misleading investors. He pleaded not guilty, and his trial in a New York federal court began in September.
The company, with new leadership, is looking to recapture momentum by making steady progress on its plan to distinguish Nikola from other electric-truck manufacturers by offering leases on hydrogen-electric trucks that include the hydrogen fuel. Nikola said it expects to acquire low-cost hydrogen through partnerships with producers and resell it at prices that are competitive with diesel.
"The unique proposition that Nikola brings is that, as we introduce the trucks, we will also introduce the hydrogen-fueling infrastructure to support those trucks," said Pablo Koziner, who was promoted in August to president of Nikola's commercial business.
The trucking industry has long been interested in hydrogen's potential as a lighter-weight alternative to batteries. Hydrogen fuel cells create electricity to power a truck's electric motor from a chemical reaction between hydrogen and oxygen. But there currently is limited availability to fill up trucks with clean hydrogen made from zero-carbon or low-carbon processes.
Under CEO Mark Russell, who took over in June 2020 and plans to retire in January, the company has taken a more restrained approach to disclosing orders that it can fill with its nascent production capacity. Nikola reported just over 1,000 orders for its hydrogen truck in April. Anheuser-Busch Cos. signed up for 800 of those trucks as part of Nikola's lease program.
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