This week, we chase storm clouds gathering for electric pickup trucks not wearing a Ford blue oval, speculate on who a big customer at Plus might be and review how Daimler Truck is setting the stage for its independence.
Storm clouds for electric pickups
Now that Ford Motor Co.(NYSE: F) has revealed the F150 Lightning electric truck, it is — or should be — panic time for startups eyeing the battery-powered commercial pickup segment.
At the top of the list, with arguably the most to lose, is Lordstown Motors Corp. (NASDAQ: RIDE). The de-SPACed startup plans to start building Class 1 electric pickups at a former General Motors plant late this fall.
Lordstown (LMC) already has attracted Securities and Exchange Commission scrutiny and daggers from short seller Hindenburg Research, which deconstructed the company’s claims of 100,000 preorders and alleged other shady dealings.
But its biggest threat to LMC’s viability comes from Ford, which has sold more pickup trucks than any company on the planet for the past 44 years. For 40 of those years, it was the best-selling vehicle of any kind.
The F-150 is the profit engine for the Dearborn, Michigan-based automaker. Like college football helps pay for other less-popular sports, F-Series profits help cover the cost of the rest of the lineup. Given Ford’s size, scale and know-how, it is practically unbeatable in the pickup space.
“I think that there’s little or no chance that Lordstown is going to have any market share of any significance,” Guidehouse Insights principal analyst Sam Abuelsamid told Truck Talk. “The F-150 has a $12,000 cheaper base price; it has a service network; it’s compatible with all the stuff that Ford truck owners already use.”
Dire assessment
A more dire assessment comes from Wolfe Research analyst Rod Lache, who downgraded LMC stock to “underperform” following the Lightning reveal. He set a price target of $1 a share.
From a PR perspective, LMC shares got a boost when the company announced a week of factory tours, presentations and test drives of the Endurance pickup in June. It is billed as the world’s first all-electric commercial pickup. But will it live up to its name?
The Lightning reveal on Wednesday evening is backed by a national TV campaign pointing to its spring 2022 launch. That marketing muscle and Wolfe’s dour projection led LMC shares 15.28% lower Thursday to $9.70. In premarket trading Friday, they were down another 5.14% to $9.14.
Calling out LMC is obvious since it markets itself as a commercial entry. Where does the Lightning leave other electric pickups like the Tesla Cybertruck and the Rivian R1T?
History may help answer that. The Detroit 3 have long dominated the full-size pickup truck segment. Even as Japanese and other Asian automakers wrested passenger car leadership away from the former Big Three in the1980s and ’90s, they have yet to make serious inroads in full-size pickups.
Detroit manufacturers Ford, Ram and GM sold 2.29 million full-size pickups in 2020. Toyota, Honda and Nissan sold a combined 174,000.
One bit of irony: GM invested both cash and property (its former Lordstown Assembly complex) in LMC. GM’s own full-size electric Chevrolet Silverado is coming in 2023 or 2024.
Who’s that customer?
Autonomous trucking software developer Plus finally got its long-rumored SPAC deal with Hennessy Capital on May 10, setting it up to be the second startup to go public after TuSimple’s successful initial public offering in April. Deep inside the Plus investor deck (page 35 to be exact) is a vague description of what might or might not be a big deal.
An unnamed customer that evaluated multiple autonomous driving software developers chose Plus as its provider of autonomy-enabled trucks in 2019. It signed a master purchase agreement (MPA) in January with the promise of getting at least some of 1,000 PlusDrive units between February of this year and 2023.
The MPA includes a term sheet that requires the mystery customer to purchase 10,000 PlusDrive units in exchange for a fully vested stock warrant for up to 20% of Plus shares. Few fleets come close to needing so many retrofits. One name comes to mind.
Amazon Smile?
Amazon (NASDAQ: AMZN) recently agreed to purchase renewable natural gas (RNG) from Clean Energy Fuels (NASDAQ: CLNE). As part of the deal, it got a warrant to purchase up to 19.99% of Clean Energy shares.
The fine print of the Plus deal contains all of the expected language about how it might not happen and mentions that no definitive warrant agreement has been entered yet.
The fracking truth
Startup hybrid driveline maker Hyliion Holdings (NYSE:HYLN ) is partnering with frac sand hauler Detmar Logistics LLC to start the the oil and gas industry servicer on a five-year path to electrifying its fleet. Detmar ordered 10 Hyliion Hybrid Electric units for retrofit on its Class 8 Volvo models. More orders may follow if the first conversions work out.
Hyliion, which touts its coming ERX Hypertruck as capable of achieving negative net-zero carbon emissions, thinks it can help Detmar clean up the part of the fossil fuels industry that requires ground transportation.
Flaring at oil and gas extraction sites is one of the largest greenhouse gas-emitting practices in the industry. Capped and captured, the emissions can be made into the negative net-zero renewable natural gas fuel that Hyliion wants to use.
Virtual roadshow
Daimler Truck gave some strong hints this week of what it will look like as a stand-alone company following its spinoff from Daimler AG and listing on the Frankfurt Stock Exchange later this year.
Among the business goals described in a virtual roadshow-style event on Thursday, the new company is targeting double-digit operating margins by 2025 to close its profitability gap with rivals Volvo AB (OTC: VLVLY) and PACCAR Inc. (NASDAQ: PCAR).
Daimler will do what it takes to target benchmark performance in every region, according to CEO Martin Daum, who recently signed a contract extension to lead the new entity. That includes Daimler Trucks North America, which provides much of the current Daimler Truck AG’s profits through the market dominance of the Freightliner brand.
In a presentation, Daimler Truck described plans to reduce fixed costs, capital expenditures and research development spending 15% by 2025 compared to 2019. That includes $366 million in personnel costs reductions by 2022. Look for a greater focus on more profitable heavy-duty trucks. One sign of that is the recent outsourcing of medium-duty engines to Cummins Inc. (NYSE: CMI).
Daimler has a fuel cell manufacturing joint venture with rival Volvo that the Swedish truck maker paid $700 million for a 50% stake. That reduces Daimler Trucks’ outlay for hydrogen-powered vehicles that both it and Volvo plan to produce in the second half of the decade.
The rest of the story
Autonomous trucking software startup TuSimple threw a little shade on partner Navistar during its first-quarter earnings call, saying its order for 25 new trucks expected in March won’t arrive until June or July. Truck Talk asked Navistar if it was experiencing other delays in delivering trucks because of a well-chronicled microchip shortage and other supply chain disruptions.
“TuSimple placed its order in January, a time at which the order board was already seeing significant lead time,” a Navistar spokeswoman said. “The delay has been amplified by TuSimple’s request for major modifications to the order.”
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That’s all for now. See you in two weeks.
Alan