Three numbers tell the desperate state of fuel cell truck maker and hydrogen fuel provider Nikola. Dozens of others apply, but these three suggest the clock is ticking faster on whether the company can survive.
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By the numbers …
Nikola’s notable numbers: 135, 29.07% and 88.
135
The Phoenix-based company on Wednesday laid off about 135 employees, roughly 15% of its workforce, amid a persistent cash crunch with little room to sell more stock as its price slides. Nikola laid off 270 employees in June 2023 and 100 in November 2022.
“To extend our runway, we are adjusting and rescaling our staffing needs,” CEO Steve Girsky said in a statement. “This is a difficult, but necessary, decision and we thank those team members who helped build Nikola and wish them the best moving forward.”
29.07%
At 29.07%, Nikola has the third-highest percentage short interest – investors betting the share price will fall as it has consistently since Nikola executed a 1:30 reverse stock split on June 25. The cosmetic move to artificially boost the share price fended off delisting from the Nasdaq, which requires a price of $1 or higher for 30 consecutive days.
Such moves rarely succeed. Before the reverse split, Nikola traded at around 30 cents a share. On a split-adjusted basis, it sells for about half that.
Short selling occurs when an investor borrows a security and sells it on the open market, planning to repurchase later for less money. It is a high-risk, high-reward strategy that has plagued Nikola almost since it went public in June 2020 during the SPAC frenzy. Girsky led the special purpose acquisition company that brought Nikola public.
88
The one number that could be considered a positive – at least in isolation – is that Nikola delivered 88 fuel cell electric trucks at wholesale in the third quarter. No one else delivered any.
The number fell within the company’s predicted range of 80 to 100 sales. It gave a shot of adrenaline to the stock price, which jumped nearly 20%. The next day, it dropped 6.5% and has been mostly declining since.
The company posted record revenue in the second quarter. Generous purchase incentives for zero-emission trucks – mostly from California’s Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project – juiced interest in the only hydrogen-powered fuel cell truck currently for sale.
But Nikola’s costs of making and selling the Class 8 Tre cabover trucks – estimated at more than $1 million each – far outstripped the $380,000 in revenue per copy.
“Nikola needs around $500 million per year to fund its operations. Every year it needs to find new investors to finance its operations. So far, either through share issuance or private investors, the company has been able to cope and survive,” long-term and dividend growth investor Luca Socci wrote on the investor site Seeking Alpha.
Ongoing dilution and burning the furniture for warmth
Dilution of shareholders, most recently through the reverse split they approved in June, has left Nikola bereft of options to raise capital. Banks are not an option. Citibank collects a 2.5% commission for backing at-the-market stock sales. With only its Coolidge, Arizona, plant property, machinery and equipment as assets, insufficient collateral exists to borrow against.
Nikola sold and leased back its plant and Phoenix headquarters in earlier cash-raising moves. Nikola has some intellectual property. But it mostly assembles key components purchased elsewhere. The Iveco S-Way is the basis of the truck. Robert Bosch makes the fuel cells. Batteries come from Proterra, now part of Volvo Group following Proterra’s bankruptcy.
That makes an acquisition of Nikola on favorable terms unlikely because so little is unique from a technology perspective.
Girsky’s comment when Nikola announced Q3 unit sales on Oct. 2 was intended as a positive. But it pointed to Nikola’s greatest challenge. It cannot sell enough trucks at prices to support a viable business.
“Despite overall market headwinds, Nikola remains focused on our mission to pioneer solutions for a zero-emission world, and we’re doing it one truck at a time,” Girsky said.
Rolling tech lab Shell Starship may have run its course
BIRMINGHAM, Ala. – The Shell Starship 3.0, the pointy-nosed, sleekly styled technology test bed built on a Navistar International chassis in 2018, took trucking media for ride-and-drives on Tuesday at Barber Motorsports Park, demonstrating at slow speeds its latest powertrain advance – the Cummins X15N natural gas engine.
“Going to the natural gas engine, fuel economy went down just a little bit, but natural gas is cheaper and it burns cleaner so that’s a huge benefit,” Starship driver Brian Rector told me during a couple laps. “It didn’t lose any power, switching between the natural gas and the diesel.”
Cummins thinks the 15-liter big bore X15N could create a breakthrough in natural gas adoption following tepid adoption of its 9- and 12-liter natural gas offerings criticized for lacking the power and torque needed for long haul. The engine runs on petroleum-based compressed natural gas or renewable natural gas made from landfill gasses and dairy waste.
Off-the-shelf technologies push efficiency
The Starship 3.0 NG achieved 9 miles per gallon during an 840-mile loop of California under a full-80,000-pound load. Aggressive aerodynamic enhancement including tire-covering body skirts, automated gap-closing wings between cab and trailer, and video mirror cameras in place of bulky side mirrors all contributed. A typical diesel truck averages 6.4 mpg.
More importantly, the third – and possibly final – version of the Starship continued to improve freight ton efficiency, a measure of how many tons of freight have been moved from one spot to another against how much fuel was used.
“From the second-generation truck to the third-generation truck, it was a little bit of improvement but not as huge as the previous ones,” Kevin Otto of the North American Council for Freight Efficiency told me. NACFE has analyzed runs on each of the Starship iterations.
Otto pointed to the use of lightweight materials and low-rolling resistance tires for the most recent gains.
Shell not competing with SuperTruck
Unlike the SuperTruck programs sponsored by the Department of Energy in cost-sharing arrangements with truck makers, Shell uses combinations of off-the-shelf technologies to improve truck performance, which translates to lower total cost of ownership.
But its interest is not completely selfless. With each update of the Starship, Shell assesses the effectiveness of its latest oils and fluids such as its Rotella natural gas engine oil and Spirax transmission and axle oils.
With the more modest gains from Starship 3.0, Shell is noncommittal to a fourth generation. The path to big efficiency gains would come through an alternative powertrain, either a battery-electric or a hydrogen fuel cell. Truck OEMs participating in SuperTruck 3.0 are testing fuel cells to reach 75% reduction in greenhouse gas emissions.
Since Shell has no intention of making trucks, has the Starship run its course?
“That’s one of the questions we ask ourselves with every iteration of the Starship,” Heather Duffy, a Shell marketing specialist, told me. “I think we’ve learned a lot over the six years of the program. There’s a lot more to learn. One of the things we’re learning is that some of that technology is just not there yet.”
Briefly noted …
Volvo Trucks North America has delivered 570 battery-electric Class 8 trucks since starting production in late 2020.
Mobile generator maker ANA Inc. intends to purchase six Hyliion fuel-agnostic generators, the latest sign that Hyliion may succeed in its pivot to low-emission stationary power.
International Truck is offering its S13 integrated powertrain in its HV Series of work trucks, expanding the new engine from on-highway to vocational uses.
Republic Services is purchasing 100 McNeilus Volterra electric-powered refuse trucks from Oshkosh after successful tests of a small number of the trucks.
Truck Tech Episode No. 86: Daimler Truck creates a full-scale hydrogen station for pilot versions of GenH2 fuel cell trucks
That’s it for this week. Thanks for reading and watching. Send your feedback on Truck Tech to Alan Adler at aadler@firecrown.com.