Editor’s Note: Clarifies comment from Spitz on liability issues for hydrogen-fueled trucks.
This week, we look at insuring hydrogen fuel cell trucks, Nikola’s patent infringement case against Tesla — is there still a case to make? — and Volvo Construction Equipment and LEGO: They’re at it again, but this time, it’s the toy inspiring the real vehicle.
A hydrogen conundrum
At critical mass, hydrogen-powered fuel cell trucks promise elimination of greenhouse gas emissions as long as the hydrogen comes from renewable sources like solar or hydropower.
But there is a more pressing issue. How do you insure a fuel cell truck, like the Hyzon Motors-converted Freightliner Cascadia that Total Transportation Systems Inc. is testing?
At $500,000 or more, a fuel cell truck is up to four times as expensive as a comparable diesel model. And the white-hot invisible flames of rising hydrogen requires a dash-installed kill switch to stop the flow of hydrogen in case of a crash. Such leaks are extremely rare. Tank construction is robust enough to deflect a bullet or other intrusion.
But who is going to write policies for these trucks that most manufacturers see as a part of the solution to zero-emissions long-haul trucking? Hyzon said its fuel cell truck falls under the same insurance as a diesel truck and that safety ratings for individual components do not come into play.
“Our information is that existing commercial vehicle policies cover H2 vehicles — in our experience, there are no exceptions that exclude H2 vehicles,” a Hyzon (NASDAQ: HYZN) spokeswoman said.
‘Almost no visibility’
Still, insurability it is going to come up eventually.
“Insurers are by nature retroactive-looking. So they are looking at their last five or 10 years of results in order to drive rates and policies and coverage for the next five to 10 years,” Mike Dorfman, co-founder and COO of Koffie Labs, a Brooklyn, New York-based digital trucking insurance startup, told me.
“They have almost no visibility around the actual equipment that they’re insuring.”
Truck crashes, they know. Nuclear verdict payouts contribute to what Dorfman said is about 40 consecutive quarter-over-quarter premium increases for owner-operators and fleets of up to 100 trucks.
“For larger fleets they’re writing insurance based on the amount of mileage that a fleet is doing, or the amount of revenue and an estimated number of power units that they’re running in order to achieve that mileage or revenue,” he said. “Beyond that, they don’t really know what equipment is on the road for that carrier.”
Limited service network and expensive repairs
That means either guessing at the cost to insure a fuel cell truck, or basing the premium on the underlying equipment, such as a Cascadia, which to the untrained eye doesn’t look all that different regardless of the powertrain.
Reid Spitz, co-founder and COO at High Definition Vehicle Insurance Inc., said the insurance industry is evaluating the best ways to cover hydrogen-fueled heavy-duty trucks.
“These trucks contain significantly more expensive technology with a limited service network,” he said. “Ultimately, the lack of insurance capacity may be more attributable to the increased difficulty and cost of repairing a hydrogen-fueled truck than an increased risk of damage or injury to third parties.”
Added Dorfman: “They’re going to probably end up frustrated with the price because they see all of these benefits to having this new truck. And the insurance company is going to take the opposite view: ‘We don’t know anything about this. We’re going to give it a higher rate than the things that we’re familiar with.’”
More time for Nikola
A federal judge is giving Nikola Corp. until January to explain why its patent infringement suit against Tesla Inc. should go forward. The case has already been closed administratively, but U.S. District Judge James Donato in San Francisco said he’s giving Nikola another chance.
Donato told Nikola on Sept. 29 that it had “dropped the ball” in its case against Tesla over design cues in the since-cancelled Nikola One, which the company said Tesla improperly used on its Class 8 Semi electric truck. Tesla has since redesigned its truck, production of which is delayed until late 2023.
“Nikola’s ostensible reasons for not responding to the court’s orders are not particularly compelling,” the judge wrote in an Oct. 18 order. “The case will not be dismissed at this time for failure to prosecute, but that may change if Nikola does not move this case forward to resolution in an efficient and timely manner.”
Nikola (NASDAQ: NKLA) said it does not comment on litigation.
Bloomberg reported that Nikola asked for more time in part because Trevor Milton, the co-founder and former executive chairman who started the case against Tesla, is under federal indictment in New York for fraud.
Milton is seeking to have his trial, currently set for April 4, 2022, moved to Utah, where he lives, or Arizona, where Nikola is headquartered. Milton, the largest shareholder in the company despite selling millions of shares this year, is free on $100 million bail.
Behind the Workhorse recall
Typically, a recall of 41 vehicles would not rate news coverage. But when it is a company’s total production, as in the case of Workhorse Group’s battery-electric delivery vans, an exception can be made.
What exactly was the defect in the vans? It’s hard to say.
Workhorse (NASDAQ: WKHS) determined that the trucks were sold without documented confirmation that they comply with all applicable federal motor vehicle safety standards. FMVSS non-compliance equates to an increased risk of crash or injury.
According to the chronology of Workhorse’s report to the National Highway Traffic Safety Administration, new CEO Rich Dauch asked his staff to provide evidence of FMVSS compliance shortly after he replaced Duane Hughes on Aug. 1. Apparently unsatisfied, Dauch retained an engineering consulting firm to inspect vehicles still in the Union City, Indiana, plant.
A second look-see by another engineering firm found the same discrepancies as the first. Workhorse leadership told NHTSA that the first consultant, Engineering Answers LLC, had advised Workhorse about certain noncompliances in 2019 and 2020.
Dauch halted production of the C-650 and C-1000 vans on Sept. 22, five days after Workhorse filed the recall paperwork. The NHTSA recall number is 21V-731.
Workhorse told NHTSA it doesn’t have specific fixes for the trucks. A spokesman did not respond to a question about whether the company would buy back the trucks from customers.
Life imitating art
Volvo Construction Equipment has licensed many of its designs to LEGO over the years. Now the situation is reversed.
A LEGO Technic toy kit is being developed into a real working machine.
The Volvo LX03 is a self-learning wheel loader with the brains to make decisions, perform tasks and interact with humans. It was inspired by the ZEUX concept co-developed by Volvo CE and LEGO Technic engineers and designers.
The ZEUX concept began in 2016 as a collaboration between Volvo, Lego Technic and a group of kids who shared their ideas and vision for an autonomous wheel loader concept.
The LX03 is not commercially available, but some of its features are likely to find their way into future Volvo CE equipment.
That’s all for this week. Thanks for reading. Click here to get future Truck Talk editions delivered via email on Fridays.
Alan