With plans to shake up commercial trucking with zero-emission vehicles and fuel, it’s the most audacious Wall Street debut for a high-tech transportation startup since Tesla’s a decade ago.
Shares of the combined new company start trading Thursday with the ticker NKLA. The reverse merger with publicly traded VectoIQ, an acquisition firm created by former General Motors
“We're full steam ahead,” says Nikola founder Trevor Milton, who’s giving up his CEO role with the merger to become executive chairman. Production of electric Nikola Tre trucks starts in Europe in 2021 with partner CNH/Iveco, with some units to be exported to the U.S., ahead of the opening of Nikola’s U.S. factory that will build both battery and hydrogen fuel cell models. “We have trucks coming out of Ulm, Germany, in full production next year, and then the year after here in Arizona, and we're about ready to break ground here. We're kicking ass.”
All proposals passed. Dually approved by stockholders. Merger approved.! NKLA on Thursday raining of the bell on Nasdaq. Approved!— Trevor Milton (@nikolatrevor) June 2, 2020
A potential competitor to Elon Musk’s Tesla in electric trucks (which it’s suing for design infringement), Nikola has raised about $600 million to get its hydrogen semis into production at a new plant in Coolidge, Arizona, gaining a $3 billion valuation prior to the VectoIQ merger. But its technological ambitions will be a stretch for an unproven company that needs vastly more funding to complete construction of the plant, open a network of hydrogen fuel and battery charging stations for its futuristic vehicles and eventually get its Badger fuel cell pickup to market.
The company estimates it will need to “raise an additional $700 million of equity financing between late 2021 and early 2022,” according to an SEC filing. Additionally, it will probably issue debt in 2023 and 2024 totaling $500 million. Spending on hydrogen stations, which will make the clean fuel from water and renewable electricity, will run to nearly $1 billion from 2022 through 2024, according to the filing.
Nikola has secured truck orders worth $10 billion from companies led by Anheuser-Busch, which wants 800 of the company’s non-polluting behemoths. So far, Nikola hasn’t generated much revenue but estimates sales will jump from $150 million in 2021 to $3.2 billion by 2024 as it ramps up productions. In 2024, it expects to sell or lease 7,000 battery-powered units and 5,000 hydrogen fuel cell trucks, according to its filing.
(For more on Nikola and Trevor Milton, see “Behind New Billionaire Trevor Milton’s $3 Billion Push To Make America Run On Hydrogen” from the September 30, 2019 issue of Forbes magazine.)
While the company has yet to deliver trucks to commercial customers, there’s been a steady uptick in interest in hydrogen for heavy-duty trucks, particularly long-haul vehicles, as fuel cell power systems are much lighter than batteries and can be refueled about as fast as diesel and gasoline models. Along with Iveco, Nikola also counts Bosch, Meritor, South Korean solar panel maker Hanwha and Norway’s Nel as key industrial partners helping get it sci-fi-styled semis on the road and fueled up.
Fuel cell technology, which makes electricity in a chemical reaction involving hydrogen and oxygen with only water vapor as a byproduct, has been around since the 1960s, but earlier iterations were far too costly and not durable enough for heavy daily use. That’s changed dramatically in the past decade, with costs for the materials and fuel tanks dropping steadily as the technology matured. While industrial hydrogen is typically sourced from natural gas, new methods for generating “green” hydrogen from water and electricity from solar or wind farms have made the fuel much more compelling to environmental regulators in California, Europe, Japan, South Korea and China.
“What I love about Nikola is we've shown how to disrupt the entire industry. At every (truck) group in the world now hydrogen is the hottest topic. And guess who did that?” says Milton, who like Musk, isn’t shy about boasting what his company can do. “It was majority caused by Nikola–and a lot of other great people have been working on this for decades.”