Fuel cell truck maker Hyzon Motors’ shares drop 20% in market debut

“I know the U.S. audience doesn’t see much of this progress, but we’re delivering vehicles, signing up contracts and setting up our operations.”

The U.S. trails Asia and Europe in fuel cell readiness, but Knight said the decision to base Hyzon in Honeoye Falls, New York — the former site of General Motors Co.’s fuel cell engineering — was a play for the future. 

Testing Freightliner Cascadias

That future begins with Hyzon using up to 10 hydrogen fuel cell-equipped Freightliner Cascadias in paid customer tests in the fourth quarter, Knight said.

The demonstrations would follow Kenworth T680s retrofitted with Toyota Motor Corp. fuel cells for drayage runs at the ports of Los Angeles and Long Beach, California, as the first over-the-road trucks fuel cell trucks in the U.S. 

Hyundai Motor Corp. is expected to bring its Xcient fuel cell truck to the U.S. before the end of the year. Startup Nikola Corp. (NASDAQ: NKLA) plans to deliver fuel cell test trucks to Anheuser-Busch Inbev S.A. (NYSE: BUD) late this year or in early 2022.

Business combination details

Hyzon, a spinoff of Singapore-based Horizon Fuel Cell Technologies, received $550 million in cash from its special purpose acquisition (SPAC) partner on Friday when 95% of shares in Decarbonization Plus Acquisition Corp. (NASDAQ: DCRB) voted in favor of the business combination. DCRB became Hyzon Motors Inc. (NASDAQ: HYZN) on Monday. 

DCRB raised $150 million in an initial public offering and $400 million from investors in private investment in public equity.

Hyzon’s closing was delayed about five weeks, Knight said, because of Securities and Exchange Commission rule changes, including accounting of stock warrants as liabilities instead of equity.

Electrification SPACs, both electric vehicle and infrastructure companies, have seen their share prices hammered in recent months after giddy enthusiasm by traders earlier. Forbes reported Sunday that 14 of 15 of the SPACs are trading at least 10% below their debut price.

“Maybe [we would be] having a better time than we’re having today if it hadn’t been for the SEC rule changes,” Knight said.

Hyzon shares closed at $8.26, down 20.04% on Monday.

The DCRB sponsors and Hyzon founders can sell their shares in the company in six to 12 months, which Knight said he feels is “a little short.”

But it is typical timing for most SPACs, and it caused the SEC to raise concerns about such short-term commitments. That is something Aurora Innovation and its sponsor Reinvent Technology Partners Y addressed by setting lockups of four years in the SPAC they announced last week.

“That four years is an extreme example,” Knight said of Aurora and Reinvent SPAC. “It’s a very good thing for demonstrating a longer-term commitment to a business. When we look at a lot of our incentive arrangements with our executives, they are on four- to five-year time horizons. So, actually, four to five years is a good time to make sure you commit to the business.”

Spending SPAC proceeds

Hyzon will use the proceeds from its reverse merger to add production facilities globally through companies like Fontaine Commercial Trailer Inc., the largest platform trailer manufacturer in the U.S., and on additional research and development.

“As much as we’re talking about the truck we’re getting out now, we’re making sure we maintain and build out that competitive moat that we have based on the fuel cell technology” from parent company Horizon, Knight said. “To do that, we need to not only invest in the core fuel cell technology but also the electric drive in the vehicles.”

The third area of spending will be securing hydrogen for customers who want zero-emissions trucks but lack access to hydrogen at pricing that gives the trucks a total cost of ownership on par with diesel trucks.

Unlike Nikola, Hyzon has no plans to build “a shed and three walls” to make trucks, nor will it develop hydrogen fueling stations, which Nikola has priced at more than $16 million each for a planned 700-station network in the U.S. and Canada.

“All the early orders are customers that have access to hydrogen,” Knight said. “Then there’s a three- to four-year ramping stage where we will play a really important role in helping the customers gain access to the hydrogen.”

One of those plans is using a Republic Services landfill in California to make hydrogen that will score even better than renewable natural gas because some of its solid carbon is captured in making the gas using a system similar to what Republic (NYSE: RSG) uses to convert landfill gas for other purposes.

Related articles:

Hyzon expects to deliver fuel cell trucks in Europe in Q3

Hyzon Motors plans fuel cell material production facility near Chicago

Hyzon Motors to get $570M from SPAC backing of fuel cell technology.

Click for more FreightWaves articles by Alan Adler.