Nikola Corp. is continuing to pull in letters of intent for its battery-electric and fuel cell Class 8 daycabs from some big names in trucking. Converting those intentions to purchase orders rides on how well the new technology performs in demonstrations.
Covenant Logistics Group became the latest of three large for-hire trucking companies to go on record as potential customers of Phoenix-based Nikola, which is building battery-electric Class 8 trucks at a new plant in Coolidge, Arizona, between Phoenix and Tucson.
Chattanooga, Tennessee-based Covenant (NASDAQ: CVLG) could order 10 zero-emission battery electric trucks (BETs) and 40 hydrogen-powered fuel cell electric trucks (FCETs) for its fleet of 2,615 tractors if trial runs meet performance against specifications, according to Pablo Koziner, president of Nikola’s Energy and Commercial division.
“Adoption of [BET and FCET] technologies is an important part of Covenant’s long term commitment to the decarbonization of freight,” Matt McLelland, Covenant’s vice president of Sustainability and Innovation, said in a press release.
Several Top 100 trucking firms sign up
In addition to Covenant, ranked No. 45 on the FreightWaves Top 500 list of for-hire carriers, Nikola (NASDAQ: NKLA) received letters of intent last week from No.16 Saia LTL Freight for 100 Tre BET trucks. No. 51 USA Truck signed a letter for 10 Tre BETs with an option to purchase 90 more electric trucks over the next two years.
“It’s a little premature to call [Nikola] a player. They are certainly showing signs of life,” Sam Abuelsamid, principal analyst at Guidehouse Insights, told FreightWaves. “For what it’s worth, Nikola has delivered more trucks to customers than Tesla has.”
Production of the Tesla Semi tractor, first shown as a concept in November 2017, has been delayed numerous times, most recently to 2023. A batch of 15 Semi models is expected to be delivered to a Frito-Lay distribution center in Modesto, California, this month after an executive of the Pepsico subsidiary said he expected delivery in Q4 2021.
Nikola delivered two pre-production Tre BETs to Total Transportation Services Inc. in late December. The trucks will be used for drayage runs around the ports of Los Angeles and Long Beach, California. TTSI signed the first letter of intent for Nikola products in May 2021, promising to buy or lease a mix of BET and FCET units based on demonstration experiences.
“The criteria can vary slightly by customer but are all related to performance against specifications,” Koziner told FreightWaves. “Should the success criteria be met, the customers agree to execute the purchase orders.”
‘High in their consideration set’
Other letters of intent were signed by No. 83 PGT Trucking for 100 FCETs and No. 43 Heniff Transportation, which will start with 10 electric trucks with the option to add 90 more.
Heniff and USA Truck (NASDAQ: USAK) will get their trucks from Thompson Truck Centers, a Nikola dealership partner that provides service, maintenance and energy infrastructure through a fleet-as-a-service model.
“The recent announcements demonstrate the industry continues to explore alternatives to diesel to support their sustainability goals and places Nikola high in their consideration set,” Koziner said.
Covenant said Nikola’s road map to BET and FCET production over the next few years is a perfect fit to meet its customers’ goals for clean trucking. Nikola expects to deliver Covenant’s first BET for short-haul, metro-regional applications and a mobile charging trailer in Q2.
Nikola’s first FCET trucks are pledged to Auheuser-Busch Inbev (NYSE: BUD), which signed a letter of intent for up to 800 of the trucks in 2018. Nikola has built a few Alpha versions of the FCET and expects to provide test units to Covenant in 2023.
Nikola CEO Mark Russell has said the company wants to focus on orders of multiple trucks rather than ones and twos.
Koziner said there is no limit to the number of orders it will take from one customer nor an upper limit on production this year despite ongoing supply chain disruption and a shortage of microchips that delayed regular production from Q4 2021 until this quarter.
“Nikola will continue to establish strategic collaborations with customers who are best aligned with a shared vision of the transition to zero-emission commercial transportation,” Koziner said.