Startup hybrid powertrain developer Hyliion Holdings is delaying its Class 8 natural gas/electric Hypertruck ERX for a year, and a new natural gas engine from Cummins Inc. raises doubts for the future of Hyliion’s current product, a power-boosting hybrid add-on.
Both developments — impacted by the supply chain crisis — led to a double-digit intraday decline in Hyliion’s share price as analysts questioned founder and CEO Thomas Healy about countermeasures.
While his comments during a Q3 earnings call Wednesday were candid, Healy offered no answers for supply chain issues that vex far more experienced manufacturers.
Delayed truck deliveries
“One of the impacts has been the significantly extended lead times for ordering new trucks. If a truck is ordered from an OEM today, the currently planned delivery date is not until 2023,” Healy said.
Hyliion (NYSE: HYLN) has build slots with Peterbilt for 2022 locked in “and we are working to secure supply for the 2023 calendar year,” Healy said.
Several Model 579 chassis are missing parts and grounded at Hyliion’s Austin, Texas, headquarters. Hyliion will use completed Hypertruck ERX as fleet demo units in the first half of next year.
Trucks ordered for delivery in the second half will be used for design verification and all-season road testing. Hyliion plans to put some company-owned ERX models in testing with Green Path Logistics in Dallas to help build 1 million miles of real-world use before production starts in 2023. It also has a nonbinding reservation for 40 Hypertruck ERX from carrier Mone Transport.
“We planned on beginning winter testing of our production-intent design of the ERX in Q1 of 2022,” Healy said. “The delayed delivery of components prohibits us from beginning testing until the beginning months of the following winter.
“As we learned with our hybrid product, it is critical to test the product through all seasons, especially the extreme winter conditions many of our potential fleet customers face.”
Hybrid eX faces uncertain future
Hyliion delivered the first of its updated torque-boosting Hybrid eX trucks to Werner Enterprises in October, but Healy said the company is assessing how the product will be affected by a 15-liter natural gas powertrain that Cummins plans to begin selling in 2024.
The Cummins engine, introduced earlier this year in China, has 500 horsepower and 1,850 pound feet of torque, addressing the common complaint by drivers that natural gas-powered trucks are underpowered.
“This will directly compete with our power-assist functionality,” Healy said. “We’re assessing the potential demand impact on Hybrid eX.” Another issue with the eX is that its benefits occur only on certain hilly terrain. The more powerful Cummins (NYSE: CMI) engine presumably would deliver higher horsepower and torque full time.
Hyliion’s plan to get fleets familiar with the Hypertruck ERX through months of demo drives mirrors the approach with the EX.
“We believe the most effective way to generate interest in and orders of our product is to show it to fleets and let them experience the benefits,” Healy said. “Most fleets want the chance to experience the positive features of the powertrain before committing to a binding order of any real significance.”
Hyliion expects to deliver a few Hybrid EX units in Q4, but the revenue they generate will be immaterial, CFO Sherri Baker said. Some fleets that want the hybrid have orders on hold because they cannot get new trucks.
By the numbers
Hyliion lost $26.6 million, or 15 cents per share, in Q3 compared to a loss of $9.1 million, or 10 cents, a year earlier. It had no revenue. The company ended Q3 with more than $588 million in total liquidity, including $289.5 million in cash and cash equivalents.
Baker declined to discuss how much cash Hyliion is consuming per month, but she said most R&D is focused on the ERX because the EX development was mostly paid for in earlier quarters.
Hyliion expects full-year 2021 operating expenses to range between $110 million and $120 million, a reduction from guidance of $130 million to $140 million, mostly due to delayed delivery of truck chassis used for the Hypertruck ERX.
Healy, who is Hyliion’s biggest shareholder, has cashed out 600,000 of his more than 33 million shares in prearranged sales in the last three months, according to Securities and Exchange Commission filings.