Hyliion Holdings is pausing orders of its Hypertruck ERX heavy-duty natural gas-electric powertrain as part of a strategic review ordered by its board of directors concerned with how the startup can reach commercial scale.
“All options” are possible, CEO Thomas Healy said on a six-minute conference call Wednesday during which he took no questions. The contents of the call mostly mirrored a statement the company issued after markets closed Tuesday.
“Hyliion, like others, has experienced slower-than-anticipated market adoption as fleets undertake a gradual transition to electric trucks,” the company said in the statement.
Unlike other startups that have run out of cash, Hyliion is fairly flush. It had $354 million in cash and investments as of June 30. That works out to about $1.50 a share. But investors fled the stock (NYSE: HYLN) on Wednesday. Shares dropped more than 40% Wednesday and continued to lose ground at Thursday’s market open, down an additional 3% at 63 cents. During the height of the special purpose acquisition company frenzy, shares traded above $55. Hyliion went public in a $560 million reverse merger with SPAC Tortoise Acquisition Corp. in September 2020.
“Hyliion’s ongoing participation in commercial vehicle electrification will require continued investment, while addressing escalating component and production costs, meeting ongoing regulatory requirements, and aligning with a new CARB mandate for fleet adoption of electric trucks,” the statement said.
Hyliion’s board has questioned the company’s plan to control cash burn and raise money needed to commercialize the Hypertruck ERX and generator technology Hyliion purchased last year from General Electric. After initially considering the Karno multi-fuel generator technology for a second version of the Hypertruck, the company decided to pursue stationary applications, like backup power for data centers.
CARB approval is time limited
The Austin, Texas-based company recently received California Air Resource Board certification of the Cummins 12-liter natural gas engine in the Hypertruck. However, the approval is good only for the 2024 model year. Cummins is phasing out the 12-liter in coming years. A new, more powerful 15-liter natural gas engine replaces the 12-liter. It is getting strong fleet interest.
Hyliion will continue Hypertruck ERX fleet trial and complete 30 trucks planned for customer deliveries in early 2024. However, it is pausing new orders until the strategic review is complete. CEO Thomas Healy told FreightWaves in September that Hyliion would pursue certifying the Cummins’ 15-liter engine with CARB. But that is now apparently part of the strategic review.
‘Right time to consider a host of strategic options’
“We believe now is the right time to consider a host of strategic options for our electric powertrain business to ensure that we deploy capital most effectively and maximize value for our shareholders,” Healy said.
Hyliion could be put up for sale. But it is unclear who might buy it given that its only product to date is a low-volume bolt-on hybrid for diesel and natural gas trucks. Supply chain constraints delayed the Hypertruck ERX by a year. Its costs continue to rise because suppliers are scarce and volume projections are low. That makes the costs of components more expensive.
“While Hyliion’s capital position is currently strong, its proprietary technology is transformative, and commercialization is progressing on track, additional future capital will ultimately need to be raised against the backdrop of uncertain market conditions if we continue on our current trajectory,” Healy said.
Editor’s note: Updates with stock continuing to fall at Thursday’s open.
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Ivan Tuma
Thanks Alan for your continued coverage of this interesting company. I knew the former chairman Ed Olkkola (RIP) from his participation and support of a medical science based cryptocurrency venture called Curecoin. Having known Ed for his integrity was one of the reasons I invested in Hyliion, in part to support his legacy in philanthropy and seeing the potential in Hyliion’s asset-light approach. Any speculation on potential buyers of the ERX “division” outside of the usual suspects who already have strategic partnerships with Hyliion? Namely Paccar, Dana and Cummins? Really any of those could produce an ERX Hypertruck or the conversion system at a more competitive price given their scaled up supplier connections.