At 28, Thomas Healy is on his third startup company, Already named one of Forbes “30 Under 30” — three years ago — the Carnegie Mellon University graduate holds dual bachelor’s degrees in mechanical engineering and engineering and public policy.
As CEO of Hyliion Inc. Healy raised $52 million for his Class 8 Hypertruck ERX hybrid powertrain, which uses a renewable natural gas generator to charge an onboard electric motor that emits net negative planet-warming greenhouse gas emissions.
Hyliion, making consistent progress since Healy founded the company in 2015, shifted into overdrive June 19 when special purpose acquisition company Tortoise Acquisition Corp. (NYSE: SHLL) announced it was launching Hyliion on a path to public ownership. Battery-electric and fuel cell startup Nikola Corp. (NASDAQ: NKLA) recently completed a similar reverse merger.
Hyliion is in line for $560 million assuming the merger gets U.S. Securities and Exchange Commission approval. That windfall will cover the company’s development and scale up of its ERX Hypertruck. Logistics giant Agility preordered 1,000 ERX systems and invested in Tortoise last week. The merger is expected to close by the end of the third quarter.
The news sent Tortoise shares soaring, closing Friday up 41% at $24.57 and more than twice the price a week earlier.
Healy spoke with FreightWaves about natural gas as a fuel, Hyliion’s business prospects and criticism that hybrid technology is merely a transition to fully electric trucks powered by batteries or fuel cells. Here is an edited transcript of that conversation.
How available is renewable natural gas on which you base the claim of net-zero greenhouse gas emissions?
Healy: When natural gas vehicles first came out, five years ago or so, renewable natural gas hadn’t picked up much speed. There’s been over a 500% increase in the amount of renewable natural gas that’s become available. In California over 80% of the natural gas used in vehicles is actually coming from renewable natural gas. Nationwide it’s over 40%. It’s taken over a significant market share and it’s growing. Every year it’s increasing 100%.
Why hasn’t natural gas caught on in a bigger way in trucking?
Healy: What we’ve heard from fleets is when natural gas was initially adopted, there were some maintenance issues. That was a turnoff to some of the fleets. But more recently, the bigger hurdle has been the performance of natural gas trucks. The natural gas engine has significantly less horsepower than the diesel engine. We put one on a dynamometer and it was putting out about 260 horsepower at the rear wheels. It’s just a much less powerful vehicle than the conventional diesel. With the driver shortage, to get a driver to say, ‘Yeah, I want to drive a less- powerful truck,’ that’s a hard sell.
How has Hyliion managed to get past the performance issue?
Healy: The way we’re approaching it is we’re saying, ‘Okay, let’s take all of the benefits of natural gas, specifically renewable natural gas, the low cost, the really significant savings on the emission side of things, and then couple that with an electric powertrain which has way more horsepower than a conventional diesel does.’ It has really high efficiencies and a lot of the benefits that drivers are looking for with an electric vehicle. It has a battery pack onboard, but when that battery gets low, as opposed to plugging it into the grid to recharge the batteries, you have that onboard generator that charges the batteries up as you’re driving.
How do incentives compare for hybrids versus battery and fuel cell electrics?
Healy: States and municipalities have come out with incentives. Our vehicle does fit into a good number of those. We haven’t really had an opportunity to take advantage of the incentives yet because we’re in that early stage. But from what we can see, our vehicle fits into some of the electric incentives because at the end of the day we are an electric truck. But it also fits into natural gas or renewable natural gas because the batteries are powered off of renewables.
How long was your merger with Tortoise Acquisition in the works?
Healy: It actually kicked off a little bit before COVID, before the country went into lockdown. A couple months before that, we had kicked off a process where we were saying, ‘We’re going to go out and raise our next round of financing, our next round of capital.’ We were looking both at keeping the company private and doing another round of financing, and we also looked at taking the company public, both the IPO path as well as the reverse merger path. [When] we met Tortoise, our vision and thought process aligned. They’re conventionally very focused in the energy space, specifically the renewable natural gas space, but they also had a focus on the megatrend towards electrification.
How concerned are you that hybridization is seen by some as a transition to fully electric vehicles?
Healy: I don’t see every truck on the road having [hybrid technology]. That’s not our vision. But it is a technology that we’ll get it into thousands and thousands of units deployed out with fleets, and it will continue to have a product life even once full electric and fuel cells and our Hypertruck comes to life. Frankly, there’s some fleets that don’t want to go full electric. They really want to use these. We’re projecting getting to about 15,000 units in 2024. We see a tipping point in 2023 where slightly more Hypertruck systems [are] being sold than the hybrid. Then, we see the hybrid starting to level off, but the Hypertruck still growing in terms of volume.
Do dismissive comments from Nikola about hybrid technology bother you?
Healy: No. We’ve tried to look at it and say, ‘Look, anyone that’s coming in and going to have a positive effect on emissions, let’s promote it. That’s going to be good for everyone.’ Frankly, we think the Tesla [Semi] truck, the Nikola truck, and our solution are all going to take market share. We think all of them are going to be successful.