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NewsNewslettersTruck TalkTrucking

Truck Talk: Crystal ball gazing edition

Looking ahead at PACCAR, Hyliion, Workhorse and Lordstown

Welcome back to Truck Talk.This week, we’re looking at the future for PACCAR; Hyliion’s long-range hybrid play; the mandate for the new CEO at Workhorse Group; and whether Lordstown Motors’ financial lifeline is enough to endure.

Was this forwarded to you? Subscribe here to get Truck Talk via email on Fridays.

The future of revenue

PACCAR Inc. is pretty much a head-down, all-business operation. Not given to hyperbole, but CEO Preston Feight takes the full hour-plus on quarterly earnings calls to field questions from analysts, even tough ones about profit margins.

Joel Tiss of BMO Capital Markets asked nicely: “Can you give us some of the pieces to raise your kind of structural incremental margins? They’ve been kind of stuck in this 12% to 14% range for a while.”

Feight handled the query with aplomb. Fresh off record Q2 profits in parts and financial services, those two were obvious. Recently introduced new trucks across all three brands — Peterbilt, Kenworth and DAF in Europe — are another boost. Add to that industry-leading orders of more than 450 battery-electric truck orders.

Then Feight looked beyond. And while he didn’t specifically mention trucks as a service, he described it to a T: field support, battery-electric charging stations, battery energy management, fleet management and, finally, autonomy with named partner Aurora Innovation but perhaps others as well.

The new Kenworth T680 (Photo: Kenworth)

The future of Workhorse

The clock ran out on Duane Huges at Workhorse Group this week. The affable and publicly soft-spoken CEO was sent packing. Hughes led the hard-luck electric delivery van maker for about 2 ½ years after the board pushed out founder Steve Burns, whose vision for the future was matched only by his inability to deliver on it.

Hughes inherited a mess and did what he could to make things better. But he had limited financial options given that issuing new equity was the only way to raise money. Hughes swapped one expensive hedge fund loan for another and briefly showed a paper profit through a licensing deal with Burns’ next venture — Lordstown Motors Corp. (NASDAQ: RIDE). 

Catching on a second-tier meme stock gave Workhorse some room to breathe but losing out on the U.S. Postal Service contract to build electric mail trucks sent stock speculators packing, and Workhorse (NASDAQ: WKHS) shares are again under pressure.

Enter Rick Dauch, who takes over Monday as CEO. He has an impressive resume as an automotive executive. He comes from a hard-nosed family. His father, Dick, played football at Purdue. Rick started for four years at Army. 

Dick Dauch created American Axle & Manufacturing (NYSE: AXL) from five axle plants General Motors planned to close in the 1990s. Rick worked there for 13 years before becoming a CEO at three companies, the last being Delphi Technologies. He took over in 2019 just in time to oversee its $3.3 billion sale to BorgWarner Inc. (NYSE: BWA).

So what is Dauch’s mandate at Workhorse? Getting more composite body electric vans out the door of the low-tech plant in Union City, Indiana, is a given. But could there be more? Maybe find a suitor to keep Workhorse alive beyond borrowing from hedge funds? 

The future of Hyliion

Hyliion Holdings’ (NYSE: HYLN) natural gas-electric hybrid technology for Class 8 trucks that has both fans and detractors may have a breakthrough to win more of the former. The startup this week said its forthcoming Hypertruck ERX powertrain will launch with a long-range version capable of 1,000 miles of range.

More importantly, 75 of those miles will be all-electric, a 200% improvement from the original 25 electric miles created by the natural gas-powered onboard generator. The 75 miles is significant because it allows Hyliion to meet California’s Advanced Clean Truck Rule regulations to qualify for zero-emission vehicle sales credits.

Those credits, which Tesla used as practically its sole source of profit until recently, help vehicle makers buy their way into offsetting pollution from diesel-powered trucks. Hyliion will get only three-quarters of a credit for each production truck sold, but it puts them in the game where a shorter electric range would not.

The other advantage Hyliion pitches is potentially net-negative emissions through the use of renewable natural gas to recharge the battery.

The Hyliion Hypertruck ERX boosts electric range. (Photo: Hyliion)

The future of Lordstown Motors

Lordstown Motors said this week it got a financial lifeline that might get the 

financially beleaguered startup through the launch of its Endurance electric pickup truck. Remember that Lordstown filed a notice of “going concern” with the SEC in June that said it could go under without new cash. 

According to a filing with the Securities and Exchange Commission reported by Bloomberg, Lordstown reached a deal to sell as much as $400 million in stock over the next three years to an investment fund managed by Yorkville Advisors Global.

The details are complicated and Lordstown probably won’t see the full $400 million. The terms of the deal allow the Ohio-based truckmaker to direct the fund to buy shares equal to as much as 30% of a day’s trading value of the stock or a block of $30 million. 

Yorkville would get a 3% discount based on the three-day average market price. The most Lordstown could raise at its Friday opening price of $6.20 a share is around $250 million.

Oh, and the SEC and the Justice Department are investigating Lordstown over inflating the number of orders to make the stock more attractive. That kind of hyperbole led to the indictment of Nikola Corp. founder Trevor Milton on three fraud charges on Thursday.

Presidential pit stop

President Joe Biden this week became the sixth consecutive commander in chief to make a visit to Mack Trucks in Pennsylvania’s Lehigh Valley. What is the appeal of the Lower Macungie Township assembly plant that every president since George H.W. Bush has stopped by?

Well, Pennsylvania is a bonafide swing state in presidential politics. So there’s that. Biden’s visit to promote his jobs agenda came just after Mack sibling Volvo Trucks North America settled a protracted labor dispute with the United Auto Workers in Virginia that included two strikes covering seven weeks.

Mack itself was struck by the UAW for two weeks in 2019. Biden is pro union, so whether he intended it or not, his presence could be encouraging to labor.

Speaking of labor, Mack said in a press release announcing Biden’s visit that it plans to add 400 additional jobs at the plant to meet increased demand for Mack products. Finding the workers will be the hard part since the paucity of workers is leading to lower productivity throughout manufacturing.

UAW Local 677 Shop Chairman Kevin Fronheiser, President Joe Biden and Martin Weissburg, Mack Trucks president, at Mack’s Lehigh Valley Operations (Photo: Mack Trucks)

Survey says

My colleague, What TheTruck?!? podcast host Tim Dooner, this week conducted a Twitter poll following Tesla’s latest production delay of the Class 8 battery-powered Semi truck. 

Question: When will the Semi actually come out?

Survey says:

2022: 8.9%

2023: 10.7%

2024: 21.4%

Next year: 58.9%

To quote the late, great Marvel Comics scion Stan Lee: ’Nuff said.

That’s it for this week. Thanks for reading.

Alan

Alan Adler

Alan Adler is a Detroit-based award-winning journalist who worked for The Associated Press, the Detroit Free Press and most recently as Detroit Bureau Chief for Trucks.com. He also spent two decades in domestic and international media relations and executive communications with General Motors.

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