Welcome back to Truck Talk. This week, we look behind the numbers at recent SPAC financial reports, including a potentially long wait for some Nikola fuel cell truck customers. Also, who reigns supreme in engine-making, Xos mobile energy refueling and more.
Behind the numbers
As young companies begin public trading once their sponsors recede to the background, investors begin to see how aligned their projections of success are with reality. Losses, sometimes really big red numbers in net and earnings before interest, taxes, depreciation and amortization are the rule rather than the exception. Most investors know that.
So, what other insights can be gleaned from these early reports? Let’s take a look.
Not exactly a newcomer though recently de-SPACed, Proterra has been selling electric buses since 2009 while amassing 20 million miles of real-world electric driving, Now, it is building its Proterra Powered and Proterra Energy businesses to have similar heft.
Perhaps the biggest news was the “low nine figures” deal to extend through 2028 a battery supply agreement with LG Energy Solution to secure multiple gigawatt hours of dedicated battery cell capacity annually. Manufacturing its cylindrical cells in the U.S. allows Proterra (NASDAQ: PTRA )to meet content requirements under the United States-Mexico-Canada Agreement.
A shortage of cells is a pinch point to industrywide electrification. Shortages of nickel, lithium and cobalt make a long-term supply agreement for battery cells really important.
“The anticipated sourcing challenges point to the need for comprehensive supply chain assessments to identify all risk factors and associated vulnerabilities,” said Rekha Menon-Varma, co-founder and managing partner at Vertaeon, a software-as-a-service data analytics provider.
The spinoff of Singapore’s Horizon Fuel Cell Technologies completed its business combination with Decarbonization Plus Acquisition Corp. at the end of the second quarter, just in time to report results. Hyzon is getting roughly $500 million to scale its fuel cell truck business.
Hyzon (NASDAQ: HYZN) is shipping its first trucks to European customers and beginning customer testing in the U.S. in Q4 starting with a 30-day loan to Total Transport Services Inc. (TTSI), a port trucking and logistics services company in Southern California. TTSI in May signed a nonbinding letter of intent with Nikola Corp. to order 100 Nikola Class 8 battery-electric vehicle (BEV) and fuel-cell electric vehicle (FCEV) semi-trucks.
Hyzon expects to deliver 85 fuel cell vehicles by the end of this year and to post its first revenue in Q3. The order book, much of it nonbinding, stands at $83 million, up from $55 million in April.
Nikola (NASDAQ: NKLA) is doing everything it can to distance itself from indicted founder Trevor Milton. Adding workers and spending big to complete the first phase of its greenfield plant site between Phoenix and Tucson, Arizona, led to a widening loss. No surprise there.
Nikola said this week it received a nearly $2 million grant from the U.S. Department of Energy to advance its research into autonomous refueling technologies for future hydrogen fueling stations. Nikola expects to break ground before the end of the year on its first hydrogen fuel station, part of an eventual network of 700 stations.
Having locations for hydrogen fueling is critical to selling the fuel cell trucks for which Nikola is holding nonbinding reservations. In its most recent quarterly report with the Securities and Exchange Commission, Nikola said 47% of the orders are for fleets with 100 or fewer trucks. They may not be delivered until “approximately 2030 or later.”
The buildout of a dealer network — including this week’s addition of Alta Equipment Group (NYSE: ALTG), to cover the northeast U.S. — may address another risk Nikola listed: obtaining permission to directly sell and deliver vehicles to customers.
Top of the (engine) hill
Daimler Trucks North America (DTNA) took care of its own engine needs and in the process edged out Cummins Inc. for first-half engine-building leadership, according to WardsAuto.com.
Detroit, which is DTNA’s engine brand, supplied the most Class 8 engines in North America from January to June, beating out independent engine maker Cummins (NYSE: CMI) by 1,299 engines. All of the Detroit engines went to the Freightliner and Western Star brands.
Detroit had a 34.5% share of Group 1 (sub 10-liter ) and Group 2 (above 10-liter) engines. Cummins had a combined 33.5% share, supplying engines to all truck makers.
How that Group 1 number is affected going forward will be worth watching as Daimler last week officially handed over its medium-duty engine work to Cummins.
The United Auto Workers’ strikes at Volvo Truck North America (VTNA) in April and June took a toll on sales in July, according to WardsAuto. VTNA’s sales fell 37.3% to 888 compared with 1,416 in the same month a year ago.
Industrywide, Class 8 sales for the first seven months rose 32.2% to 128,376 compared with 97,110 a year earlier, Wards reported.
Charging on the go
Xos Trucks had a big week. On Monday, the SPAC-in-waiting startup announced a deal to supply FedEx Ground with 120 medium-duty trucks for its independent service providers. On Thursday, it showed what its vision of charging as a service looks like.
Xos Hub is a mobile charging station to help its fleet customers access charging infrastructure at their fleet yard without having to wait for traditional infrastructure installation. Xos Hub can charge up to five vehicles at a time and fit in the space of about two parking spots. A solar array on the roof of Xos Hub powers the cloud-enabled control and safety systems.
It doesn’t stop there. Xos Hub is part of Xos Energy Solutions, a new business unit that helps small and large fleets get commercial electric vehicles deployed faster. For example, Xos Serve is an on-demand infrastructure-as-a-service platform that includes site evaluations, energy storage development, and installation and energy management services.
XOS focuses primarily on medium- and heavy-duty commercial vehicles that travel on last-mile, back-to-base routes of less than 200 miles per day. Its merger with blank check company NextGen Acquisition Corp. is proceeding and could close this quarter.
Paying the ‘vig’
Simon Bergson is one of those guys who calls it as he sees it. The CEO of Manhattan Beer Distributors is a leader in decarbonizing his business, delivering 45 million cases of a beer a year to thirsty New Yorkers. Half his fleet is made up of less-polluting compressed natural gas trucks. And he will all but eliminate diesel engines over the next four years.
After showing the first of five Volvo VNR Electric trucks he is purchasing, Bergson explained how a 191,000-square-foot solar array on the roof of his Bronx headquarters helps reduce the cost of his electric bill — sort of.
“Con Edison has to get their vig,” Bergson said, referring to vigorish, a gambling term familiar to most bettors. It might more accurately be described as getting a cut or a taste.
“The way everything works is we have to sell our power to Con Edison so they can sell it back to us so they can charge us to deliver power to them and to deliver it back to us.”
And don’t get Bergson started on the $2.6 million his company pays in violations for double-parking his beer trucks around New York every year.
That’s all for this week. Thanks for reading. You can subscribe to Truck Talk here for delivery to your email on Fridays.