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Truck Tech: Summer reading edition

Mining for gold in shareholder letters and earnings transcripts

Shareholder letters and earnings call transcripts don’t qualify as page-turning vacation reading. But they yield plenty of nuggets about the health of electric and autonomous startups.

A cure for insomnia, or …

Earnings reports and shareholder letters don’t make for scintillating reading. Some are better written than others. But even the best fall short of a page-turning novel.

Second-quarter reporting season is well underway. So, it’s a good time to see how electrification and autonomous startups are mapping their futures amid rising inflation and higher interest rates.

Pre-revenue companies, years from making money, are tightening spending while trying to hold on to their stock-incentivized engineering talent. Depressed stock prices of companies that went public through special purpose acquisition company mergers — in some cases prematurely it could be argued — are taking a toll.

Aurora’s goodwill impairment

Take Aurora Innovation, one of two autonomous software companies — Alphabet Inc.-backed Waymo is the other — serving ride-hailing passenger vehicles and Class 8 trucks. 

In a shareholder letter, CEO and co-founder Chris Urmson described the progress the Pittsburgh-based startup is making, sprinkled with customer testimonials about how Aurora (NASDAQ: AUR) booked $21 million in revenue from Toyota. 


One of 20 Class 8 Peterbilt Model 579 trucks that Aurora Innovation uses to haul freight for big fleets in Texas. (Photo: Aurora Innovation)

The big shock came on page 12 of 17. Aurora had to erase $1 billion in goodwill — the difference between the amount the company valued its equity and the book value of the stock — from its balance sheet. Aurora’s shares closed Thursday at $2.68 compared to $17.68 a share during a brief rally following going public in November.

Like rival TuSimple, which delayed its purpose-built Class 8 autonomous truck with Navistar to 2025 from ’24, Aurora is targeting  commercialization of its Aurora Driver product with Peterbilt and Volvo for the end of ’24, pulling back from its original target of ’23.


Saving Lordstown Motors 

As one of a handful of advanced transportation technology startups to warn it might not survive, Lordstown Motors Corp. found a white knight in Taiwan’s Foxconn Group. Instead of waving a white flag, it appears LMC will live on as the face of Foxconn’s electric vehicle manufacturing.

LMC (NASDAQ: RIDE) literally sold the furniture to survive. The 6.2-million square-foot Lordstown Assembly complex, where General Motors built cars for 53 years, is now Foxconn property. It paid $257 million to LMC for the plant and the right to contract manufacture the Endurance commercial electric pickup truck. 

LMC essentially received the plant for free from GM. LMC had a mortgage, retooling loan — and $25 million in GM cash that came as part of an ill-fated SPAC October 2020 merger with DiamondPeak Acquisition Corp.

Cash burn in Ohio

That burned up as LMC tried to adapt a licensed Workhorse Group truck design. It ended up with the underpinnings of a Chevrolet Silverado. GM sought to appease the northeast Ohio community, where it operated for six decades. President Donald Trump bellowed on Twitter that GM should keep manufacturing there after idling the plant in March 2019.

LMC desperately needs Foxconn’s rescue. Most of the $236 million on its balance sheet at the end of Q2 came from selling the plant. Expenses fell as LMC transferred 400 manufacturing  employees to Foxconn rolls. As part of a joint venture, LMC is Foxconn’s primary development partner for electric vehicles in North America. 

Neither LMC nor Foxconn has produced any vehicles for sale to date. LMC projects a slow ramp of endurance trucks in Q3 with commercial deliveries in Q4. Announcement of the first joint venture vehicle program is also targeted for Q4.


Workhorse getting back to business

Workhorse Group received the first 16 of 1,500 stopgap medium-duty electric trucks from GreenPower Motor Co. this week. The Cincinnati-based Workhorse is preparing to resume production of its own electric trucks next year.

The company (NASDAQ: WKHS) reports its Q2 results on Tuesday. Little to no revenue is expected because CEO Richard Dauch halted production after safety questions led to the recall of the only 41 C-series electric step vans produced.

Workhorse will rebadge GreenPower’s EV Star Cab and Chassis as the Class 4 W750. It hopes to generate $25 million in revenue this year.  

“We look forward to rapidly scaling up deliveries over the next few quarters to support Workhorse’s production requirements to meet customer demand,” Brendan Riley, GreenPower president, said in a news release.

The GreenPower EV Star cab and chassis that will become a Workhorse medium-duty electric step van. (Photo: GreenPower)

Proterra progress

Maybe if investor fickleness toward startup electrification companies was less of a factor, Proterra Inc. could feel more celebratory about its second quarter. Known in its first 15 years for electric transit buses, Proterra (NASDAQ: PTRA) is growing battery-making and electric infrastructure businesses.

Both reported decent results in Q2. But the reaction brought to mind the downtrodden donkey Eeyore in “Winnie the Pooh.”

Proterra Power Delivery posted a record of 348 battery systems and record revenue of $24 million. Proterra Energy delivered 3 megawatts of charging solutions despite continued parts shortages and delays in site commissioning. 

Battery packs from Proterra Powered (Photo: Proterra)

Including $51 million in revenue from Proterra Transit, total sales hit $75 million, up 27% year over year. Gross margin was 1%, down from 2% a year ago but a big improvement from a negative 5% in Q1.

“I can’t overstate how difficult an environment we’re operating in right now,” CEO Gareth Joyce told analysts on a call Tuesday. “We’re now in a market that has lost some of its enthusiasm [for] a high-growth company and is focused far more on margin improvement, capital management and cash flow generation.”

The acquisition of Romeo Power, a competitor in battery manufacturing, by Proterra customer Nikola Corp. should help over time. Nikola plans to use Romeo’s employees and facility for its own needs. But it has no plans to be “a merchant of batteries” as Nikola CEO Mark Russell put it.


Embark Trucks pull over for cop stops

Autonomously speaking, Embark Trucks is playing nice with law enforcement.

Working with Texas law enforcement, Embark showed how its technology identifies and communicates with law enforcement vehicles. That assures the trucks wouldn’t drive away like Cruise Automation ride-hailing vehicles did in San Francisco in April.

An Embark autonomous truck interacts with a Texas law enforcement officer. (Photo: Embark Trucks)

Safely engaging with emergency vehicles is critical to making autonomous viable.

“Law enforcement always needs to be able to stop a commercial vehicle — autonomous or not — to ensure compliance with the law,” Emily Warren, Embark head of Public policy said.

Embark’s engineering team trained its trucks to identify emergency vehicles via lights and other cues. Then they respond by pulling over safely onto highway shoulders. Law enforcement officers safely stop, approach and receive information from a truck without any additional equipment.

Embark’s externally accessible lockbox contains the truck’s registration, bills of lading and a toll-free number to contact the company.

With the cop stops checked off, Embark has achieved 12 of 16 technical milestones on its technology roadmap.

Scorecard of Embark technology accomplishments. (Source: Embark Trucks)

Separately, Embark (NASDAQ: EMBK) reports Q2 financials Thursday. Embark shares closed Thursday at 53 cents, down from their 52-week high of $10.49.


That’s it for this week. Thanks for reading. Click here to get Truck Tech via email on Fridays.

Alan

Alan Adler

Alan Adler is an award-winning journalist who worked for The Associated Press and the Detroit Free Press. He also spent two decades in domestic and international media relations and executive communications with General Motors.
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