Nikola Motor, the upstart truckmaker seeking to shake up the heavy-duty vehicle market, started building its first U.S. plant near Phoenix with a goal of making battery-powered semis there next year followed by futuristic hydrogen fuel cell behemoths in 2023.
The first phase of the $600 million factory on 430 acres in Coolidge, Arizona, an hour from Phoenix at the edge of the Sonoran Desert, opens late next year with production of the battery-electric Nikola Tre, a “cab-over” truck for hauling loads less than 300 miles. Long-haul Nikola Two semis, outfitted with hydrogen fuel cell and battery power systems, are to roll off the line two years later. When completed the plant will be 1 million-square-feet and have capacity to turn out 35,000 zero-emission trucks a year with two assembly shifts.
“It’s pretty awesome to see where Nikola is right now financially, where we are technologically and where we are with our production plans,” founder and executive chairman Trevor Milton told reporters ahead of the groundbreaking. “This was the biggest question people had: when are you going to have a plant to build your trucks? Well now it’s going up.”
Factory construction comes on the heels of Nikola’s speedy listing on Nasdaq NDAQ in June via a reverse merger with VectoIQ, a special purpose acquisition company, that dramatically improved the startup’s coffers. While the company won’t generate meaningful revenue for a few years, it will have about $900 million on hand from the merger and redemption of warrants, according to CEO Mark Russell.
Nikola is at the cutting edge of a push by companies including Hyundai Motor, Toyota, Daimler, and Volvo Trucks to commercialize hydrogen fuel for heavy-duty vehicles–as well as interest in the EU, California and South Korea to use it grid-level energy storage–to help bring down carbon emissions. It will compete head-to-head with Tesla TSLA in battery-powered trucks, and thinks it can outdo Elon Musk’s company in the long-haul semi market with vehicles offering more range and that can be refueled in about the same amount of time as a diesel truck.
And while it’s more efficient to use electricity to charge a battery directly, rather than making hydrogen that will be converted to electricity, the cost of electric power from utilities varies widely and means using battery power alone for fleets of trucks will likely be higher than for hydrogen, according to Milton. “We’re all about battery, we love it,” he says. “We’re all about hydrogen, we love it, but we need to drive the cost down to the battery as well.”
Fuel cell power systems, which make electricity on demand by forcing hydrogen and oxygen through high-tech plastic and metal membranes, have been around for decades and automakers have tested fuel cell vehicles since the 1990s. While the high costs of powertrain components and fuel tanks have fallen steadily in the past decade, finding low-cost ways to make hydrogen from water and renewable energy instead of natural gas (the primary source for industrial hydrogen) has been a problem.
Milton argues that new electrolyzer technology and the rising of surplus solar and wind power in California and Southwestern states means Nikola can provide hydrogen fuel for trucks that’s cheaper than diesel–and with no tailpipe pollution.
The new Coolidge factory will assemble battery packs used in the trucks but fuel cell power modules, supplied by partners such as Bosch will be shipped in, Milton said. Production of Tres starts in Germany in 2021 with partner CNH/Iveco, with some units to be exported to the U.S., prior to the U.S. factory opening. Nikola has also designed a battery and fuel cell electric pickup, the Badger, that is to be produced by an as-yet unnamed automaker.
The company says it has truck orders worth $10 billion from companies led by Anheuser-Busch, which wants 800 of its non-polluting behemoths. Its business model is based on leases that include fuel for the life of the lease. Nikola estimates sales will reach $150 million in 2021 and jump to $3.2 billion by 2024 as it ramps up productions. By 2024, it expects to sell or lease 7,000 battery-powered units and 5,000 hydrogen fuel cell trucks, according to its filing.
Nikola indicated ahead of its Nasdaq listing that it will need to “raise an additional $700 million of equity financing between late 2021 and early 2022,” according to an SEC filing. Additionally, it will probably issue debt in 2023 and 2024 totaling $500 million. Spending on hydrogen stations, which will each make eight tons of the clean fuel per day from water and renewable electricity, will cost nearly $1 billion from 2022 through 2024, according to the filing.
The company’s shares fell fell 3.8% to $35.20 in Thursday morning Nasdaq trading. An earlier surge for Nikola shares turned Milton into a billionaire. Forbes estimates his net worth at $4 billion as of July 22, based on his ownership stake in the company.