Q4 2020 Nikola Corporation Earnings Call
Its fourth quarter and full year 2020 earnings conference call. At this time all participants are in a listen only mode. We begin today's call with a short video followed by managements prepared remarks.
A brief question and answer session will follow the formal prepared remarks.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded we will now begin the video presentation.
Oh.
And on that.
Thank you.
Okay.
Yeah.
Oh.
Okay.
Okay.
Yeah.
That's right.
Oh, Yeah, very one on trade to hear and dislocation.
Day, one right behind me is being charged up to 230 and 170 kilowatt. This true.
She is capable of going to 350 kilowatts, but right now we're taking precautionary steps on that going one step at a time.
Every single vehicle has a purpose that come from the United States.
I have a few dynamics vehicles, you have emails debt that we're gonna be using for crash. If you have a thermal vehicles that we're gonna be putting the vehicles and are there more cases.
Although moving.
Uh huh.
Okay.
Okay.
It's very exciting to see your vehicle working to the software that you're on for them you know, especially as he owns it seems that you're building from a Nicola is doing an amazing job you need to get that turns out of the battery.
What do you need to go higher than that.
Hey, Randy.
Very cool App.
Yes.
Yeah.
The truck will be doing a lot of drivetrain calibration broke down from to get calculations and on calibration on the on the overall that we have here.
Yeah.
With regard.
Okay.
Okay.
[music]. This is accomplishing a lot of stuff for us because we are taking about 600 millimeters right now from the motors.
They are accelerating faster.
Okay.
Deteriorating fast as well.
Yeah.
Is fantastic it is exhilarating to begin with and just the accomplishment that you've done is is outstanding.
Okay.
So right now they're on hooking the box trailers on behalf and they're gonna Pud of that bad debt is right behind me, there's more weight on the flatbed.
On the track there on your limited to 65000 pounds.
There are other measures, we're taking to go to 82000 pounds at the limit of the drug that we're gonna be capable of doing.
Okay.
Okay.
Uh huh.
This truck reengineer to in essence in under one year.
Typically if you would be 50% from a rupee debugging just getting it up to pork and beef they've been able to pull this off in about six weeks.
Things are really really progressing.
Yeah.
Yeah.
Obviously, we noted at the beginning we have to do a lot of validation testing and the proving ground.
These are really really good start.
So this isn't something we're just rushing forward without thinking.
Variance architectural layout architectural thinking analysis, when you just have to be calm clear headed and exited the season.
And that's what we intend to do.
Okay.
Yeah.
Why.
Okay.
Okay.
It's amazing and the noise that it makes it sounds like a combination of the debt ended a semi truck and E V.
It is just accelerating.
Okay.
Never driven anything like this before.
This is fun.
On the smooth quiet.
Honestly as power on.
I love it.
[music].
Yeah.
Okay.
August one.
Thank you. It's now my pleasure to introduce Britain worthy. Thank you Burton you may begin.
Thank you and good afternoon, everyone.
Welcome to Nikola Corporation fourth quarter, and full year 'twenty 'twenty earnings call.
With me today is Mark Russell, Chief Executive Officer of Nikola and Kim Brady Chief Financial Officer.
During today's call, we will share our views on the business environment and our financial results for the December 2020 quarter and our outlook for the March 'twenty 'twenty, one quarter and the full year 2021.
The press release detailing our financial results were distributed a little after two P. M Mountain time this afternoon.
The release can be found on our Investor Relations section of the company website, along with presentation slides that accompany today's call.
Today's presentation and Q&A includes certain forward looking statements within the meaning of the federal Securities laws.
Forward looking statements are predictions projections and other statements about future events that are based on current expectations and assumptions and as a result are subject to risks and uncertainties.
Many factors could cause actual future events to differ materially from forward looking statements on this communication.
For more information about factors that may cause actual results to materially differ from forward looking statements.
Please refer to the earnings press release, we issued today as well as the risk factors section of our quarterly report on form 10-Q for the quarter ended September 32020, and our annual report on form 10-K to be filed with the Securities and Exchange Commission. In addition to the company's subsequent filings with the SEC.
Forward looking statements speak only as of the day they are made.
Readers should be cautioned not to put undue reliance on forward looking statements with that I will now hand, the call over to Mark.
Thanks Brendan.
We're pleased to welcome you to Nicholas fourth quarter, and full year 2020 earnings call.
During the quarter, we made significant organizational and other changes.
To sharpen our focus and align our resources to execute on.
On our core objectives.
On today's call I'll provide an overview of what we achieved including updates on the.
The Nikola Tre Bev testing and validation.
Our long term electricity rate agreement with Aps.
And progress at our manufacturing facilities and on Germany, and Coolidge, Arizona.
I will also recap.
Some of the organization on strategic decisions, we made during the quarter.
And then Kim will discuss our financial results for the fourth quarter and provide you with some expectations for 2021.
And then of course, we will do our best to answer your questions. After that let's kick things off with an update on the status of the first five Nikola tre be EV prototypes.
All of the trucks are complete.
And are now on the commissioning process.
We have four trucks here in the United States to our at northern proving ground for a cold weather validation and powertrain and durability testing.
Two trucks are on the test track here in Arizona for torque speed and payload testing.
One truckers in Hanover, Germany.
For brake commissioning, including regeneration ABS traction control and electronic stability control.
And the next batch of nine prototype trucks are being assembled at the on Germany facility.
Moving on to our race schedule with Aps in December.
Last year, Aps and Nikola finished negotiations on a special rate that the Arizona Corporation Commission unanimously approved on January 12.
This is a huge accomplishment for Nikola and represents an essential milestone for the company.
In executing our plan to produce hydrogen fuel for our customers at price parity with diesel as many of you know 80% to 90% of the cost of hydrogen production.
Allow us to produce hydrogen fuel for customers in the region.
At or below a price parity with diesel fuel.
The rate agreement also gives us the flexibility to look at hub and spoke model production and distribution.
And since the rate schedule. So favorable we we can build centralized hydrogen production.
Hubs, and then transport fuel to dispensing stations in locations, where favorable electricity rates may not be available the big step for Nikola.
It reflects the understanding of the benefits, we bring to the grid and to the utilities are hydrogen production facilities have the potential to help balance renewable energy into the grid by curtailing during peak periods of demand.
And provide utilities with newfound revenue during periods of off peak.
We continue to believe that this has laid the foundation on groundwork for our station network and this agreement will serve as a foundation and model for future negotiations in other regions and without the utilities next will provide an update on progress at our joint venture manufacturing facility in <unk> industrial complex and on Germany.
As of today, the dismantling and building refurbishment, including the civil work such as the floor on <unk> on power in plumbing.
<unk> has been completed in the next step will be installation of the automated guided vehicle system.
The installation.
Installation of that system is on pace and should begin completion next month.
<unk> logistics warehouse, the internal logistics system at the end of the line and finishing and the it infrastructure and the ordering and installation of production tooling and equipment are all on pace for completion of the facility by the end of May.
With trial production set to begin in June.
2021.
Moving on to our Greenfield manufacturing facility.
Nikola began steel erection at the Coolidge, Arizona facility during the fourth quarter and today. The steel work is almost complete the roof is ongoing citing scheduled to follow the manufacturing equipment has started to arrive on site and installation of that will begin in may.
Nicole is currently hiring and training manufacturing technicians.
For this facility and our efforts are being fully supported by the city of Coolidge.
On a building and engineering departments and we're on track to begin trial production. This summer next let's talk about some of the strategic decisions. We made during the quarter beginning with general Motors on November 30th.
Last year, we announced our revised deal with G M.
The revised memorandum of understanding that we executed on.
It made much more sense for both of US GM oil supply Nikola with their hydro tech fuel cell system, helping.
Helping us to commercialize the investments that they made into their fuel cell program and giving us a dual source or second source for fuel cells. In addition to Bosch. So between Bosch in GM, we have two world class fuel cell system suppliers.
As part of this new Mou GM and Nikola will no longer develop the badger pickup truck.
The decision to cancel the badger.
Debt Nikola will no longer be committed to pay up to $700 million of capex related to bad or specific tooling.
On the manufacturing facility, there and our shareholders will no longer phase 2 billion of dilution for stock, which would've been paid the GM for the income and services for the Badger moving on to the cancellation of our B E V refuse truck program.
On December 23rd last year, we announced the discontinuation of the BV refuse truck program with Republic services after careful analysis.
Along with Republic, both of Us realize that it would take 12 to 24 months longer than we previously anticipated and in addition.
The previously planned upfront development costs ballooned up over $200 million.
That additional time and resource needed.
<unk>.
To be dedicated to the program would have distracted us from executing on our core deliverables. The cancellation of the refuse program was one of the last difficult, but necessary steps and a series of decisions. We took during the quarter to restructure the organization and to realign and focus our resources.
We now believe Nikola is in the best position the company has ever been to execute on our core business plan.
Next I'd like to give some color regarding COVID-19 effect on our business. The pandemic has caused significant supply chain disruptions.
On the into tier two and tier three on the supply base.
As consumer spending in our parts of the economy have recovered to near pre Covid levels, we see pent up demand hitting the supply chain, creating global critical parts shortages.
For our components like H M mine electronic systems. We're also facing a battery cell shortage at this time, we don't have final commitments for our cell allocation.
For 2021 from from a battery suppliers.
We'll have greater visibility into our cell allocation commitments towards the end of the next quarter and we will give you updates once the information becomes available.
Furthermore, we've had to modify our working practices, including employee travel policies.
Non essential people working from home and various work restrictions imposed by local governments, especially in Germany.
In light of all of these uncertainties, we believe it would be prudent to revise expectations for Nikola Tre BV deliveries in 2021 down to a range of approximately 100 trucks.
Which will represent approximately $30 million in sales.
Regarding our ongoing regulatory and legal matters. The company made a fulsome disclosure in our form 10-K, which we filed to the SEC today to be mindful of the calls length. Here. We encourage you to refer to form 10-K for the updates on these legal and regulatory matters with that I'll turn it over to Ken.
<unk>, who will discuss the financial results for the quarter Kim.
Thanks Mark.
And good afternoon, everyone as Mark alluded Q4 was a peculiar time from Nikola However, we have been able to refocus on our core businesses.
And realign our vehicle programs.
Sure we have the right people process and plan for execution.
Really excited about what we have on ahead of us in 2021, as we continued to execute on our milestones and deliver the first trade Bev in Q4 2021.
Now to review, our fourth quarter financial results in the fourth quarter net loss was $147 1 million and on a non-GAAP basis, adjusted EBITDA total negative $65 5 million.
Adjusted EBITDA excludes among other items $146 3 million in stock based compensation.
$19 5 million on regulatory and legal matters and other professional service fees incurred in connection with the Hindenburg reported from September 2023.
Free $14 4 million in impairment charges related to power sports and for $1 8 million in normal depreciation and amortization.
Research and development expenses for the fourth quarter were $67 5 million, including $8 million on stock based compensation expense R&D expenses consist mainly of costs incurred in the development of Nikola Tre Bath and certain many outside engineering costs for power.
Worse.
SG&A expenses were approximately $64 9 million of which $38 2 million in stock based compensation expense SG.
SG&A expenses include about $19 5 million related to regulatory and legal matters mainly.
Regarding external legal counsel cost Nikola maintains a D&O insurance policy with $12 5 million total coverage and a deductible of $15 million.
As of December 31, 2020.
Our total head count exceeded 450 full time employees and it's growing at rapid pace as we continue to build our team and engineering supplier quality management and energy.
Turning to the balance sheet, we ended the fourth quarter with approximately $841 million of cash and cash equivalents.
Our restricted cash balance was $8 4 million comprise of cash collateralization of our equipment term long <unk>.
And the required deposits too.
P&L land holding to construct the Coolidge, Arizona manufacturing facility.
As of the balance sheet date, we had a $4 1 million equipment node fully secured by the restricted cash on our balance sheet.
The note was expired and was repaid in Q1 2021.
We have no other debt outstanding as of December 31, aside from our Phoenix headquarters lease obligation.
Our capital expenditures totaled $31 1 million year to date and $15 9 million during the fourth quarter cash.
Capital expenditures are comprised of the construction about Coolidge Greenfield manufacturing facility.
Purchases of in process equipment, and Nicholas portion of investment into our joint venture in on the Germany.
We ended 2020 with 391 million shares outstanding weighted average shares outstanding for the fourth quarter were $386 million.
GAAP net loss per share for the fourth quarter was 38.
Non-GAAP net loss per share was <unk> 17 cents.
Non-GAAP net loss per share excludes stock based compensation regulatory and legal matters previously mentioned and impairment charges.
Now turning to the 2021 outlook and guidance for our calendar year.
We anticipate doing Q4 2021, we won't make deliveries of the first Nikola Tre bad two launch customers as Mark previously mentioned, we are experiencing some COVID-19 impact.
<unk> work restrictions in Germany, and parts shortages and lead time challenges with certain suppliers.
As such we think it would be prudent to adjust our trade best delivery commitment to approximately 50 to 100 best trucks.
We expect revenue generated from trade debt sales in 2021 was in the range of 15 million to $30 million.
The gross margin related to Troy best sales will be over negative 150%.
This is attributable to low scale production volume and high cost of bill of materials from the first 200 to 300 less trucks.
As we scale up our production volume.
Forecast of 1200 trade less trucks from 2022, and 3500 trade best trucks for 2023.
And localize our North American supply chain, we anticipate and sharp drop in the bill of material costs in 2022 and 2023.
We believe our trade Beth Baum cost could be could drop by approximately 40% to 45% in 2022.
Followed by a further decline of 25% to 30% in 2023.
Our full year 2021 estimated R&D is in the range of $305 million to $315 million <unk>.
Including $27 million on stock based compensation.
Estimated SG&A for the full year of 2021.
Is $235 million to $245 million.
Which includes $152 million of stock based compensation.
Total estimated operating expenses will be in the range of $540 to $560 million.
On a GAAP basis.
And approximately $360 million to.
$380 million, excluding stock based compensation.
Total shares outstanding at the end of 2021 will be about $400 million.
And we expect weighted average shares for the full year ended December 31, 2021 will be approximately $395 million.
By the end of 2021, we will have approximately 1000 employees comprise of roughly 180 manufacturing plant employees and 820 corporate employees.
Our anticipated capital expenditures for the fiscal year, 2021, or 210 to 230 million or.
Our capital allocation plans include phase, one Coolidge manufacturing plant.
Associated Assembly equipment.
Hydrogen infrastructure.
Hydrogen and technology development equipment and fuel cell electric vehicle engineering equipment.
For the first quarter of 2021.
<unk> made at R&D day range of 70 to 75 million.
Including $6 million of stock based compensation expense.
Tomatoes, SG&A is in the range of $60 million to $65 million, which includes $37 million on stock based compensation.
Total estimated operating expenses will be in the range of $130 million to $140 million on a GAAP basis, and approximately 87% to $97 million excluding SBC.
Our anticipated capital expenditures for the quarter, our $50 million to $60 million.
Now that we have put our business restructuring behind US we are looking forward to achieving the following milestones in 2021.
First start of trial production at our joint venture manufacturing facility on tobacco campus in on Germany in June 2021 second.
Started trial production at our Greenfield manufacturing facility in Coolidge, Arizona.
In Q3 2021.
Break ground on our first commercial hundred station infrastructure.
Fourth announcement of hydrogen collaboration partners and electricity procurement agreements.
And fifth delivery of Nikola Tre beds to customers during the fourth quarter of 2021.
This concludes our prepared remarks, we will now open the line for questions operator.
Thank you we will now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
You May press star two if you'd like to remove your question from the queue from participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
We ask that you each keep to one question and one follow up.
We will pause a moment to allow for questions.
Thank you. Our first question comes from the line of Jeff Osborne with Cowen and company. Please proceed with your question.
Yes. Good afternoon, guys a couple questions on my end and thanks for all the detail on the guidance it's very helpful.
Can you just give us an update on the order book for Trey or when will move out of the validation and testing.
Phase both in the northern States in Germany, and when people can do ride and drives and hopefully get that book of business growing.
Yes, Jeff that's a great question.
We obviously have had a lot of interest in the trade debt.
Net interest started in the summer of <unk> 19, after we unveiled.
The unit at Nikola World in concept.
That's when we found out that North American customers really wanted the traded into America. So we started working on the on.
On the battery version of the true for the North American market at that time.
And just about a year, we have production prototypes.
Production testing and validation.
And obviously theres a lot of customers who are interested in it we have conversations going on with many customers in North America. The launches in North America first of course, we will.
We will deliver to our launch customer here in the fourth quarter. The first the first vs.
Nichols.
And.
Those discussions.
Well being delayed by the controversies.
Last fall and delayed now by Covid, just a little bit.
Our ongoing we anticipate just as you mentioned Jeff debt.
We will have we'll be able to conclude.
Ed.
Agreements with.
A launch customer leased and possibly multiple launch customers.
After we're able to show them production prototypes that have been fully validated and tested which we think will happen in the April may timeframe, we're already setting up times, where we can bring customers to track and get them on the trucks and get them actual ride and drive experience, which we think will be the time that we will be able.
Finalizing conclude negotiations for a specific customer orders and contracts, we don't have any shortage of interest everybody wants.
Everybody's question is when can I get a truck.
So what we're really what we're trying to do is come up with agreements with a launch customer who is going to be committed to us and help us with the development.
And even share a little bit of risk with us as we go forward.
In launching these vehicles like Anheuser Busch did and has done and continues to do on the fuel cell side, we're looking for that kind of a launch customer on the day.
Battery side of the trade battery vehicles side, and we anticipate we'll be able to get that done.
And the next upcoming quarter.
On a likelihood so good question.
Got it and just with with Covid and everything going on with the delay in parts and whatnot with the guidance for Trey is there any delays as it relates to the fuel cell variance.
Either vehicle being available for sale in the 'twenty three time frame I know thats, a long ways away, but I just wasn't sure. If your kpis are being hit on that.
Yes, that's another great question at this point, we don't we do feel like we have enough time between now and launch that we can have a chance to recover from any delays. We're experiencing there we are experiencing delays on the fuel cell program in the same way. We're just not that we're not so close to the start of production there.
We have to push anything back at this point, we think a lot can change in the next 18 24 months and we hope that we can overcome some of these shortages.
The critical ones to us of course, we've already mentioned battery cells semiconductors and products that incorporate <unk>.
On my conductors are in really short supply right now.
But we think theres a good chance for that to get.
Ameliorated over the next.
12, 18 moving <unk>.
Four months.
Got it that's all I had thank you.
Thank you. Our next question comes from the line of Daniel Ives with Wedbush Securities. Please proceed with your question.
Thank you.
So my question is on the partnership side have you now seen Justin.
What I would call a surge or spike in interest from partnerships, whether it's on the the hydrogen fuel cell side or on others. If I compare where we are today versus let's say three to three to four months ago.
Daniel we definitely have.
More.
I would say.
Yeah.
Intensity on those discussions obviously, what happened last fall gave everybody a pause.
And at this point I think the people who have seen that.
We've gotten refocused.
Back to execution mode.
And that has increased the intensity.
Decisions with potential partners.
You've also seen.
A number of people get into our slipstream.
In terms of especially fuel cell vehicles and hydrogen a lot of people now trying to trail us.
Catch up to us copiers et cetera on.
That frontage what used to be kind of all alone there not that long ago and now Theres a lot of big names, who are also jumping into the space on doing the same things we're doing.
That also lends credibility and also as I said increases the intensity of those discussions.
We're also refining our approach.
We have made a lot of progress.
R&D for partnerships has evolved.
We've actually done from things that.
Partners could have helped us with if we had if we had.
On some of the deals we were talking about last year, we've actually already accomplished all those things or need for a partner to help us reduced on from France in some areas, but we're still interested in being.
On our partnered up with with people, who bring a lot to the table and who are interested in what we bring to the table. These things are like marriages, both parties need to bring something to the table and for it to work well.
And that's certainly the case at this point there are still a number of really attractive potential partners for us that can help reduce our risk or help us speed things up.
And bring essential things to the table and we think we bring a lot to the table as well. So those conversations are ongoing and we're back to serious negotiations once now that the uncertainty of last fall is pretty much behind us.
And then just.
Moving fourth quarter debt some of the conversations will likely spill into Q1 and of course, that's the case, but as Mark alluded. We are having number of discussions and we feel confident that we'll be able to share the progress on many of those discussions.
In the upcoming months.
Yeah sure.
Just sort of powerful and just tell me if you agree or disagree.
Here it is yet kind of partnerships.
You guys are in discussions with fall comes things you, obviously get put on ice.
And now it feels like that's really starting to come back pretty quick and we likely could expect over the coming months.
You know whatever true two to five months more partnerships that may be a lot of these we even started pre fall. They just basically pause kill everything calmed down is that is that a correct characterization.
That is correct. We did see some pause from discussions that we had ongoing last year. We also have some new ones.
There is a lot of activity in this space as you know.
So we have.
We've restarted most of the discussions that we were having last year, rather we've re engaged on a serious level with most of the discussions we had last year and then we've added a couple of new ones.
People who have come.
Come to us with with ideas and.
And with things they want to talk about so.
Thanks for the info you can find its debt as we make some additional announcements you will find debt we have been very thoughtful how we think about 100 and value chain and RFP of hydrogen potential partners has expanded and you will give you greater confidence in terms of how we're thinking about the rollout of the hydrogen pathway.
Okay, great thanks for being on site.
Thank you. Our next question comes from the line of Chris Mcnally with Evercore ISI. Please proceed with your question.
Hi, Thanks, so much good afternoon team.
My question is around the iPhone Steamship partners.
It was curious if we could get an update again.
Lots of his discussions with how close you are to finally finalize and maybe the first.
Tranche of stations it sounds like the strategy is moving more towards a multiple partners rather than one broad partners as <unk>.
Got it.
Previously, but also on on timing how long from breaking ground on a station Kennedy tested ahead of.
22 for percentage of the beta trial.
Yes, that's a great question Chris.
First of all let's talk about the.
The likely.
Focus.
You saw our announcement about the rate schedule that we have with the with Aps and their service area.
Which is really groundbreaking and it is going to be a model for us and other discussions in other areas with other utilities.
That tells you that now.
That's an area of focus for us.
Yes.
And we focused on that debt area.
And as you said there's multiple.
Potential partnerships there is multiple potential models.
Hydrogen supply chain that are youre going to see here.
Within that Aps right area, we have the rate that we would need to generate on site.
That's the base station design that we worked on with now for the last for last several years, where we can.
Produce and dispense up to eight eight times, a day or 16 or.
24.
Or higher and eight ton increments.
Yes.
On location by using the electric rate that's favorable to diesel.
On a location and then as you get to save on the West side of the Aps service area.
West on Interstate 10 corridor closer to the California market, there, where you might see us.
Producing hydrogen in bulk.
And then transporting that hydrogen Europe, either on a compressed form our liquid form into the southern California market for example, where we're not going to give that kind of rate.
Most likely in the Los Angeles Basin et cetera.
So youre going to see different iterations of the infrastructure youre going to see different.
More than one type of partnership as well as you said.
Things have evolved at this point and there's probably no one partner that true.
Provide everything that we're looking at.
In terms of what we're looking at in terms of partnership what.
What they bring to the table.
So you're probably going to see multiple partners, you're going to see multiple forms of infrastructure. As we go forward there will be solutions that are tailored to an individual location.
And solutions that are tailored to specific partnerships.
And Chris It's Super helpful I Misspoke sorry.
Just one more thing in certain locations, we may not even consider actually having centralized hydrogen generation.
Hustling certain locations, where gray and blue hydrogen may be available where carbon capture so we're focused on really Ci score and we think there is value streams that can be captured where we can actually purchase hydrogen and able to deliver to our stations at or only responsible for actually.
Dispatching. So there are a number of value channel that we are considering to optimize overall hydrogen pathway.
And then given Kim's point about Ci, which is carbon intensity by the way that's what we're looking at is the overall scorecard for how green a solution is.
So we are looking at situations, where people are are making hydrogen from sources that otherwise would be admitting carbon, but theyre, capturing and sequestering. So we'll look at we're looking at those as well on some locations also.
On your other question, Chris was about the timeline.
When we actually start construction on a station depending on the kind of infrastructure that we have there.
Determines how long that construction time is.
A generating and dispensing station. The construction time is about 12 months.
And we took we beat that slightly for our dispensing location here at our headquarters we think for.
Generating in dispensing location, we could do that and do the whole thing in 12 months and that would be after the completion of all permitting.
Paperwork is all done.
What we've had in our presentation materials. Prior has been 18 months as a benchmark.
Which represents six months of permitting time in 12 months from construction and certain jurisdictions, the permitting time might be a year or more on parts of California, where I think you're probably looking at more than a year in some cases.
Here in Arizona, we get permits very rapidly.
So it's going to be on a much shorter end of that scale construction times of year Permian anytime.
Somewhere between a month on a year over usually and so we kind of approximate that debt from.
From a.
The announcement to commissioning is about 18 months on average.
That's very helpful on on the.
Fueling strategy and if I could squeeze in one that's related to that.
You guys released the three variance on on the hydrogen truck.
This week I am curious how that relates to the to the Budweiser trials.
Look at slide six you're talking about the pilot.
In 'twenty two.
Well this was a pilot it's there'll be initially focused on the long haul I mean, originally it was talked about too.
The timing is actually more like 2024 on Budweiser actually use some of the regional trade launching in 2023.
For the for the pilots in early 2022.
Great question, Chris that the focus with Anheuser Busch's on fuel cell vehicles, they've been our partner for developing fuel cell vehicles for a long time now.
And they will be using both vehicles.
The trade fuel sales going to be suitable for routes that are up to 500 miles.
Whereas the two we're getting two exceptionally long range is at this point.
That's why we released that.
Portfolio refinement, because we were going to have a 900 mile at least variant of the equal of two sleeper.
And that will cover the longest route that Abbvie has in North America.
The 500 mile truck will cover a good chunk of those routes and will be available slightly sooner. So we anticipate that the first vehicle that ABB will free.
Running from Nikola will be the Nikola Tre fuel cell.
Up to 500 miles of range and then in 'twenty four we'll add the sleeper for the longer hauls.
On a prototype route for AB with us.
Nice, California, where they have a large brewery serves a market here in the southwestern United States.
The primary route for the event nice brewery as to the Chandler.
Arizona warehouse, which service services, the southern part of Arizona and Thats about it just over a 400 mile route. So the Nikola Tre a fuel cell could could service that route there are longer routes.
That may be has that.
We will tip into the Nikola two range category.
We think that theres going to be a lot of ralphs, maybe has that we can cover with the Nikola Tre Joe.
Thanks much appreciate it.
Thank you. Our next question comes from the line of Joseph Spak with RBC capital markets. Please proceed with your question.
Thanks, Good afternoon, everyone I actually wanted to follow up on on.
Chris's line a question right there.
So I think originally the tray fuel cell was Europe. Accordingly, maybe you could just indicate I think give us some indication of what your potential customers were telling you that made you decide to bring in a tray version on the fuel cell to the U S. And then I know that.
Nickel two fuel cell it seems like it was delayed a little bit was that related to trying to get it get the higher mileage variant out there and ultimately even if the mix is changing between.
Two Nikola two in the tray a little bit here.
Does this is your 2000 fuel cell targeted by $23 five K by 'twenty four still valid.
Let's start there.
Sure.
We have not changed any of our forecast from 2023, and 2024 and 2025 total.
Our fuel cell trucks, I think what we have done is debt.
We have found that there was some confusion about it in the marketplace with respect to our fuel cell products.
And one thing that we have done, especially in the last couple of months is that we have spent a lot of time really trying to understand the market and segment the market and understanding of the needs at where the gaps are and why do we think about BV trucks versus field <unk>, we know that theres, a GAAP, where BP is not able to provide the right solution and so we believe we are.
Got compelling product that we can meet the medium haul market and then as well as having a new chassis new truck when you think about Nikola.
Q for.
That can meet reality long haul segment of the market. So we feel that we have the best product out there in terms of being able to really attack those sub segments of the market.
And Joe your question about the Europe versus USA. That's another example of the United States market and the customer share.
Ed.
Helping us to see that we needed to adjust our strategy.
Had a number of customers who are going to be customer with a tray battery sales.
To us we like this truck a lot. If you had if you had a fuel cell version that could go longer range still with a full payload.
Particularly if you could make it a little bit more dynamic for the higher speeds that you see on the U S compared to Europe.
We would buy it.
That's why we decided that we would go next to the trade fuel cell variant.
For the U S market.
Because we can follow right on the tray battery truck.
It's a same platform it's the same basic vehicle.
Just replace a lot of the battery with fuel cells, and we put our with hydrogen storage and then we put the fuel cell stack in there.
On the system, we have developed in there and we slightly changed the geometry of the truck. If you were looking at if you look at the renderings in the release, we put out there a couple of days ago.
You'll see that there is.
<unk> Aero front to this ratio fell at the same truck underneath but with Scott, It's got a more aerodynamic structure.
No just slightly lengthened and based on the on the simulations, which will verify with real trucks here shortly.
On a truck is much more aerodynamic the coefficient of drag a substantially improved by that revised geometry.
And so we think that the.
<unk> fuel cell will actually be very suitable for a good chunk of the north American market.
It's going to be suitable for those higher speeds that you need for Interstate travel is going to cover a lot of the Interstate market. That's under 500 miles and we think we'll be able to.
So a lot of those trucks.
And Thats. The reason why we go next from the trade battery, we go to the trade fuel cell and the two.
It comes down a little bit later and now our focus on the two is to make sure that we have a very high mileage distance long distance.
Vehicle to cover that portion of the market that really needs to long distance, particularly as the hydrogen fueling network that we're building out becomes more available on a coverage gets better.
You get into you get to the point, where you've got pretty good coverage in Europe on the natural gas front, but you still have the best selling trucks and in the European natural gas truck market is the longest range version that Golar partner has a <unk>.
<unk> hundred kilometer or 1000 mile truck.
Is there a number one seller in Europe, and that's even after you've got a lot of places where you can fuel that a lot of places you can fuel the compressed natural gas version and even a number of places now where you can fuel the liquid natural gas version they still sell a lot of really long constructs there because a portion of the market, particularly the for hire carriers in the third carrier.
And the third party logistic market they need a longer range truck.
And theyre going to need one for a long time to.
To come until they until the fueling network, it's really dense.
So that's why the two is now.
At the end of the introductions in 'twenty, four and it's focused on being as long range as it can be that's another reason for the announcement is that we're now up to 900 miles.
On the two range.
I'm personally not satisfied without it I won't push it even further if we can we'd like to get to the 1000 mile number they got to get on Europe for the natural gas truck they've got there.
But we're right now on 900 miles from we'll keep pushing that envelope as we get closer to the introduction there.
Alright, great. Thanks for the detail there.
Second question.
Maybe we could just turn to capital.
Capital, So I think back in.
August of last year, which I know is.
A lifetime ago, but I think you just talked about second half capex of like a $100 million I think it only came in in 2018, and then originally like $290 million for 'twenty. One I think you from the original deck and now youre, saying to 'twenty. So.
Cumulative capex is lower how much of that is a realignment of the priorities you talked about vs delight spend or maybe some efficiencies.
What does that mean for <unk>.
The language you had in some of your prior filings about.
Our capital raise in late 'twenty, one early 'twenty two.
Great question.
I would say all of the above as you know in 2020.
Did defer some capex, but.
When it comes to spending, especially for hydrogen stations. It was important that we found the right solution that makes sense.
And so it made sense for us to defer debt through 2021.
But when it comes to Capex, it's something that we think about very carefully as you know.
This is investors' money and capital allocation decision is super important and we won't be thoughtful and while we understand that we need to meet all of our timetable on commitments with respect to trucks and fuel cell trucks, and we're making sure that we have like capital deployed.
For operating expenses to ensure that we meet the timeline in terms of Capex.
I think we have that provision rate for 2021.
We have pretty good idea in terms of what we need to spend to get to one.
No phase completed for a greenfield manufacturing facility and there are some capex related to having making sure that our on facilities online by June So that's going well and we anticipate capex allocated for those two projects that will be fully spent.
True to when it comes to 100 stations and partners. There we are trying to be a bit more flexible recognizing that there could be a number of different options and configurations and so we need to be flexible in terms of on how we think about the capex.
But we do believe in the overall context of $225 million to $230 million that were allocated for 2021. We think we will have enough flexibility now it's quite possible that especially when it comes to the second quarter second half of the year and if we find that there are great opportunities as we continue to partner.
And that perhaps we may need to accelerate capital spending when it comes on hydrogen side, we will certainly update the market.
In terms of capital raise I think we have always been clear debt.
Debt at some point, we thought that it would be prudent.
Pursuing a capital raise sometime in 2001, we like to make sure that we have adequate capital at this hearing advance or potentially year and half two years worth of capital for our operating expenses and capital expenditures and so we will time to time the market.
And we do think that so far the market has been strong so do not be surprised if we do end up tapping the market. This year, but we do that because we want to make sure that we have ample liquidity at least 12 months to 18 months in advance.
Okay. Thank you. Thank you very much.
Okay.
Thank you. Our next question comes from the line of Mike <unk> with call. Your Securities. Please proceed with your question.
Good afternoon.
Can I start with a question on the Aps deals for electricity.
Can you maybe give us some color as to on some of the moving parts behind that contract. I mean. This is this is this is a commodity that trades openly so somewhere youre, giving us on where youre getting so can you give us some color as to how you got good price zone.
Is there any kind of.
Minimum offtake or.
I know I'm asking you to actually take from EPS can you get that kind of question.
Yeah, Great question Mike.
The rate schedule that we have with Aps.
Very competitive by the way and very innovative.
Was it a result of a lot of work and a lot of.
Education of stakeholders, because we had to convince.
The utility that this was going to be a good deal for them, we have to convince the state regulators.
On that oversee the utility that this was good for the ratepayers.
As they are publicly regulated utility and we had to also convince.
The people who.
Where we're going to be.
Touching on the grid that this was going to work well so.
Key aspects of the agreement.
Or that.
We have this rate available throughout the service area.
For the quantities of electricity that we're going to need which are very large.
And what our advantages to the market is off peak.
Which is during the night every day year round.
And during the shoulder season is during the peak of solar production during the day and solar noon you have a lot more electricity coming into the grid.
Then as needed when it's when it's not a hot day.
Here on the southwest.
And then the P kits.
The peak of the peak here in the southwest is in the hottest months of the year, which has delayed summer and thats in the late in the day. After the solar noon you get solar production starts to fall off but everybody is running their air conditioners, and so you get around five o'clock, you usually get a peak somewhere between four and seven P. M. We have the ability.
<unk> and making hydrogen to be able to curtail for a period of time during the peak, particularly in that peak of the peak time of year for the southwest grid.
That was.
Cold or the utility and the grid operators.
Because we're not going to add anything to their peak because we're going to in the peak of the peak. We just we just curtailed for a few hours every day, we can do that we've got buffer built into the system to do that.
And then we're a newfound red zone four.
Sure.
When mills and.
100.
On.
Hydro power turbines and other sources of renewable energy.
And even non carbon generating energy sources like nuclear plants of which there is a great. One here on the southwest just down the road from us.
There's a lot of life left that doesn't add any carbon by making electricity and at night that capacity is just on his is wasted no revenue no use well at night, we're going to make hydrogen with that now and that's going to be that's found revenue for the utility and for the ratepayers.
And then we don't add anything to their peak problem in the afternoon. During the peak times a year. So that's why we get this very very competitive rate because we represent the future of the electric grid, if youre going to get renewable energy like wind and solar into the grid and use it effectively.
Lee you either need massive kind of storage or some kind of like big grid batteries, which are expensive integrate quickly or you can have us do it basically marginally for free and.
And we will pay you for that.
The electricity that youre not in keeping our we're able to sell during the off peak hours and we're not going to add anything to your peak problem. So we think this is a model we think that everybody around the country, United States and around the world.
We have similar discussions going on in Europe by the way.
We are going to be able to quickly look at this and see that it makes sense to do this just about everywhere because the amount of renewable energy goes up every day every week every month.
And the challenge of balancing the grid goes gets bigger and bigger every weekend every every month every year.
And hydrogen can be part of a solution for that I think we just proved out in the EPS model here.
And we're looking forward to replicating that in other jurisdictions and methodology to it with other utilities.
Okay.
Got it.
I also wanted to ask about the pricing of the tray.
Youre, putting on your outlook here.
This could be me and I'd be crazy I remember seeing in the past.
Just by dividing what was on some of your earlier slides.
ASP.
True Bev start was going to be it was going to be about $200000.
It looks like here same calculation on the <unk> $300000 again that can be working with some all wholesale data here, but did anything changed maybe it's price of steel or so on the other.
Kind of raw materials here or is this just a different pricing schedule again about working with small data.
You're working with some older data Mike debt that original price benchmark was established by the only product in the market at first.
Was being priced at 250000.
That was a much.
Inferior products to what we're going on which the way we're going to have in the market here is very shortly and we're going to prove to customers that they can get from us that was a much lower range less capable less sophisticated vehicle, but it was the only one available and it was being sold for $2 50.
Right now, we see pricing in the market going north of 300000.
Very very rapidly for more capable state of the art vehicles.
So that's why you see that number changing we will continue to use the most up to date market reference that we have.
For our modeling purposes to help you out.
Got it I appreciate that thanks, so much guys.
Thank you.
Ladies and gentlemen, this concludes our Q&A session index our call today, we thank you for your interest and participation you may now disconnect your lines.
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