Q1 2021 Nikola Corporation Earnings Call
[music].
Greetings and welcome to the Nikola Corporation's first quarter 2021 earnings Conference call.
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 for prepared remarks.
If you require operator assistance during the conference. Please press Star Zero on your telephone keypad as a reminder, this conference is being reported.
We'll now begin the video presentation.
Hum.
Yes.
Okay.
[music].
Gotcha.
Yeah.
Okay.
Okay.
Okay.
Welcome welcome. Thank you. So we just came from northern Michigan from a testing from that worked out really well for us and so now we move trade one to northern Indiana to another proving ground to continue the powertrain validation testing and net so far is going really well, okay. What do you want for all.
Buybacks.
All Oems, who will take their vehicles moving around and make sure every corner cases covered any scenarios actually cover and we do it here because we can stimulate a much more extreme environment then open relative.
But it was going to happen on the open road after say 200000 miles without having to adhere to much sooner mileage are doing.
Well here, we are first attempt at a 20% grade and then proving ground and see how it goes.
EBITDA countdown whenever you're ready for.
Yeah.
Yeah.
[music].
Yeah.
And.
Again, good good perhaps it pretty easy.
Totally as expected adjusted torque is all there.
Good evening.
Let's do it again.
Yeah.
Okay.
Uh huh.
Okay.
Uh huh.
Yes.
Okay.
Yeah.
Hum.
Okay.
[music] right here doing powertrain validation testing and we're testing efficiency right now in 2000 tons alone.
Okay.
And we're also evaluating.
B with it which is actually quite surprising for.
Beth.
Looking forward to seeing what the top speed is but to wait on the truck presently.
She's gone 70 475.
75 miles an hour.
Not bad.
He's not going to love that.
There's no drama there was no diesel no emissions.
Well, it's not the love for that.
Yes, I'm very happy that resolved.
Very very happy.
Well listen guys for Powell I ever thought of class eight truck with average.
From a standalone.
Yeah.
Okay.
And without any hesitation I can accelerate on demand right.
Great on demand.
For the takes us from Delta.
Okay.
Alright.
S trade channel.
Volume was breakeven.
Sure.
Yeah.
Yes.
Not bad not bad at all.
We're moving very quickly it's a startup every day is gonna be different presenting new challenges every day. The end result, realizing your problem solving skills and how to navigate tough waters and everybody's all in we're all working to deliver on schedule and everybody is doing it with a lot of enthusiasm.
Okay.
Okay.
Yeah.
Sure.
We're getting ready to go out and attract and stimulate six per cent great. So how we're doing that is we have a total no attach it backup for this rig so what's the total amount does it basically absorbs energy from moving to the truck.
Oh It does that is through AC Motors Tonight, steric driveline, and we can accurately simulate any road grade up to 26 per cent for this.
The most extreme roads in the country.
Trucks aren't on cloud on us because there are simply too steep. It turns you should pay the elevation is too high or whatever the reason is but what we can actually do it stimulate that road conditions and emulate and our past or the coke all good idea of how you expect like that great.
Yes.
Okay.
Uh huh.
Okay.
Uh huh.
Okay.
Okay.
Okay.
Yes.
[music] I don't think we effectively from one another truck yet we're testing to a certain set of requirements and those requirements are pretty steep but so far everything has worked out really well.
Yeah.
Okay.
It was good she runs from she runs very well.
It didn't have any snags theres no fault.
We're going home on time of day.
[laughter].
The one thing that for me described driving this Nikola tray.
Not a job.
For people, who drive a truck.
Shifting gears 18 speeds 20 once fee for.
For this truck here.
You know what is truly a game changer, Oh, yeah spend by the way is very fast.
So yesterday, we were out there doing some funding and it occurred to us that maybe we should lineup next to our.
Free shipping or transport.
Just to see what works.
Sure.
Okay.
Oh well.
Yeah.
Good day.
Okay.
Yes.
Got it.
Okay.
We were a door to door. So when you hear the term wave of the future GAAP I mean looking for the industry going.
Yes.
It is now my pleasure to introduce Britain Wilton.
You may begin.
Okay.
Thank you and good morning, everyone.
Welcome to Nikola corporations first quarter 2021 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 March 2021 quarter and our outlook for the June 2021 quarter and the full year 2021.
The press release detailing our financial results was distributed a little after six am Pacific time earlier this morning.
The release can be found on our Investor Relations section of the Companys website, along with the 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.
Any factors could cause actual future events to differ materially from the forward looking statements in 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 annual report on form 10-K, and our quarterly report form 10-Q filed with the Securities and Exchange Commission. In addition to the Companys subsequent for.
Fillings with the SEC.
Forward looking statements speak only as of the day they are made.
You should be cautioned not to put undue reliance on forward looking statements.
I will now hand, the call over to Mark Thanks Britain.
Welcome to our first quarter 2021 earnings call.
Yeah, we're going to provide you an overview of what we've achieved including updates on the Nikola Tre Bev testing and validation.
Our progress on our manufacturing facilities in <unk>, Germany, and Coolidge, Arizona.
I'll provide you an update on the recent developments and announcements, including our sales and service partnership with breakthrough 60.
Our collaboration with O G and tobacco in Germany for hydrogen infrastructure, our collaboration to install hydrogen stations at existing travel centers of America locations and the announcement of our collaboration with total transportation services.
After this business update I'll turn it over to Kim and he'll discuss financial results for the quarter and of course well.
Do our best after that to answer your questions.
Let's kick off with an update on the status of the Nikola Tre be EV battery electric vehicle or Bev.
We will begin with the first batch of five trucks, which we've commissioned and are going through validation testing that progress.
During the first quarter the trucks are exceeding our expectations.
Expectations, so far in the winter testing, we're working to complete the commissioning and the validation of those first batch.
Number one is still on the proving grounds for powertrain powertrain validation number two is.
In the process of road load data acquisition and in poster correlation.
Number three remains in Arizona for software H M. I N controls development number for US also in Arizona for commissioning and is preparing for customer demos and other events, which have been happening this past week.
And number five remains in Germany for continued breaking validation testing.
The next batch is nine trucks on top of that first five and as of today, we have assembled for eight of those three of the trucks or at our headquarters here in Arizona. One has been sent to our facility in Indiana for crash testing for.
For trucks are in various stages of transit two.
To our headquarters here.
We anticipate the ninth truck will be finished by may 10th and that the for trucks in transit in the night truck.
Completed on the 10th well I'll get here to the headquarters by the end of the month of May.
Now onto our joint venture manufacturing facility out of Echo's industrial complex in <unk>, Germany as of today, we've nearly completed the building modifications to the facility the dismantling and building restructuring have been completed the automatic guided vehicles system installation is nearly complete and for that 30 to a J.
Vs that we'll be using that have been installed for validation on that track.
In the hardware and software is now complete.
While we anticipate the remaining 28 a G vs that we'll have for production will be installed over the next few weeks.
And tooling and equipment installation of our 14th separate workstations in that production line will be completed by the end of the month.
Critical parts and components to build the trucks have already started arriving at the facility and we've hired about 50 employees so far.
To prepare for vehicle trial production starting in June 2021, just.
Less than two months away.
In Coolidge, Arizona.
Where we have our greenfield manufacturing facility.
During the first quarter, we made significant progress on the construction of the facilities really starting to take for them now that the building has been substantially enclosed with the floor slab. The roofing. The walls are complete electrical and mechanical construction and installation is nearing completion and the manufacturing equipment is beginning to be installed the road paving is ongoing.
For the utilities have been installed as you can see from the photos in the deck. The progress that we've made in Coolidge. Since we went vertical in December has been quite remarkable we will continue to be as efficient as possible through our.
Construction process as we continue our expansion plans in Coolidge.
We will begin vehicle trial production there in the first phase in July and concurrently we will be building out.
The rest of the phase one assembly expansion area.
And upon completion of phase, one and in concluding that assembly expansion area.
The Coolidge plant capacity will be approximately 2500 trucks per year, and then of course, it will be going up from there.
Future phases.
With respect to our assembly tax the Nikola technicians that we've had in on Germany have been building a prototype trucks.
Since we started that process had been there for over three months now.
By the end of this quarter they'll come back to Arizona and start building trucks and are in college.
We've also begun assembly of our first Trey fuel cell electric vehicle Alpha vehicle here in Coolidge and Coolidge will now become.
Other base for us to assemble.
Prototypes and production trucks shortly.
On.
April 8th.
Just past Nikola and rig 360 announced an expansive sales and service dealer network spanning more than 65 service center locations.
<unk> hundred 60 service centers are ideally located in the key metropolitan areas in that major intersections of the Interstate highway system throughout the southeast the northeast and the Midwest.
This agreement provides a service and maintenance network for us and a reputable sales channel for our customers.
Service and maintenance are key points for our free customers and they expect reliability and uptime from these vehicles, so having todd.
Top notch service maintenance providers is key and our agreement with rigs for 60 or it will provide our customers with the confidence that these vehicles are going to achieve the desired uptime.
On April 14th just passed in conjunction with Iveco, and Oh, Gee, we announced our intent to deploy hydrogen infrastructure and fueling solution throughout Germany, Nikola will install hydrogen fueling locations for OEM F C Evs and not just our own but these will be open to the public at key.
<unk> supported by Oh, geez hydrogen delivery system pipelines.
The collaboration between Nikola Iveco and <unk> is expected to enable cost effective distribution of hydrogen from production to storage and <unk>.
Two fueling in dispensing locations in Germany.
As an important first step.
For us and building out our hydrogen infrastructure footprint in Europe.
On April 22nd just fast Nikola and travel centers of America agreed to collaborate on the installation of hydrogen fueling stations for heavy duty trucks at two existing Ta sites in California.
The first two stations are expected to be commercially operational by the first quarter of 2023.
And this agreement with Ta sets the foundation for the build out of hydrogen fueling infrastructure across the country here in the United States, We anticipate that we'll be able to announce the exact station locations with Ta sometime in late second.
Second quarter or early third quarter this year.
This is another important step in building out our hydrogen ecosystem here in the United States.
As you know we already have an innovative electricity rates schedule in place with Arizona Public service company.
Which should allow us to produce hydrogen fuel at price parity with diesel or lower.
Now our collaboration with Ta.
Gives us the station locations along the highly traveled truck corridor to dispense fuel the Nikola customers.
On May six just a couple of days ago, We announced our collaboration with total Transportation Services, Inc, which is one of southern California's prominent port trucking companies too.
To expedite zero emission transportation at the Port of Los Angeles, and long Beach.
The collaboration includes vehicle trials that they will do with us and a letter of intent.
For them to order 100, Nikola class eight bv's and fuel cell electric vehicle semi trucks. This is a great accomplishment for US. We now have a dual customer that is purchasing and will be using both battery electric vehicles and fuel cell electric vehicles.
It's a testament to the product lineup, we have and the competitive advantage of being able to cover both short regional and long haul with our different vehicle solutions.
Our <unk> are ideal for port Drayage in Metro distribution operations in our <unk> addressed the needs of customers, who have higher range requirements or need to refuel faster than a battery charging can give them.
Alright, I'll now pass it on to Kim and he'll go over the numbers.
Thanks, Mark and good morning, everyone.
In the first quarter net loss was $120 2 million and on a non-GAAP basis, adjusted EBITDA totaled negative 53 point for a million.
Adjusted EBITDA excludes among other items 150.3 million in stock based compensation to 14.9 million on regulatory and legal matters and other professional service fees incurred in connection with the show Celo article from September two.
2020.
And three $1.8 million in normal depreciation and amortization.
Research and development expenses for the first quarter were $55 2 million, including $10 3 million of stock based compensation expense.
R&D expenses consist mainly of costs incurred in the development building testing and validation of Nicolet trade battery electric and fuel cell trucks.
SG&A expenses were approximately $65 4 million of which $39 9 million is stock based compensation expense and 14.9 million is legal and regulatory cost.
As of March 31, 2021, our total head count exceeded 530 employees.
And it's growing at a rapid pace as we continue to build our teams in engineering manufacturing and energy.
Turning to the balance sheet, we ended the first quarter with $763 8 million of cash and cash equivalent.
We have no debt outstanding as of March 31, aside from our Phoenix headquarters lease obligation.
Our capital expenditures totaled $24 5 million year to date.
And are comprised of the construction of our Coolidge Greenfield manufacturing facility and equipment.
As well as investments in supplier tooling related to trade Bev production.
We ended the quarter with approximately 394 million shares outstanding.
Weighted average shares both basic and diluted for the first quarter.
Were approximately $392 2 million and 392.5 million respectively.
Eluded weighted average shares enclose the impact of the private warrant.
Basic and diluted GAAP net loss per share for the first quarter was 31 cents.
Basic and diluted non-GAAP net loss per share was 14 sales.
Non-GAAP net loss per share excludes.
Stock based compensation gain on <unk>.
Revaluation of private warrant liability and regulatory and legal matters.
Next we wanted to provide an update on day, one counting developments.
That as you know many companies have been working through in the past several weeks.
In light of day recently issued SEC staff statement, we have reevaluated, our historical accounting for the private warrants assume from that dry Q in dispatch merger and determined the private orange should have been accounted for as a liability and.
Mark to market at the end of this quarter in 2020.
Previously we had counted for those warrants as equity similar to other spec and Despect companies.
We have worked with our auditor and our board to complete the restatement.
Of our 2020 financial statements.
Accordingly, and filed an amended form 10-K yesterday.
This restatement resulted in additional non current liabilities.
Seven 3 million and a noncash gain of $13 4 million in differential statements.
For the year ended December 31 2020.
The restatement does not impact our previously reported operating expenses or our cash flows.
We considered the matter concluded.
This change in the accounting treatment has no effect on Nicholas cash position ongoing operations or future plans.
Now turning to our Q2 and fiscal year 2021 outlook and guidance for.
For the first quarter of 2021, we came in below our previously communicated expense ranges.
We continue to be laser focused on managing cash and disbursements.
For the second quarter of 2021.
Estimated R&D is in the range of 87, five to $92 5 million.
Including $10 million.
Stock based compensation expense.
Estimated SG&A is in the range of 62.5 to $67 5 billion.
Which includes 43 million of stock based compensation.
Total estimated operating expenses will be in the range of 150 $260 million.
Which includes approximately 53 million of stock based compensation.
Our anticipated capital expenditures for the second quarter.
Our $60 million to $65 million.
We have revised.
'twenty one guidance for operating expenses.
Solely due to an anticipated increase in stock compensation expense of approximately $30 million.
Of which there are $10 million is R&D and 710 million is SG&A.
Previously our full year 2021 guidance for R&D was.
In the range of 305 to two we had a $315 million.
Because R&D stock compensation is expected to increase from 27 million to $40 million our.
They did R&D guidance range is now 300 $318 million to $328 million.
Our previous full year 2021 guidance for SG&A was in the range of $235 million to $245 million.
Due to our anticipated increase of SG&A related stock compensation.
From $152 million to $169 million.
Our new SG&A guidance range.
Is $252 million to $262 million.
Our revised total estimated operating expenses will be in the range of $570 million to $590 million.
On a non-GAAP basis total operating expenses remain unchanged in the range of 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 the weighted average shares for the full year ending December 31, 2021 will be approximately $396 million.
We expect that we will fulfill our hiring plan in the coming quarters.
By the end of 2021, we will have approximately 1000 employees.
Comprise of roughly 180 manufacturing plant employees, and 820, corporate and engineering employees.
Our anticipated capital expenditures.
For the fiscal year 2021 remain unchanged in the range of $210 million to $230 million.
Our capital investment plans include phase, one Coolidge manufacturing plant and equipment.
Supplier tooling.
Hydrogen infrastructure.
<unk> fuel cell electric vehicle engineering equipment.
As we continue to move forward and execute on our business plan.
We look forward to achieving the following milestones in 2021.
Start of vehicle trial production at the joint venture manufacturing facility in <unk>, Germany.
In June 2021.
Start of vehicle trial production at the Greenfield manufacturing facility in Coolidge, Arizona.
In July 2021.
Break ground on our first commercial hydrogen station.
Announce additional hydrogen infrastructure.
And ecosystem partners.
Announce additional fleet testing customers.
And deliver the first Nikola trade baths.
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 would like to ask a question. Please press star one on your telephone keypad.
Information total will indicate your line is in the question queue.
You May press Star two if you would like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Okay.
Okay. Our first question is from Paul Coster of Jpmorgan. Please proceed.
Thank you for taking my question Mark I I've got a bundle of questions to start with which as.
You're now starting to show the best vehicles to customers.
What is the response do you think that you're going to get customer orders.
Soon do you believe that you're still on track for that target of potentially as much as 600 sales by the fourth quarter. I know you can only fulfill 100 because of the supply constraints, but do all of those numbers still mesh and finally on that bundle of questions. What's the latest on the supply.
Strength surround the battery.
Of course, yes so.
The response, so far to the tray pack production prototypes.
That has been very positive we actually had fleets in here.
Two our Phoenix headquarters and on the on our local Phoenix Test track this week.
We had 25 fleets represented.
And our customer days this week that came in and actually had a chance to.
Two.
And the trucks.
Look under the Hood.
Metaphorically speaking.
Some technical presentations.
And then the of course had a good tour of our facilities share.
And an update on the Coolidge Greenfield.
Germany, Germany brownfield.
So very.
A very positive reception at this point.
We don't know about longer range truck.
That's coming to the market.
Our trade that is coming to the market with a 750 kilowatt battery.
The closest we know of.
Competitively right now is $5 50 for over 200 kilowatts more energy onboard the truck that that will translate into longer range.
We're continuing to validate the actual range that we're going through.
Advertise.
But it should be the longest range truck out there. It's also relatively short wheelbase.
Compared to a lot of U S class eight trucks.
It's got great visibility for the driver.
Outstanding visibility for the driver and with the sharp well.
Base has a great turning radius, it's very maneuverable.
And of course for applications for Metropolitan deliveries.
Regional return to base kind of ralphs, that's going to be an ideal truck.
And again range is always an issue are almost always an issue for for these customers and so having a long range truck.
We think it's going to be a really great thing for customers in the market. So.
Positive reception.
Again, we are at.
Trying to.
Yes.
Finalized agreement for launch.
And the model for our launch customer is Anheuser Busch Thats been our launch customer.
For the fuel cell vehicles for a long time, because they stepped up early and said we'd like to for your launch customer and partner with you and developing the vehicles. That's the kind of relationship we're looking for for the trade.
Anybody.
I've been to I have yet to talk to any customer who doesn't want a truck per test that wouldnt be willing to buy one for testing and evaluation. What we're looking for at this point its launch customers. So.
Those negotiations are ongoing and we had a number of those target customers in here. This week. So we are cautiously optimistic that we'll be able to put that in place in the near future.
Second question.
On the production delays.
We've already explained to you the situation on battery cells. We do believe we have confirmation from them from.
From our supply chain that we were going to receive in ourselves through to complete enough trucks to stick with our current guidance of between 50 and 100 units that we'll be able to finish this calendar year.
Other parts are now <unk>.
Our concern.
We are looking of course for chips.
Touch screens.
There are potential shortages.
A number of different parts at this point.
Thank all of you who follow us companies in our space now that the supply chain is under strain for a number of parts.
We're confident we're going to be able to build trucks.
And we are sticking with our guidance of 50 to 100, because we don't know of any reason why we can't do that at this point, but there is the possibility that that shortages.
We will affect us.
Because they're just across the industry and across the globe at this point.
And we will keep you updated on that we'll know more of course.
At the end of them by the end of the next quarter and we'll keep you updated on that.
Quick follow up the pace at which you're executing now is really breathtaking and of course it will.
It will eventually come a nice problem to have which is that you'll need more capital to build out the infrastructure. When do you think the need to for.
For new capital will arise and can you just give us some sense of how you're prepping for that eventuality.
Paul.
Thank you.
We have been consistent in our communication at that point the market sometime this year.
In terms of preparation.
We are well prepared and we are in conversations with.
With our underwriters and we feel confident at the right time that we'll be able to execute additional capital raise.
Very good thank you so much.
Thank you.
Next question is from Jeff Osborne of cash.
Collin <unk> company. Please proceed.
Yes, I was wondering if we can go back to the battery supply commentary how are things shaping up for next year, just given a lot of folks who are having to put deposits down for the year ahead.
We have confidence in the ability to.
All right.
As Jeff that's a great question because.
The suppliers that.
We rely on.
Which our Korean based.
Homebase they have other production facilities, but they're based in Korea.
They are holding off on 2022 commitments until at least until June and probably my guess is we won't.
Be able to firm that up until July so you probably have to wait another quarter before we get final commitments on allocation for 'twenty, two and that's the situation.
Everybody is going to be on allocation youre.
Youre going to get you're going to get what they are willing to give you.
<unk>.
Our best too.
To make sure that we get as much as we need to be able to build the trucks that we can build and that we know we can sell.
Without constraint because of battery itself, but we won't we won't know for sure for at least another I would say, 45% to 90 days.
What the allocation is going to be for 2022.
Jeff having that said we want you to recognize that we are having active discussions with the cell suppliers about 2022 as well as 2023 supplies and as you stated some of the cell suppliers are requesting that we make.
Initial down payments for potential support in terms of dedicated lines and so that's something that we are actively evaluating and having discussions.
And in fact, we have a supplier that will be here next week.
That's good to hear the second area I wanted to pivot to was on the hydrogen side can you just.
Remind us.
Refresh us what what the strategy is there in terms of the five stations I think when you initially went public you had.
Based on order with now for five Electrolyze. It received no I guess identified three sites with the two from Ta.
Looking out more broadly in 'twenty, two and 'twenty three do you still have this ambitious plan for a nationwide network over the next 456 years or are you going to do that more scaled back and much more regionally focused.
The southwest.
No Jeff we absolutely are committed to the plan that we outlined previously.
And we'll start that network here in North America with stations in California, and Arizona.
Given the Aps rate schedule that we have and the coverage area that utility which extends to the California border along Interstate 10.
That's going to allow us to produce hydrogen very cost effectively competitive with diesel.
And so in addition to stations, where we might produce and expense onsite here in Arizona, because we have the right power structure.
In the western part of Arizona accessible, particularly today to the quarters that lead into California.
We're likely to do a hub facility.
We will likely be a dispensing station, but we're going to be producing a lot more hydrogen that is required for that location, because we're going to move that hydrogen into higher cost locations.
In this case in southern California, So, while we don't give the electric rate to make a competitively priced hydrogen.
<unk> will make it nearby in this case just over the border in Arizona, and then we'll move that hydrogen into those dispensing locations.
For two locations that will be.
Making public with Ta in the very near future are very strategically located particularly for our launch customer Anheuser Busch, which has a brewery in van Nuys.
California.
To be able to fuel their loads in and out so.
We feel better about this than ever.
It's no longer theoretical but we have all the building blocks in place, including electricity, which is up to 90% of its total cost of the hydrogen over the life of the station.
And we have that in place now.
And then we'll be we'll be adding additional city pairs.
Our geographic regions.
Add in various parts of the country.
And following probably the same model, which will be a mix of producing in dispensing locations and then hub locations, where we will move hydrogen to dispensing locations on my end.
That model will probably be what we follow across the United States. Similarly in Europe, we will be doing something similar with a possible difference of what we just announced with LG.
So FX was also participating in that consortium with <unk>, which is the largest pipeline operator in Germany.
They are going to be distributing.
Barry Green hydrogen and by the way a lot of that hydrogen will be sourced from north Sea wind power.
I'll make that will make that with <unk>.
Electrical lives our facilities onshore in the northern Netherlands, and then it will be pipeline distributed throughout northern Europe will start dispensing that from pipeline distribution with.
With stations that we're going to build in Germany that should be the most cost effective and green hydrogen in the world when we start actually.
A very exciting way to start there in Europe that should be very cost effective and competitive.
Got it that's all I had thank you.
Thank you. Our next question is from Jeff Kauffman of vertical research partners. Please proceed.
Thank you very much good morning.
Thank you for that video I think it was great to see the trucks in motion at least until we can see them live.
I was just curious you're measuring top speed and efficiency upgrades.
Do you have any measurements yet on what your realized I guess miles per gallon equivalent on the on the battery trucks are.
And also in terms of.
Range testing have you how has the maximum drivable ranges testing out so far.
Well Jeff.
Range is as I mentioned earlier one of the.
For chief selling points of this vehicle it should be the longest range battery electric vehicle that we know of class eight heavy truck.
In the World that we know of at this point 750 kilowatts onboard we know that's going to translate into really good range. We've already had some range testing results and they are I will just tell you they're very impressive.
This is going to be a really long range battery truck.
We have of course theres a lot of work yet to be done before we can actually translate that into a representation of miles per gallon equivalent.
But right now the results are very encouraging very positive so far.
Okay. Thank you and I think you answered this in your commentary in terms of what the trucks are doing to get commissioned so.
There are no customers actually testing the trucks themselves yet correct.
That is correct all of our testing is internal although this past week, we allowed customers in the vehicles and of course, we.
Doing their own inspections.
And.
Got it.
Sure.
We've got their physical hands on the vehicle, but they were at the test track facility. So we won't have customer fleet testing.
For a little bit.
For a few more months.
Alright, and Thats encouraging news on the participation at the customer days too. So thank you for that that's all I have.
Thank you.
Our next question is from Chris Mcnally with Evercore ISI. Please proceed.
Thanks team.
Two questions. The first is maybe a little bit more.
A detail on the hydrogen stations and strategy, if we look at the Ta announcing.
You answered a little bit of the question, Jeff, but I just wanted to dive in high level just over the next two years.
How much of sort of your needs are covered by that.
The two stations with Ta plus the central hub.
Is it 30%, 50% something much more just to understand how many more of these.
Separate agreements, maybe maybe Connie.
So Chris our target is to supply 100% of the <unk>.
Trucks.
That we deliver 100% of our fuel with.
With the stations that we provide.
It's a bundled lease.
So the <unk>.
City pair, we're targeting first as Phoenix and Los Angeles.
So we need we need fuel in Los Angeles, we need fuel here in Phoenix, we have a thousand ton dispensing station at our headquarters here in Phoenix, which had been operating on a prototype test basis for for some time now.
But we'll be adding to that so that we have a retail open to the public retail station here in the Phoenix Metropolitan area.
I will start with the two stations in Los Angeles, and then in between on.
On the border. We will we are planning to build a hub facility as I've described so that will allow us to provide fuel between Phoenix from Los Angeles. It will also provide fuel for out and back routes from Phoenix and from Los Angeles.
Out and back.
Up to half the range of the vehicle of course and then the next thing. The next stage for this region will be to provide coverage in central California somewhere in the Bay area most likely.
Which is just about the right distance got 400 miles from the.
The Los Angeles.
Los Angeles station.
And then of course eventually infill stations for those.
For that area. So that you can provide the coverage that you need the ideas that we have enough fuel to fuel all the trucks that we deliver in that geography, and we'll be doing that same thing delivering the trucks and the fuel.
Synchronized as we move to other city pairs in other geographies around the country.
Chris as you recall, our 2023 forecast for hydrogen truck is approximately 2000 units.
And we assume.
That represents about 10 stations in terms of <unk> commercial station equivalent.
As Mark indicated.
Net in certain locations, we will have stations, where we generate hydrogen on site at the locations. We may have a hub and transport for dispensing stations and there may be areas, where we may actually procure hydrogen for a long term off take agreements and so I think that probably.
To give you some combination of how we're looking at ultimately delivering hydrogen at the pump level, but you shouldnt assume that it will be all 10, eight ton dispensing stations, where we generate hydrogen onsite although.
Although we do have as was I think somebody had asked earlier about the.
The longer lead time item, which is the intellectual lasers themselves, we do have $30 million Electrolyze our order.
And process with now so there'll be producing and delivering the electrical lasers for up to the first five stations. If there are eight tons of peace.
As we may adjust.
For the sizing depending on the needs of the local.
The exact location of course.
And Martin can I very much appreciate the mapping that 215 at Willis.
Super helpful as well I guess, what I'm thinking about a high level is how much actually the Ta agreement, where you sort of have this ability to expand right. This could be a foundation agreement sort of the two stations work out and then day or your partners for other.
Good evening geographies versus.
Maybe having a couple of partners. So a couple of agreements that look like Ta.
That way, maybe for different geographies or different economic different revenue models, I guess that was a little bit more of a focus on my question as opposed to the actual math on the stations.
I understand Chris that's absolutely true, we're very pleased to be partnering up with Ta.
Have a very good coverage.
Stations, and the places, where we're going to need to be.
They also have tend to have larger locations they have.
They never did they never have skimped on the land for.
For their stations so there the actual amount of land that they have in each location.
There's a little bit higher than some of their competitors are larger than our competitors, which is very helpful. For us we don't need a lot of land for dispensing usually a truck stop we will have enough space for us to put the dispensing equipment in there for only dispensing and these first two stations by the way will be dispensing only we will be moving to hydrogen in there.
They are they are in high cost locations for electricity in California, and the Los Angeles Basin.
And so we'll be moving the hydrogen and so those will be relatively simple and relatively inexpensive stations compared to ones, where we are producing and disconnecting on site.
So we'll be looking at other potential partnerships as well we are already doing that have been in discussions for some time with a lot of potential partners on the hydrogen infrastructure side Youll see us.
Do other.
Things on that front as we go forward.
Great.
Get that detail and then the second is on order for progression.
Nice to see the orders from.
Total in California, just was curious if we could maybe get an update on on whether we could also see a launch.
Customer for that particularly in Europe.
Does that still make sense to think about a major launch customer for Europe or could it be.
Sure.
Accumulation of several small orders.
But specifically for Europe.
So Chris at this point, we do like having a margin customer.
We've been very fortunate to have Anheuser Busch as a partner for the launch of a fuel cell vehicle now for several years, where they have helped us to develop the vehicles that helped us in testing we're going to have a couple of prototypes in their fleet, we'll tell you more about that.
Coming up here in the next couple of quarters.
And that's just a really excellent way to bring new vehicles to market.
So we're looking for that kind of launch customer.
With the.
The trade Bev.
Gtsi, which we just announced a couple of days ago is going to be one of our launches and thats going to be a great place for us to test the trade balance applicability in a port in drayage application. They agreed to take up to 30 of the trade paths there.
The day agreements that we do the testing and they will take up to 30 of the 100 will be trade bets.
And then 70 will be tri fuel cells, which of course and a drayage operation have the advantage of additional range and runtime and quicker refueling.
But theres a lot of applications for drayage that we think that the.
Battery electric vehicle will be just fine and they do too so that's a good place to launch.
We're still we're in discussions with other potential launch customers.
On.
Other applications for.
The trade Bev.
Which of course are focused on metropolitan deliveries.
Regional deliveries, where you can stay within the range constraints of the trade and again, we're going to have a longer range or any battery electric heavy truck that we know of at this point. So we feel really good about that as I mentioned, we had 25 fleets represented here this week to come in and kick the tires metaphorically speaking.
And had a great week with them those discussions are continuing.
Of course can always place test vehicles.
Ones and twos with customers everybody. The only question people have is when can I get my test when can I try one, but we're focused right at this point of our development on on launch customers. Because we know we can sell we can.
Put the ones and twos and to the market without much problem, but wed rather at this point have one or two maybe three launch customers.
And so we're working on that if we can do it.
Thank you. Our next question is from <unk> <unk> of Scotiabank. Please proceed.
Hey that is known for Emmanuel.
First topic wanted to cover.
The total transportation have order for 100 trucks or letter of intent.
Could you maybe drill down more into the mix of that for <unk> versus <unk>.
Based on the order based on specific range performance commitments and and also what kind of pricing would you expect and.
Oh, so what's sort of the operational plan to convert this to to firm orders.
Sure.
The split.
The anticipated split is going to be 70 30.
<unk> 30 battery trucks 70 fuel cell trucks.
In the set for.
For operations at <unk> is running in Los Angeles from long Beach requires them to get to full shifts every 24 hours at least.
So they turn these trucks very quickly typically they have.
One quick turn between the two shifts and then longer term, where you can actually have the truck offline a little bit longer. So the first between the first and second shift day call that hot seat because the driver then.
The next driver gets them out with feed is still warm as that quick and you could use it.
Got to be able to fuel really quickly.
That's the reason that skewed to the fuel cell trucks because.
The.
That quick change is that doesn't allow for up for a battery charge.
You have to be able to fill in in the same timeframe that you can draw a diesel truck, which we can do with a fuel cell truck we can.
Refueling can be accomplished in 10 to 15 minutes.
Which is about the same time as the diesel and so that is really suitable and thats why they execute the order 72 fuel cell and 30 battery, but battery.
Works just fine for for range, you don't need a long range that you get from a fuel cell truck and a drayage operation typically you need run time, but not so much range. They are usually not.
Exceeding that will certainly not exceed the range normally for a lot of their use cases.
The shape that it's going to be longest range truck out there for 750 kilowatts on board. So that's not a problem. The challenge is the recharge time right.
Right now our fastest recharge units that were using our 350 kilowatts and to go from.
The lower lowest recommended state of charge for recharging to 80% which is.
For the ideal recharge target for battery life.
It takes about 99 minutes at this point for.
For us in our testing.
So that's a little bit longer than any for a for a hot seats shift change, but they can recharge on the longer term.
After the second shift so.
This is stuff, we're working on with Tsi, a great partner for us they are really committed to greening out their fleet.
And.
And we're really excited to be working with them to figure out how to solve the challenge for for Drayage operations, which as you know in southern California is one of the biggest problems for carbon and other emissions.
In southern California, because it's one of the busiest portion of the world there.
Edison.
For your question in terms of timing of converting this into a firm order we.
We do have a commitment to deliver test vehicles sometime next year for hydrogen fuel cell trucks as well as battery electric trucks.
And we are working also with tsi and helping them in terms of procuring government subsidies on dish trucks in terms of pricing is more favorable than what we have dialed into our model.
Understood that's really helpful and insightful.
Just one last question.
Just trying to get a sense after that customer day.
You're still aiming for for two deliveries weighted could we maybe expect to know.
Who those initial 50.
<unk> customers will be or who they will be will there be some sort of them announcements communicated.
About.
Our profile, our who exactly those are.
Sure. So obviously tsi is one.
They will be there'll be there'll be an launched they'll be getting early units.
We'll be working with them for sure and as I mentioned before I'd, we'd like to add to that another one or two.
<unk> customers, who we would be able to partner with them in similar vein.
And we're working on that right now made some really good progress on that front. This week and we hope to be able to announce those soon.
Great. Thank you.
Yeah.
Thank you. Our next question is from Joseph Spak of RBC capital. Please proceed.
Thank you very much.
Q U.
Highlighted anheuser Busch as a key partner and customer and no against you to talk about.
Even.
Using them for this phase two for this announcement.
Can you just talk a little bit more about how that relationship has progressed over maybe the past couple of months.
I think you are required to get them. Some hydrogen prototypes by the end of the year is that still the case and is that on target.
As Joseph So day, we've shared a goal with them.
To be on the cutting edge of this for.
From the beginning that was.
There are corporate objective.
Include some very strong targets for them to hit by 2025 for actual operations and emissions reductions.
And thats for them as part of <unk>.
<unk> worldwide commitments, so very very strong corporate commitment a laudable corporate commitment there kind of partner that we're looking for it.
It was really committed.
And as you know we.
We're able to do a demo run.
Calling beer from the flagship brewery in St. Louis.
Using.
Fuel cell prototype.
We did that.
However, a year ago right.
Just over a year ago.
And we do share a goal to have.
Regular deliveries being made on it on a pilot basis by the end of 2021.
With Anheuser Busch and so we're working on that very diligently.
Two prototype vehicles.
That we're targeting for that purpose are actually underway in the shop.
And we're on track for that at this point.
Okay.
Okay.
I thought maybe I misheard, but.
I was wondering if you clarify I thought you said in the prepared remarks day.
<unk> capacity was two and a half thousand I thought that was supposed to be about five K in phase one did something change or are you talking about different.
No.
Points, along the goal here.
So chill.
As you know we are building out equally facility in phases.
By end of Phase one we do believe that capacity will be approximately 2500 3000.
And then when we started phase two beginning of 2022 and that will be accomplished by beginning of 2020 end of 2022 and that capacity will likely increase to something around 15000 units and then when we actually start face.
Three of our facility in the beginning of 2023, and then complete that by Endo ticked up from 23, the capacity will be about 35000 units running two shifts and so.
I think what you may be referring to is something that we showed last year and we have decided in terms of phase one phase two.
Two.
Delay some of the capacity.
We'll have plenty of capacity in terms of what we have committed to the market as you know that.
Next year.
I am commitment for battery electric truck is 1200 units.
Okay.
Last one for me I know during.
Or about a month ago or so.
There was a report that the head of Nikola fuel cell development left and look I realize employees coming all the time, but.
I don't think investors have a great sense for.
Maybe the debenture. The teams. So can you just provide an update on that on leadership, there and that team.
Absolutely that transition was not unexpected.
Net.
That employee.
As.
State is staying in the space by the way.
Im joined in.
And help start a.
Our fuel are fueling.
Dispensing company from Orange, our understanding is.
That's what he left to do we have more resources leadership people capacity in that space than we've ever had at this point that team is so much bigger and more capable than it was previously.
That particular employee did great work, while they were here, but we are absolutely not missing a beat and going forward with with a really strong team on that front.
The people who.
Customers other people that were working with that works for works with that team on from inevitably very impressed with what we've been able to do that we've got some of the best people from around the world.
On the team.
Thanks for thanks for that insight.
Thank you. Our next question is from Mike Szeliski.
Colliers Securities. Please proceed.
Hey, good morning.
I wanted to ask first about the travel centers.
<unk>.
I Wonder if you could tell us a little bit about what's in it for travel centers.
Are you going to be paying their rent to us as part of their.
Real estate.
Sales of hydrogen.
Give us a sense as to.
What they might be getting.
From what you can tell.
Quick question right.
Right now as you know we are still working on some of those details.
But at its foundation it is anticipated when it comes to dispensing economics that we will share 50 50 in <unk>.
Terms of revenue and profit.
So recognize besides dispensing station, Sony which means that we will provide.
Provide hydrogen from hub and we will transported so significant portion of the margin we expect to capture.
Got some facility on our side.
So it is a true partnership.
There'll be a transfer price from <unk> to the station.
For hydrogen and then the margin over that will be split between us.
Net debt.
I would also be the approach we take on the infrastructure capital requirement.
Okay, Okay got it.
And then I wanted to ask secondly about.
<unk> hundred 60, I guess first.
How have they communicated to you about their availability with technicians trained technicians to service electric vehicles.
Knowing that it takes roughly 12 months to train somebody new.
Lincoln UTI types of schools out there and then maybe secondly can you give us a sense.
Are you looking at partnerships with other dealership networks elsewhere in the country at this time.
Yeah, Great question, Mike. So that's one of the great benefits of the <unk> hundred 60 agreement and to answer your the last part first we are absolutely looking at.
Adding to that we intend to have continental coverage.
Dealerships.
In North America will be doing the same in Europe by the way.
So we are looking for sales and service support through our viewers.
Coast to coast.
North to South in Europe posted growth in North America.
So what the dealers are providing and their commitment that they're making is to provide both sales and service support so they're adding salespeople and then Theyre training service technicians.
Doing on both fronts, where the service technician training as cooperative with US we have our existing service and support group here at corporate.
And they have their own tax MLB.
Dealer tax will be training alongside us so the dealers have made a commitment and well.
<unk> will be making a commitment to hire and train tax.
And we will cooperate with them and that training and he'll provide it and then they will be also adding sales representation. They also are going to be flooring vehicles. So they will have to have vehicles for display for demo.
And in some cases for for immediate delivery from inventory so.
Are they actually fulfill part of the purpose of a launch customer for us.
And that they are going to be helping us get for vehicles sold.
<unk> distributed serviced and supported.
And launch here.
Thank you. Our next question comes from Daniel Ives with Wedbush Securities. Please proceed.
Yes. Thanks.
One question. So when you talk about Q4, whether it's 50 to 100 and.
And just some of the orders, especially going into 2022 at this point is the only constraint supply from a chip perspective, rather than on the demand side could you could you just be clear about that in terms of just hitting those goals is it really just pure supply constraints.
Yes, that's a great question and my answer is yes, it's going to be constrained.
Certainly.
Do more if we had all of the.
Parts that we that we're going to need.
And whereas we are going to we already constrained by by sales as we mentioned.
We do have commitment now.
To GAAP enough cells from the supplier to get in that 50 to 100 range.
Net but not more.
We are looking at the other possible constraints chips being.
Prominent one of course.
And we're trying our best to make sure that one of those things doesn't drop us below that number.
If we could get all of the.
Parts to.
To do more we would definitely look at doing more.
You got to remember that the demand for these vehicles.
It has not gone down.
At any time.
The combination of carrots, and sticks out there gets more and more compelling and we call it carrots and sticks because there are incentives for carrot side, where people are increasing the incentives and by the way. There was just an increase in the incentive on.
Carbon capture for Blue hydrogen just in the last couple of weeks I understand.
But other people are looking to follow California in terms of their incentive scheme, a number of states have announced that recently that they want to follow the California model, which will increase there.
Alright here more incentives to move.
On the other side you've got the sticks.
<unk> got people who are passing.
Sale bands and and then even operation bands within specific jurisdictions and that's worldwide.
We don't see anybody backing off on us. So we haven't seen anybody back off and yet we see people. The number of jurisdictions that are doing that being added to pretty.
Pretty much every every month at this point.
The demand is not going to go down.
Demand is not going to be the problem for this industry, which is one of the reasons why were we welcome and encourage our first while competition, it's going to take the best efforts of all of us to meet this demand.
We're going to have to in the next.
Period of years, we have to figure out how to completely replace the internal combustion fleet.
And.
And right now, it's not a manner a matter of that would be nice in many cases, it's a matter of a regulatory requirement or a law.
So.
Between that between the incentives.
The requirements from the mandates.
The demand is not going to go down I don't see how it goes down from here.
Great. Thanks.
Thank you.
No further questions at this time I would like to turn the flow back to Mark Russell for closing remarks.
We appreciate everybody being here this morning.
Being interested in Nikola following us we're grateful for your support and we'll talk to you next quarter. Thanks.
You.
Yeah.
This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation and have a great day.
[music].