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Nikola: Tesla In The Truck Industry, Disruptor Of Hydrogen Energy

Aug 08, 2020

The new energy vehicle forces headed by Tesla are quickly recovering from the impact of the epidemic, showing unique resilience different from traditional car companies, and consumers' preference for companies with new economic forms is rising.

In the United States, Nikola, known as the "truck industry" Tesla, has attracted much attention since its listing. As a company in the Pre-Revenue stage, the total market value has reached 17 billion US dollars, PE (LYR) 530 times, why the market is so optimistic about a car company that has not yet mass-produced or even has no operating income?

Hydrogen energy leader

The business model is different from Tesla

Nikola (NKLA) was established in 2015 and is a global leader in zero-emission heavy trucks and hydrogen infrastructure. To date, more than US$10 billion in pre-orders and a joint venture with European industrial vehicle manufacturer Iveco have made Nicolas an important leader in this field. At the same time, Nikola has a differentiated business model that does not rely on government subsidies.

Nikola's trucks are mainly leased to help customers complete long-distance transportation tasks over 500 miles (about 800 kilometers). The method of refueling through hydrogen refueling stations (faster than charging) also gives the vehicle the same experience as a traditional diesel truck.

From the perspective of business model, Nikola did not choose a model based on factory-driven production and online sales. Instead, he chose a model similar to ARM that only controls R&D and outsources production, sales and after-sales. This is similar to Tesla. There are obvious differences.

At present, Nikola is still a Pre-Revenue company, but has already received an order worth 10 billion US dollars from Anheuser-Busch, and is expected to achieve 150 million US dollars in revenue in 2021.

In June of this year, Nikola was listed on the Nasdaq, with a market value of nearly 33 billion U.S. dollars. Nikola became the world's first IPO hydrogen fuel vehicle manufacturer.

Main FCEV hydrogen fuel truck

Mass production may be achieved in 2024

Nikola’s main product, hydrogen energy trucks, uses fuel cells to generate electricity after hydrogen refueling stations to provide power for cars. Compared with the current mainstream battery electric vehicles, fuel cell vehicles have the advantages of longer cruising range and shorter charging time (10-15 minutes).

Nikola’s revenue mainly comes from three parts: electric trucks (BEV), hydrogen fuel (FCEV) and sports cars in three market segments. The estimated revenue is mainly concentrated in the first two areas. The income in these two areas depends on the sale of trucks ( BEV), the number of leased trucks (FCEV), and the hydrogen fuel consumed (FCEV only).

The annual production of Nicholas is expected to increase to 7,000, and it will reach 14,000 in 2027.

The FCEV version of the truck costs US$235,000. Nicholas hopes to lease 2,000 trucks in 2023 and double it to 5,000 in 2024. The goal is to transport 30,000 trucks per year by 2027.

According to Nikolai’s future performance expectations, it is expected to achieve revenue of US$150 million in 2021, US$300 million in 2022, US$1.4 billion in 2023, and US$3.2 billion in 2024. The corresponding electric truck sales or leases are 600, 1,200, 3,500 and 7,000 respectively.

Although the first car has not yet been produced, we see that Nikola has a diverse range of new energy vehicle products and services, including large freight vehicles Nikola One, Nikola Two, Nikola Tre, small pickup truck Nikola Badger, and all-terrain vehicle Nikola NZT, Nikola Reckless, and motorboat Nikola Wav.

According to the products currently announced by Nikolai, the potential audience market for its product sales is also very wide, including long-distance freight, ordinary civilian markets, and even military markets and outdoor sports and leisure markets. From the geographical location of the market, Nicolas is committed to becoming an international company. North America, Europe, and Asia are all already planned markets.

The commercial field has a broad market

The passenger car market is not without opportunities

Nikola has entered the heavy-duty truck market. The total market in this area is much smaller than the passenger car market that Tesla has entered, especially the audience outside the United States will be smaller. But there is currently no sign that Nikolai intends to use hydrogen fuel cell technology to enter the passenger car market.

However, while fuel cells have been unable to open up the situation in the passenger car field, the commercial vehicle field has opened a door for it.

One is the increasingly stringent environmental protection requirements for commercial vehicles, and the other is the inapplicability of power battery technology in the field of commercial vehicles is the two major backgrounds for the new birth of fuel cells.

Take the world’s most proactive environmental protection EU as an example. It has clarified that all domestic commercial vehicle manufacturers must reduce the average carbon emission level of their product lines to 85% in 2019 by 2025, which will further decrease by 2030. To 70%, otherwise you will face high fines.

It is estimated that the number of global commercial vehicles may increase from approximately 225 million today to 300 million in 2040. The total mileage of new energy vehicles will increase from 1% of the total mileage in 2019 to about 10% in 2030, and will increase to nearly 40% by 2040.

For Nikola, the passenger car market is not without opportunities. We have seen that the passenger car market is accelerating the transition from traditional fuels to new energy sources in recent years. Consumer preferences, the cost reduction of new energy vehicles, and the expansion of product choices all play a role.