Nikola Corporation ( NASDAQ: NKLA) CEO Fireside Chat and Q&A Webcast with Steve Girsky Teleconference September 13, 2023 4:30 PM ET
Business Individuals
Steve Girsky – President and Ceo
Dhillon Sandhu – Financier Relations
Steve Girsky
Great afternoon, everybody and thank you for joining me for today’s chat and Q&A. I am Steve Girsky, President and CEO of Nikola Corporation. The function of this conversation is to deal with concerns sent associated to business of Nikola. A number of you understand me, however for those of you who might not, prior to this function, I was Nikola’s Chairman of the Board for more than 3 years and previous to that, our veteran vehicle market and financial investment executive. When I at first got included with Nikola, I believed it was a concept.
Today, I believe it’s an even larger concept. Initially, I believe there is a great deal of white area in between Nikola and the competitors in the no emission Class A truck market. This advises me when I signed up with GM in 2009. I inquired about Tesla and was informed that it was simply a lot of engineers having fun with laptop computer batteries. That was standard knowledge at the time and we understand how that ended up. Tesla got a 10-year jumpstart on the whole market. I believe we have a comparable chance at Nikola. The huge men are crossing out the no emissions trucking market. I understand they are having fun with models, however they think this tech is late-decade things at the earliest. If you take a look at the no emissions trucks signed up in the market, you’ll see a lot of the huge, big OEM trucking men. However at second, you will see us. And we are simply starting. Nikola is not inspecting a box like the others. This is our company. We are no emissions. We are energy which’s it.
The 2nd piece of the huge concept is the cradle to tomb, the capability to catch downstream income. At GM, when we offered the automobile, we produce state $40,000 in income for it. However that automobile would produce another $200,000 or more over its life time. It will be offered as utilized a couple of times, it ‘d be serviced, it needed to be sustained, it ‘d be funded, it ‘d guaranteed. That downstream income is more successful and less cyclical than the income we will produce from the preliminary sale. And it will normally bring greater margins and thus a greater numerous in the market. We offer the client a total no emissions option and the return on their and thus your financial investment. I have actually been Nikola’s President and CEO for about 6 weeks at this moment and I should inform you it’s been the most amazing working experience in my profession. The enthusiasm and drive of the group here is absolutely nothing except motivating. And the never ever quit spirit is genuinely transmittable. Simply in the previous couple of weeks, our hydrogen fuel cell electrical truck has actually started comparable production and is going through last screening prior to shipments start.
Our gamma hydrogen fuel cell electrical trucks are logging major miles. Recently, among those trucks ran more than 900 miles in a day. This was rather an achievement and I defy anybody to discover another no emission car truck anywhere that can add to 900 miles on a day. Client fuel cell demonstrations have actually begun today, consisting of one with Biagi Bros. utilizing our hydrogen mobile fueling website in Ontario, California, to keep the trucks moving. We likewise have more client demonstrations coming throughout the next couple of months. The hydrogen highway is on its method. We have actually enhanced our monetary position. We have actually just recently raised $125 million and have actually enhanced our money position through a lowered money burn, which our company believe will provide us the capital to make it through the fuel cell launch and well into next year.
We have actually likewise included a brand-new board member, John Vesco, who has years of tested management in the transport and supply chain markets. We are headed in the best instructions as whatever the business set out to do years back is anticipated to come together in the 4th quarter of this year. Our clients, dealerships and investors are delighted. However there are difficulties that we require to deal with, including our voluntary recall of our battery electrical trucks. Given that June there have actually been numerous thermal occurrences with our battery electrical trucks.
As you understand, we released a voluntary recall within 24 hr as soon as the initial findings of the examination were gotten and suggested strategies were laid out to safeguard our clients and dealerships and keep as lots of trucks as possible in operation. Our engineering and security groups are working all the time to guarantee the security of our trucks and the general public and we are taking even more safety measures by releasing groups to our active fleets to physically keep an eye on the trucks in service.
We have actually not come across any interest in those trucks that function and we stay concentrated on keeping continuous interactions with our clients and dealerships to make certain they all have their concerns responded to which they are positive in our trucks and pleased with their efficiency. We are taking all safety measures and our group is presently setting up to get the trucks to our Coolidge, Arizona producing center. Our company believe this will enable repair work to be made in the most effective way under the direct guidance of the Nikola group.
It’s an obstacle, however we remain in it for the long run. We have actually shown the doubters incorrect, who stated we could not craft a truck, could not construct a truck and could not offer a truck. And we’re not intending on stopping anytime quickly. The market is prepared for our items with the most recent State and federal rewards nationwide, it can be a lot more financially feasible to be a Nikola client.
Among the most recent examples is the ingenious little e-fleet program in California, which enables coupons of more than $240,000 on our battery electrical truck and $360,000 on our hydrogen fuel cell truck, lots of money offered to fight the major effect of diesel truck emissions.
Given that the program opened at the end of August, there’s been a strong client need for our trucks, seen by applications submitted out through our dealerships within the last couple of weeks. We are releasing the hydrogen highway with more trucks, mobile fuelers and clients running no emissions freight. It’s a huge task, and we thank all of our financiers, partners and fans for helping us.
Prior to we open it approximately concerns, I simply wished to extend my gratitude for your continued self-confidence in us and our objective as we together leader services for a zero-emissions world. I eagerly anticipate turn your concerns, Dhillon, who is initially?
Question-and-Answer Session
A – Dhillon Sandhu
Thank you, Steve. Prior to we start, I want to keep in mind that today’s conversation consists of positive declarations about our future expectations and strategies. Real outcomes might vary materially from those mentioned. And some aspects that might trigger real outcomes to vary are discussed in our filings with the SEC.
Positive declarations speak just since the date on which they are made. You are warned not to put excessive dependence on positive declarations. We got a great deal of concerns online. Most of which can be come down to 4 subjects: one, battery electrical truck recall; 2, production and shipment expectations; 3, hydrogen facilities construct out; and 4, Nikola’s future and outlook. So Steve, let’s start with the battery recall.
Steve Girsky
Thanks, Dhillon. As you’re all conscious, we have actually had numerous thermal occurrences with our battery electrical trucks that are operating on battery loads gotten from Romeo Power. We have actually interacted to our dealerships and clients that trucks requirement to be gone back to Nikola at our Coolidge production center to make the required repair work and keep an eye on the cars to guarantee security. One concern that was recognized is a coolant leakage, which includes the coolant manifold and associated coolant lines. Each battery electrical truck has 9 battery packs, and each pack has 2 coolant loops. As part of the repair work, the coolant lines that link to the manifolds in each pack will be changed. As soon as the pack is open, we will check all the modules to guarantee stability. Module parts and possibly the whole module might require to be changed on a case by speed basis, if any extra problems are found. Our group is working relentlessly with our providers to acquire the proper parts. All repairs are and will go through comprehensive recognition screening prior to launch. Plan and expenses will be passed on as quickly as possible, and our primary top priority is to guarantee client security and fulfillment.
Dhillon Sandhu
Thank you, Steve. Let’s proceed to the 2nd subject concerning production and shipment, particularly around the hydrogen fuel cell truck.
Steve Girsky
We started production of the hydrogen fuel cell electrical truck on July 31, and the very first production car came off the line in Coolidge roughly 2 weeks back. We prepare to start providing the trucks to dealerships in late September and early October, and we’ll have a launch event in Coolidge on September 28, where we will have our clients, dealerships and other partners in presence. Following that occasion, we will deliver the very first production fuel cell trucks to dealerships and soon after they will be provided to clients for operation in their fleets. To date, our dealerships have actually gotten more than 210 non-binding orders for the fuel cell truck.
A few of those clients consist of big fleet operators like J.B. Hunt, Biagi Bros. and TTSI. We desire you all to be a mindful that the battery electrical truck recall does not impact the production or shipment of the fuel cell electrical car given that it utilizes a various battery pack from a various provider. Our group is delighted to provide the very first Class 8 hydrogen fuel cell electrical truck to the marketplace, and our company believe we have at least a 2-year running start on our rivals. For the battery electrical truck, we have actually stopped briefly shipments till we conclude the recall. On the production front, presently production capability in Coolidge is 2,400 trucks annually. The mix design line in Coolidge can developing both the electrical truck and the hydrogen fuel cell electrical truck on the very same line and we can deliver production volume allotment to either item relying on need.
Dhillon Sandhu
The 3rd subject has to do with hydrogen facilities and the build-out of the fueling network. So, we can cover the near-term and long-lasting visions for the hydrogen refueling system.
Steve Girsky
When we think of our energy company, this might likely be the greatest chance for Nikola. We are starting to develop the environment in California, a state with rewards promoting the purchase of no emissions trucks and policies needing fleets to transform ICE cars to no emissions. In California, just no emission drayage trucks can sign up in the carbohydrate online system starting January 1, 2024. This guideline, paired with effective rewards like the ingenious little e-fleet program, which I discussed in the opening, or HVIP, where clients can get a coupon approximately $288,000 per truck, make California a perfect market to introduce the fuel cell truck and hydrogen highway. California is likewise the biggest Class 8 truck market in the United States. More than 40% of imported containers and 30% of exported containers move through California, and the majority of that freight is moved by trucks. We intend on releasing fueling services along a few of the most extremely taken a trip trucking passages in California along Interstate 5 and 10, connecting paths in between Northern and Southern California and Arizona. Today, in California, clients can get approximately $360,000 per truck with existing rewards. This is a substantial advantage and makes the acquisition expense of a hydrogen fuel cell truck similar with a diesel Class 8 day taxi without the contamination. This year, we anticipate to release a minimum of 9 hydrogen mobile fuelers at numerous areas throughout the state of California to make it possible for hydrogen fuel cell truck operations. The mobile fuelers are a fantastic resource permitting us to offer instant fueling services and permeate brand-new markets rapidly. Our company believe that will play a vital function in the construct out of the hydrogen highway as truck network density is constructed and long-term fueling facilities is brought online. In addition to sustaining services, we are likewise protecting supply to support client operations. We have actually worked out supply for approximately 130 metric heaps daily with Linde, Plug and BayoTech and are working out an off-take arrangement with FFI for approximately 30 metric heaps daily from the prepared Phoenix hydrogen center. We see this as a substantial chance, which allows a first-mover benefit with our fuel cell truck and hydrogen refueling company.
Dhillon Sandhu
And the last subject from financiers was, what is the outlook for Nikola and what can we anticipate in the future offered the existing difficulties we have dealt with?
Steve Girsky
The group at Nikola is extremely inspired and concentrated on providing on our dedications. We are working to achieve something nobody has actually ever done prior to. So, difficulties are to be anticipated. What I can state is I am surprised at the strength and dedication that our staff members reveal every day. In the short-term, we are concentrated on performing on the battery electrical truck recall and producing and providing the hydrogen fuel cell electrical trucks to dealerships and end clients and guaranteeing we have sufficient fueling services to support client operations. We feel that we are well prepared to deal with fuel cell shipments and sustaining this year and have appealing strategies and collaborations in the works to support more shipments in 2024. Our financing company has actually enhanced our balance sheet, increasing our unlimited money position by $107 million in the 2nd quarter and just recently raising another $125 million through a convertible note offering, while continuing to discover chances to minimize our costs, enhancing our monetary discipline and guarantee Nikola has sufficient liquidity to money our near-term company strategy and continue towards our course to success by the end of 2025.
So, due to any current obstacles, we are relocating the best instructions. It is not unusual to find difficulties with items post launch as history has actually shown with many OEMs anytime they introduce a brand-new item or an innovation. And we are definitely not alone when it concerns the difficulties confronted with the battery innovation. We value our clients’ faith in Nikola, and we are dealing with these issues as we continue to drive forward in our objective to decarbonize industrial transport. Thank you for joining me today, and thank you for your assistance.