Nikola Corp. is dedicated to creating energy and transportation solutions focused on zero-emissions, particularly specializing in hydrogen-electric trucks. The company’s aim is to facilitate the transition for commercial clients to advanced truck technologies, along with establishing hydrogen fueling and charging infrastructure, as well as maintenance options.
The company’s strategy involves collaborating with key business partners and suppliers to produce eco-friendly vehicles and offer innovative fueling solutions. These partnerships are designed to reduce costs, improve efficiencies, and accelerate the time to market for new technologies.
Nikola’s primary strengths include its unique design capabilities, engineering, software development, and a strong commitment to decarbonizing the trucking sector.
Unlike traditional electric vehicles that require plugging into an electrical outlet, Nikola’s vehicles utilize hydrogen fuel cell technology. These fuel cells generate electricity by combining stored hydrogen with oxygen from the air, providing similar advantages to fully electric vehicles, but with quicker recharge times and greater driving ranges.
Nikola operates through two main business divisions: Truck and Energy.
The Truck division focuses on battery electric vehicles (BEV) and hydrogen fuel cell electric vehicles (FCEV) that are environmentally friendly and cost-effective for short-haul, medium-haul, and long-haul trucking.
Meanwhile, the Energy division is dedicated to creating a hydrogen fueling infrastructure and providing charging support for owners of both Nikola’s FCEVs and BEVs, as well as serving various third-party customers.
Key Takeaways
Industry Overview
Nikola operates within the Farm and Heavy Construction Machinery industry, part of the broader Industrials sector, while also being categorized in the Electric Vehicle (EV) market.
The company aims to lead in zero-emissions transportation, leveraging a developing hydrogen fueling ecosystem that encompasses procurement, distribution, and storage/dispensing of hydrogen.
Companies within Nikola’s alternative fuel vehicle sector currently face significant risks related to uncertainty about fueling options for vehicle manufacturers and buyers.
Further compounding this issue is the hesitance of established fuel providers to invest in alternative fueling infrastructure due to a lack of demand information.
Nikola believes its FCEV solutions, which combine trucks, fueling infrastructure, and maintenance, can mitigate the risks associated with infrastructure development by assuring the demand and use of fueling stations. Prospective customers will have the option to buy or lease Nikola’s FCEV trucks from authorized dealers.
Competition
Nikola faces competition from vehicles powered by traditional internal combustion engines, as well as battery electric trucks, hydrogen fuel cell trucks, and compressed natural gas trucks.
The company acknowledges that its existing and potential competitors may possess greater financial resources and advantages in areas such as:
– Financial strength
– Design, manufacturing, marketing, distribution, and sales capabilities
– Brand recognition, operational history, and relationships within the customer and industry landscape
Key BEV competitors include:
– Daimler
– Volvo
– Tesla (TSLA)
– BYD
– Paccar (PCAR)
– XOS (XOS)
– Lion Electric (LEV)
Main competitors in the FCEV sector include:
– Hyundai
– Toyota (TM)
– Daimler-Volvo collaboration
Nikola’s 2023 annual financial report covered results for the fiscal year ending December 31, 2023. Additionally, financial results for the quarter ending March 31, 2024, were announced on May 7, 2024.
The company reports its revenue based on “Trucks” (from truck sales) and “Service and Other” (from services provided, charging products, hydrogen supply, and service parts).
Revenue Overview
In FY 2023, Nikola reported total revenue of $35.8 million, a 28% decline from $49.7 million in the previous year. In the first quarter of FY 2024, revenue totaled $7.5 million, a 30% decrease from the first quarter of the prior year.
Trucks Revenue
For FY 2023, Trucks revenue amounted to $30 million, decreasing by 34% compared to $45.9 million the previous year. The first quarter of FY 2024 showed Trucks revenue of $7.4 million, down 26% from the same quarter in the previous year.
Service and Other Revenue
In FY 2023, revenue from Service and Other was $5.8 million, reflecting a 52% increase from $3.7 million the previous year. However, for the first quarter of FY 2024, this revenue declined by 87% to $0.079 million compared to the same period in the previous year.
Operating Income
The operating loss for FY 2023 was $(650) million, reducing from $(702) million in the prior year. In the first quarter of FY 2024, the operating loss grew to $(145.3) million compared to $(127.2) million during the same period last year.
Net Income
In FY 2023, the net loss reached $(966.2) million, greater than the previous year’s loss of $(784.2) million. For the first quarter of FY 2024, the loss was $(147.7) million, which was less compared to $(169) million in the same quarter the previous year.
History and Leadership
Founded by Trevor Milton in 2015, Nikola is headquartered in Phoenix, Arizona. The company is named after the famous inventor Nikola Tesla.
Stephen J. Girsky serves as the president and CEO of Nikola Corporation, having previously held the same titles at VectoIQ Acquisition Corp., which merged with Nikola in 2020. Girsky also has experience as president of GM Europe and as an advisor to General Motors executives.
Thomas Okray is the Chief Financial Officer while Mary Chan occupies the role of Chief Operating Officer.
Recent Developments
– In May 2024, Nikola received an order from AiLO Logistics for 100 hydrogen fuel cell electric vehicles through Tom’s Truck Centers, part of its dealer network, with deliveries planned for 2025.
– In February 2024, the Board of Directors rejected five nominees proposed by Trevor Milton, emphasizing that he no longer had affiliations with the company following his conviction for fraud and subsequent incarceration in December 2023.
As of June 20, 2024, Nikola shares were trading at $0.48.
Is Nikola Corp. a Good Investment?
This assessment hinges on individual risk tolerance, outlook, and valuation perspectives. Nikola is pioneering in carbon-free emissions and is focused on producing BEVs and FCEVs. While it is not yet profitable and continues to incur losses, there are signs of increasing revenue and vehicle demand.
The Bottom Line
Nikola is an emerging manufacturer of electric and hydrogen-powered trucks, along with related charging infrastructures, aiming to meet the transport requirements of businesses reliant on vehicle logistics and committed to achieving zero emissions in transportation.
