Distancing from Milton
To be sure, Nikola has separated itself from Milton. Late last year, it reached a $125 million settlement to resolve a fraud investigation by the Securities and Exchange Commission. The company did not admit wrongdoing.
Lohscheller has faced turnarounds before. He spent four years as CEO of the Stellantis-owned Opel car brand, helping to engineer its return to profitability.
And Nikola needs to staunch its losses as it begins to sell trucks and collect revenue. It lost $173 million on sales of $18.1 million in the second quarter. But Lohscheller also has to create a turnaround in the perception of the company.
“The answer is very straightforward. Let the product speak the real language,” Lohscheller told Automotive News at the IAA Transportation conference in late September. “Do we have a product which is real, which drives, which is doing the job? And the answer is yes.”
Early operations of Nikola’s Tre battery-electric semi-tractor with Ikea, Covenant Logistics and others are demonstrating an uptime — the trucking industry’s measure of performance — approaching that of a diesel truck. That’s expected to improve as Nikola refines its prototypes.
“The people who drive the trucks like them. The drivers say they are smooth, comfortable and have lots of power,” said Bill Van Amburg, a zero-emission commercial vehicle consultant.
Sorting out production
Lohscheller said when he joined the company as president in March, he remembers seeing that his first job was to sort out production. Nikola has a factory about 55 miles southeast of Phoenix and a joint venture assembly plant with truck maker Iveco in Ulm, Germany.
“When we went into serial production, I felt much better… It is real. We have a factory, we are producing trucks, we are selling trucks,” he said.
Nikola has an important partner in Iveco, said Van Amburg. It is an established European truck maker with the know-how to help Nikola through the launch of production.
Nikola is importing its truck cabs directly from Iveco, allowing it to avoid investing in expensive tooling for now.
“We have done some design changes, but not big ones. We also get components of the architecture from them,” Lohscheller said.
Using Iveco for the hard components frees Nikola to focus on software, batteries, connectivity and vehicle integration. Farther down the road, it plans to use Bosch as the supplier for production fuel cell stacks.
Nikola produced 50 battery-electric Class 8 tractors in the second quarter and delivered 48. It’s on track to produce 65 to 70 in the third quarter. Prototypes of the hydrogen fuel cell truck — the concept that launched the business — are in testing with Walmart and Anheuser-Busch. The fuel cell trucks are scheduled to go into production in the latter half of 2023 in the U.S. and in Europe the following year.
“I think they have made herculean efforts to overcome the Trevor Milton issue,” Van Amburg said. “They are showing that they have good partnerships and a real factory.”
Competing with legacy manufacturers
But he said there’s still the question of whether Nikola can compete with legacy players such as Daimler Truck Group and Volvo Group as the zero-emission trucking industry grows.
Both are pushing quickly into electric heavy-duty truck production in the U.S. and Europe. The two companies have a joint venture to develop hydrogen fuel cell technology and also have trucks in testing. Other players such as BYD, and Paccar, which owns Peterbilt and Kenworth, are also moving forward with electric trucks.
Still, Nikola has a chance to crack the market using a more agile approach.
“Sometimes the larger companies delay because they have so much investment in legacy technology,” Van Amburg said.
One area where Nikola is working to gain an early advantage is through an aggressive fueling infrastructure approach. Executives from Daimler and Volvo talked at IAA Transportation about how a lack of green hydrogen availability and fueling stations could limit sales of fuel cell trucks even as regional and national governments start to ban diesel vehicles.
Nikola is tackling that issue by building its own fueling network on the routes of its first clients.
The company is starting with one station at the Port of Long Beach and two others in Colton and Ontario near major Southern California distribution hubs. It will roll out more as its customer base grows.
“I could sell you a truck, but good luck finding hydrogen… I have to make sure that I can offer you the hydrogen as well,” Lohscheller said. “We need to bring these things together.”
Even as Lohscheller works to regain the trust of investors and potential customers, Nikola still faces the same obstacles as other early-stage businesses.
Its market cap is about $1.7 billion, not even 10 percent of its peak. Nikola continues to lose money and had $442 million of cash and cash equivalents at the end of the second quarter. Ramping Tre electric tractor sales will be critical to maintaining a cash cushion.
Competitors say there’s no assurance Nikola can produce trucks at an industrial scale, a task that has tripped up other electric commercial vehicle startups. And it doesn’t have a distribution and service network of legacy manufacturers.
Nikola moved to shore up its battery supply by reaching a $144 million agreement to acquire its supplier Romeo Power Inc. of Cypress, Calif., in August. Nikola said the merger would drive operational improvement and cost reductions.
But on Tuesday, Nikola extended the deadline for Romeo stockholders to exchange shares to Oct. 12. It was supposed to expire this week. But Romeo’s stockholders had exchanged just 37.65 percent of their outstanding stock. The deal requires a minimum of 50.1 percent of outstanding Romeo common stock.
“If less than a majority of the outstanding shares of Romeo common stock are tendered, the offer cannot be completed by Nikola,” the company said.
Truck manufacturing has big, established players, with decades-long relationships with large fleets.
“Will their business model pay off? I don’t know,” Van Amburg said. “It is a tough business to be in and to get everything right.”
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