Nikola's hydrogen-powered rigs: The Bentley of trucks

To keep IMC’s trucks running, Nikola operates temporary stations—essentially tankers set up in parking lots—near the ports in Long Beach and close to networks of warehouses in Ontario, California. A third mobile station opened in Santa Fe Springs, midway between the first two, in August. Nikola’s customers in the San Francisco Bay Area can fuel at a fixed True Zero station operated by First Element, a private company that runs about 50 hydrogen stations across California serving drivers of fuel cell cars including Toyota’s Mirai sedan and Hyundai’s Nexo SUV. As truck volume grows, Nikola plans to build permanent stations in the next year or two where demand is highest, using grant funds from California. It’s also finding interest in Canada, where Walmart just started using a Tre FCEV near Toronto. In July, Nikola opened its first mobile Canadian fuel station in Etobicoke, Ontario.

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Hydrogen prices are high for now, but the availability of fuel, historically a challenge for California’s fuel cell car market, isn’t a problem, Nikola’s CEO Steve Girsky says. “We’re not worried in the next six months about hydrogen supply. Frankly, we think there’s an abundance of supply out there right now,” he says. “It’s not at the cost we want, but it’s part of building a coalition of partners.”

That coalition will likely include vehicle manufacturers and energy companies. Girsky declined to identify if those include Toyota, Hyundai and Daimler, which are preparing to sell their own hydrogen-fueled semis.

Nikola got some much-needed good news as the company in August posted its best quarterly revenue to date thanks to better-than-expected growth in hydrogen truck sales: $31.3 million, more than double last year. Still, it’s far from profitable, losing $133.6 million in the second quarter. On the company’s results call, Girsky indicated that interest in the company’s hydrogen semis is growing, though he didn’t provide an updated delivery estimate for the year, maintaining its guidance of up to 350 trucks in 2024. Second-quarter deliveries of trucks totaled 72 units, above the company’s guidance of 60.

“Not only are we getting more calls from fleets interested in deploying fuel cell trucks, but also from strategic partners like automotive OEMs, suppliers, hydrogen producers and big energy who recognise our role as a first mover in the hydrogen economy,” he says.

 As the largest auto market in the US, California has long been ground zero for both battery and hydrogen vehicles—in part thanks to enforcing the toughest automotive exhaust emissions rules in the country. It also has tens of thousands of trucks moving goods in and out of massive ports in Southern California and Oakland.

Hydrogen trucks can cost more than double the price of a diesel model—Nikola’s is $390,000. But the government is also subsidising them, pushing long haulers to consider the greener vehicles, by offering state rebates of up to $240,000 per truck. The 387 hydrogen truck rebate vouchers that have been issued so far have gone overwhelmingly to Nikola, though models from Hyundai and startup Hyzon also qualify for the incentive, according to the California Air Resources Board. The incentives are funded by revenue from the state’s sale of pollution credits.

As of the end of the second quarter, Nikola had only delivered 147 hydrogen trucks to customers, but Girsky, a former vice chairman for General Motors and long-time financial analyst, estimates nearly all those hydrogen truck rebate vouchers issued are going to its customers, most of whom will take delivery throughout the year.

“We’re 99 percent of all of them in hydrogen. But importantly, the number of vouchers outstanding for hydrogen exceeds those for batteries,” he says. “A voucher gives you the right, but not the obligation, to buy trucks. It’s like a reservation. But the fact is there’s interest in hydrogen and we want to be there to supply it.”

The interior of Nikola’s Tre FCEV Image: Courtesy Of Nikola Corp.

That’s because the real-world usable range for hydrogen trucks is at least double that of battery models, including Nikola’s own Tre BEV. “If you haul potato chips around town, a battery truck is fine. If you want to haul cases of beer a long distance, you’re going to need something more.”

The big challenge for Nikola is finding the capital to keep expanding production and building fuel stations until hydrogen trucks reach critical mass. “With more scale, with more volume, the cost of the truck will come down. And with more volume, the cost of the fuel will come down because the fuelers are not efficient right now,” Girsky says. “The more volume that runs through them, the more efficient they get. It still doesn’t get it down to where it needs to be but it’s important to have a line of sight on where it could be.”

Where it could be, he and other hydrogen advocates hope, is cost parity with fossil fuels, but without the carbon emissions.

If it can make it through the next few years, Nikola could benefit from unprecedented federal spending to scale up production and distribution of clean hydrogen across the US, resulting from funds earmarked for it in the Inflation Reduction Act. Separate from what it’s already spending on truck rebates, California was awarded $1.2 billion for its Arches H2 hydrogen hub project from the Energy Department, and has a range of projects in the works to use the fuel to decarbonise heavy industries as well as to get cleaner trucks and buses on the road.

By 2030, the federal funds will help the Golden State scale up production of clean hydrogen—made mainly by splitting water with electricity from renewable power sources—to 500 metric tons per day and have at least 60 heavy-duty hydrogen fuel stations in operation to keep 5,000 fuel cell trucks and 1,000 buses powered up.

For his part, IMC’s Gillis is reasonably happy with his hydrogen truck fleet, which is more than six times larger than the eight battery-electric semis he operates near the Southern California ports. Aside from the shorter range they offer, installing heavy-duty charging stations battery trucks need is a challenge, he says. But even with better range and faster fueling, hydrogen isn’t perfect at this point.

“Zero emissions trucks do have some barriers, particularly because of the vehicle weights, which affects how much you can haul,” he says. “But I think for the majority of the cargo we’re running in Southern California this technology does work.”