Paul Rodden • Season: 2023 • Episode: 260
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In episode 260, Nikola stock goes up thanks to California. And could hydrogen internal combustion engines really be a worthwhile investment for manufacturers? I'll go over all of this and give my thoughts on today's hydrogen podcast.
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Nikola stock goes up thanks to California. And could hydrogen internal combustion engines really be a worthwhile investment for manufacturers? I'll go over all of this and give my thoughts on today's hydrogen podcast.
The big questions in the energy industry today are, how is hydrogen the primary driving force behind the evolution of energy? Where is capital being deployed for hydrogen projects globally? And where are the best investment opportunities for early adopters who recognize the importance of hydrogen? I will address the critical issues and give you the information you need to deploy capital. Those are the questions that will unlock the potential of hydrogen and this podcast will give you the answers. My name is Paul Rodden, and welcome to the hydrogen podcast.
In an article in Market Watch, Tommy Kilgore writes Nikola reports wider than expected loss but stock rallies amid upbeat outlook on Hydrogen Highway, Tommy writes shares of Nikolas surged Thursday as part of a broad rally in the electric vehicle sector and the broader stock market even after hydrogen and battery electric truck maker reported a surprise widening and losses and negative revenue. CEO Steve Girsky helped fuel investor optimism by highlighting Nikolas quote first mover advantage with its hydrogen fuel cell electric trucks. He noted that starting January 1, all new trucks registered with the California Air Resources Board for operation in California ports must be zero emission vehicles.
He said we think the competition is well behind us and believe there is white space for us to capture market share with the introduction of the advanced Clean Fleets rule and incentives like the HV IP or the hybrid and zero emission truck and bus voucher incentive project and the ISEF or the innovative small e fleet offering up to 288,408 1000 respectively, per hydrogen fuel cell electric truck in California. The stock shot up 8.6% in morning trading, while the global x autonomous and electric vehicles ETF climbed 2.2% and the s&p 500 Index rose 1.6%. Nikola reported before the open have a net loss of 425 point 8 million or 50 cents a share after a loss of 236 point 2 million or 54 cents a share. As the number of shares used in the calculations of per share results nearly doubled to 857.2 From 438 point 4 million.
Excluding non recurring items. The adjusted per share loss widened to 30 cents from 28 cents while the FactSet consensus was for a narrowing in per share losses to 14 cents. Revenue swung to a negative $1.73 million from a positive $24.2 million compared to the factset consensus for positive 9.5 million as trucks shipped dropped to three from 63. Nikola also updated investors on the voluntary recall it issued for its battery electric trucks in August. The company said after further investigation, it was determined that the compromise of the battery packs was not limited to the coolant manifold and therefore it was decided that the Romeo packs on existing customer battery or electric trucks would be replaced.
The company expects the recall to cost $61.8 million, with actual cash disbursements to take place over the next nine to 12 months. And a quote from the company we anticipate delivering battery electric trucks to customers again in q1 of 2024. Nikola stock has still plunged 62.3% Over the past three months while the EV ATF has dropped 19.7% and the s&p 500 has slipped 4.7% Okay, so interesting news from Nikola as their stocks as well as the Evie ETF funds continue to be much more volatile than the s&p. But that's to be expected. The EV and even more so the fuel cell Evie market will continue to be much more fickle than the market as a whole. But the new mandate out of California is a definite bump for EV truck makers. So manufacturers such as Nikola, Hyzon and Volvo have a distinct advantage with others such as Daimler following suit. But one question that springs to mind revolves around the California mandate and what they consider to be zero emission vehicles.
Now, I've reported a few times in the past regarding hydrogen internal combustion engines or ice vehicles. The technology just didn't seem to work well with compression storage solutions. But that hasn't stopped companies like Cummins and Toyota from refining the hydrogen ice options and this matters will California consider H to ice to be emissions free. Well, this point is brought up in an article in automotive news on November 2, Jerry Hirsch writes, from race cars to cement mixers, hydrogen combustion gains interest for decarbonisation, Jerry writes carbon emission free engines that burn hydrogen increasingly look like a viable technology for vehicles that range from race cars to cement mixers.
The motorsport department at Austrian automotive supplier AVL has developed a hydrogen engine for race cars, and instead of testing the two liter turbo engine produced a top power measurement of 410 horsepower at 6500 rpm. If reproduced at a working vehicle that output would match what Bugatti is and Ferraris achieve. And a quote from Ellen Lohr AVL motorsport director This is the first time we could show that h2 combustion can be very powerful and AVL. Race tech the company's motorsport division wants to show there is quote, a sustainable future for combustion engine vehicle racing.
The experimental motorsport lab operated by the Hungarian mobility Development Agency helped with the development. For now AVL sees such an engine powering the sports car circuit, a loftier goal would be such as Formula One, which would require a rule change f1 allows only hybrid engines. Again in a quote from Lohr, we will target smaller race series at the moment as well as other options such as Dakar or even Le Mans. Using hydrogen combustion engines on the race circuit makes sense as a decarbonisation tool. This according to Gregory Davis, professor of mechanical engineering at Kettering University and director of its advanced engine Research Laboratory, he says you can only produce really great power to weight ratios with hydrogen engines. He said motorsports are under pressure to transition to green racing. It's easier to do that with a hydrogen internal combustion engine rather than an all electric race car. And it might not be worth the expense to develop such a specialized engine for the relatively small market for high end sports and race cars.
This according to Bernd Heid, who leads the McKinsey Consulting Firms, Global Climate Technologies and hydrogen work. He says, Well, the technical answer is that yes, you could, but you could have a conventional gasoline engine vehicle and burn synthetic fuel and get the same result for less money. Nonetheless, the hydrogen combustion engine develops illustrate how after more than a century of burning hydrocarbons to power transportation, motor vehicles are splintering into many technologies. passenger car manufacturers, including Toyota and BMW are also researching hydrogen combustion engines. At the other end of the vehicle spectrum, Cummins has joined a collaboration organized by Terex Corporation, a prototype and test concrete mixer trucks powered by hydrogen fueled internal combustion engines. The partnership which includes edge materials and PCC hydrogen, Inc. leverages Cummins work on its x 15 H hydrogen combustion engine.
The engine maker aims to demonstrate how hydrogen combustion engines perform and challenging industrial conditions. Edge materials ready mix concrete provider and Terex will operate the trucks on construction sites and critical infrastructure projects. PCC hydrogen, an ultra low carbon hydrogen producer and Louisville Kentucky will supply the fuel and pumping infrastructure. In a quote from Jim Nebergall, Cummins general manager of hydrogen engines. Hydrogen internal combustion engines are emerging as a key technology to eliminate carbon emissions from heavy duty sectors while retaining the power density and operational range typical of diesel engines. But there are still significant hurdles to using hydrogen as a fuel, whether through combustion or in an electricity producing fuel cell. There's almost no green hydrogen available.
Most hydrogen is produced using hydrocarbons, which negates its carbon free status. The federal government is subsidizing the construction of hydrogen hubs, but it will be years before those are online. Hydrogen combustion engines also reduced trace amounts of carbon emissions from the lubricants that burn as the motor operates. Both the European Union and EPA have signaled they would still consider engines that burn hydrogen as carbon free, but California regulators and by default the states that follow its environmental rules have voiced objections to virtually all combustion engines. They may be softening their stance. The California Air Resources Board told automotive news that it plans to hold a public workshop to discuss the appropriate role of hydrogen fueled internal combustion engines towards meeting the state's regulations. That's one reason why vehicle manufacturers are pursuing so many powertrain technologies.
Heid also said we are big believers in multi technology future, there will not be one technology that wins each will have a role to play in a specific sweetspot. battery electric technology will eventually replace most gasoline passenger cars, as well as trucks and commercial vehicles that typically drive about 250 miles or less daily. This is going according to Heid. He also said batteries are awesome for city vehicles even short haul trucking. A battery can be a good technological solution. Think of food distribution or parcel vans in an urban area. The mileage isn't that great, but you can charge overnight. hydrogen fuel cell technology has a place in long haul trucking, it offers fuelling much faster than the time it takes to charge giant battery packs long haul trucks would need heavy batteries also reduced the paid payload of a long haul truck.
But nothing is certain. Although Tesla's still must ramp up production improved durability. Initial real world testing of its semi tractor has demonstrated it can travel long distances of 700 miles or more a day about all a long haul trucker can achieve while staying within federal driving regulations. Hydrogen combustion trucks also would have a strong constituency because so much of the technology either overlaps with or is similar to diesel technology. That's according to Davis. It's a small leap for fleet managers and mechanics. It's easy to run an engine on hydrogen.
He said the conversion is easy and you don't have to toss out decades of technology. It's also likely to be less expensive, at least initially, Heid estimates a battery electric truck would cost at two to two and a half times its diesel counterpart. Before federal and state environmental incentives. a fuel cell truck would cost three to three and a half times a diesel truck. Well the operating costs of those technologies would be less than half of that of a combustion truck. The acquisition cost is still a big hurdle.
A hydrogen combustion powertrain requires modifications such as a special alloy for the pistons and cylinder block and high pressure fuel tanks. But those are challenges where the technology is well understood and would add a much smaller 25% purchase premium to a hydrogen combustion truck again according to Heid. Okay, so some great insights on a potentially high volume demand market. Now you all know by now my thoughts on BEV versus fuel cell electric vehicles. And it's a fun conversation to have. But this article is really highlighting two very different applications, motorsport and heavy duty transport. While most analysts talk about long haul trucking, which is also mentioned in this article.
It's important to remember that those same power trains are used in many more applications, such as the cement truck industry is highlighted in this article, as well as future avenues such as waste trucks, buses, and heavy duty construction vehicles. And it's also good to see that California could be loosening its stranglehold on clean ice vehicles, because so many other government agencies will likely follow what California decides.
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Hey, this is Paul. I hope you liked this podcast. If you did and want to hear more. I'd appreciate it if you would either subscribe to this channel on YouTube, or connect with your favorite platform through my website at www.thehydrogenpodcast.com. Thanks for listening. I very much appreciate it. Have a great day.