Nikola Shares Rise as Hydrogen Truck Future Takes Hold

Shares of Nikola jumped 25% in one day after the hydrogen-powered truck maker achieves its guidance of selling more than 80 heavy-duty vehicles. There is growing momentum behind sales and revenue from the immovable zero-emission regulations in California, where the nation’s busiest ports and the world’s fifth-largest economy reside.

The truck maker’s results were boosted by 20 new orders from shipping giant J.B. Hunt, which added to the more than 200 alternative-powered vehicles it currently operates for customers, including battery-electric, hydrogen-electric and renewable-natural-gas (RNG) vehicles.

The Advanced Clean Truck (ACT) regulation, adopted in 2020, sets a strong foundation for California’s zero-emission vehicle (ZEV) strategy. It requires manufacturers to sell an increasing percentage of zero-emission trucks, starting from the 2024 model year.

The requirements vary by vehicle class. For Class 2b-3 trucks (light- and medium-duty): manufacturers must ensure that 5%-9% of trucks sold are zero-emission vehicles by 2024, increasing to 55% by 2035. For Class 4-8 trucks (heavy-duty), manufacturers must meet targets of 9%-11% ZEV sales by 2024, escalating to 75% by 2035, and 100% by 2045.

Nikola's success hinges on ZEV mandates for trucking, and there are no signs of California or the Federal government relaxing those targets.

While Tesla is in the market selling battery-electric heavy trucks in a pilot program, Nikola CEO Stephen Girsky does not consider Elon Musk’s truck effort to be much of a threat because of the volume of different classes of trucks that will need to be sold and deployed in California, as well as across the country, to meet regulations.

"This is a record sales quarter for Nikola, with 88 hydrogen fuel-cell electric trucks wholesaled to our dealers for end customers, as well as the addition of a first-ever dealer-based HYLA (Nikola’s branded) modular refueling station, Girsky says. “Despite overall market headwinds, Nikola remains focused on our mission to pioneer solutions for a zero-emission world, and we're doing it one truck at a time.”

Nikola is hardly alone gearing up for the mandates in California designed to end the use of diesel in most trucking applications.

Tier 1 and Tier 2 suppliers with FCEV technology for heavy trucks include:

Forvia, a major supplier of hydrogen technology, says the growth rate for hydrogen propulsion systems will remain steady both in North America and Europe.

“Hydrogen is here to stay,” says Nick Miller, vice president, Faurecia Hydrogen Storage Systems, North America. “It’s a matter of time. The climate is changing. What we need is acceleration. We need to build a clean world for upcoming generations.”

And not just FCEV heavy trucks. Forvia says there is growing enthusiasm for hydrogen-fed internal-combustion engines in Europe. It’s possible, and even likely, that some diesel-powered ICEs could be converted to hydrogen fuel. That would allow truck makers to convert existing engines to run on hydrogen without having to buy dedicated FCEV trucks. Those converted engines are known as H2ICE.

The U.S. is building eight hydrogen production and distribution hubs, located strategically to supply fuel to hydrogen trucks around ports with the heaviest traffic, with an eye toward adding them along the heaviest trucking routes as well. The hubs with money already allocated by the U.S. government are expected to take up to seven years to make operational.

“We have to be realistic about what we can accomplish and when we can accomplish it,” says Detroit-based NextEnergy CEO Jim Saber. Metro Detroit is ripe for hydrogen-trucks and an accompanying re-fueling infrastructure because of the heavy truck traffic coming from Canada to the U.S. and vice versa.

The perennial argument around hydrogen is how fast FCEV and H2ICE should be scaled up because of a scarcity of “green” hydrogen supply made from wind, solar, nuclear and biomass.

“It’s not so much a ‘chicken or egg’ argument, but rather ‘synchronized swimming,’” notes Tarek Abdel-Baset, chief engineer for Forvia’s Hydrogen Storage Systems-North America operation, whereby multiple stakeholders are working together at a pace that makes sense to avoid stranded capital in technologies and production before the demand scales up.