In a tumultuous 2020 that has shattered the global economy and bankrupted century-old businesses across America, Phoenix, Ariz.-based electric truck startup, Nikola Motor, has been an unexpected rising star in the depressed tech sector.
Founded in 2015 by serial entrepreneur and trucking enthusiast Trevor Milton, Nikola makes heavy-duty semi trucks powered by hydrogen fuel cells, a controversial alternative to the more popular lithium-ion batteries in electric vehicles.
Since making its public market debut on Nasdaq on June 4, Nikola’s share price has skyrocketed over 100 percent, pushing the company’s market value past that of Ford, Fiat-Chrysler and many other established automakers. At press time, Nikola stock is traded at $74 per share, valuing the company at a whopping $26 billion.
Yet, unlike those gas car giants that sell millions of vehicles every year, Nikola hasn’t delivered any trucks yet. And, as the company’s name goes mainstream, its core technology, hydrogen fuel cells, faces growing doubts from electric vehicle experts—led by Tesla CEO Elon Musk—who argue that hydrogen is too inefficient and expensive to be used as a major energy source for automobiles.
In an interview with Observer earlier this month, Milton, now Nikola’s executive chairman, responded to these controversies and spoke up about Nikola’s competition with Tesla. He also shared thought on the company’s sky-high valuation right now—and why he isn’t bothered by the fact that Ford and Chrysler may be offended.
(The following Q&A has been edited and condensed for clarity.)
Last time we spoke, seven months ago, Nikola and hydrogen fuel cells were both pretty new concepts. Now, thanks to your blockbuster IPO, everyone is suddenly interested in hydrogen cars, it seems. Before we dive into questions about the IPO and the hydrogen-battery debate, can you explain briefly what a hydrogen fuel cell is? How does it get a car running?
A fuel cell is essentially an electrical grid on your vehicle that creates electricity out of hydrogen on the go. The only byproduct in the process is water. It’s like a permanent generator on a vehicle that doesn’t run out of energy, as long as you have hydrogen.
How is it different than electric cars powered by lithium-ion batteries?
A battery electric vehicle (BEV) is charged up from an outside source of energy. As you drive, it just depletes. So, you always need to plug it in. With a hydrogen vehicle, you still have a battery on the car, but it’s much smaller. And you have the fuel cell that constantly keeps those batteries charged, so it gives you a much longer range.
Hydrogen is also much lighter. A hydrogen semi truck can weigh up to 10,000 pounds lighter than a battery electric truck.
Is that why you’ve chosen to specialize in semi trucks instead of passenger cars, for example?
Yes. In trucking, weight is everything. How much a truck weighs empty determines how much freight it can move. The lighter your truck is, the more money you make on every load. And, to be honest with you, there’s a lot of money to be made in selling trucks, whereas there’s almost no money in [selling] cars. That’s why we love trucking.
Before Nikola came along, there were actually a few hydrogen passenger cars (Toyota’s Mirai, Hyundai’s Nexo SUV, etc.) in limited markets. It seems that one of the big challenges to make them more widely available is to build out an extensive network of hydrogen refill stations like what we see with Tesla’s charging network. What’s Nikola’s approach to this problem?
We’re in the process of building 700 hydrogen stations across the U.S. for our semi trucks. These are massive ones that could each recharge thousands of cars without an issue. And these stations are going to be spread out across the country. Very soon people will be able to drive hydrogen trucks all over the country.
Besides the infrastructure problem, there’s also lots of skepticism on hydrogen cars’ efficiency. Actually one of the biggest critics is Elon Musk, who has made fun of fuel cells many times on different occasions. His main issue with this technology is that it takes too much energy to separate hydrogen from water before you can utilize hydrogen. And then it’s also very expensive to safely store it. What’s your response to that argument?
I think the easiest way to think about this is that Elon doesn’t use batteries to launch his rockets into space.
Batteries don’t fix everything. Does it take more energy to create hydrogen? Is it less efficient in the total run? Yes, it is in some situations. But efficiency is not the biggest issue here. Everyone has inefficiency. Do you know how much inefficiency there is in the grid that burns natural gas or coal to power an electric car? It’s weight and the cost-per-mile to move a vehicle that matter.
We create hydrogen 24/7 through contracts with wind farms and solar farms. We can eventually produce it for as cheap as $2 or $3 per kilogram. We are under $4 right now. That’s important because $4 is cheaper than diesel. When we get it down to $2 or $3, it will be cheaper than battery vehicles.
In the same week of Nikola’s IPO, Tesla said it’s going to ramp up production of its own semi truck, the Tesla Semi. What do you make of that news? Do you feel threatened by the competition?
I think it’s kind of a compliment. I mean, it’s nice to know that we’re affecting Elon’s decisions. We have nothing against Tesla. But you can definitely tell that we’re scaring them because now he’s dedicated all of Tesla’s resources to the semi truck project. I also think he’s coming after the truck industry because he finally realized that there’s better money in it.
Speaking of Tesla competition, Nikola recently unveiled an answer to the Cybertruck, the Badger pickup. Tell us more about that. Why is it a big deal?
I grew up on a farm, and I’ve owned trucks my entire life. I think Tesla’s Cybertruck isn’t built for real truck owners; they are built for Tesla fanatics. There’s nothing wrong with that. I mean, if you can get people to buy your product, good for you.
But the Badger pickup is a real truck. It’s built to compete with Ford F-150. We are talking about being able to put ladders on it, pulling trailers with it and going off the road with it. You can do everything with it. And it’s a zero-emission pickup that runs off of both [lithium-ion] batteries and fuel cells. You get all the performance out of an electric vehicle and the power and range of a hydrogen vehicle. It can give you up to 600 miles on each charge. No one else has come close to that.
Why do you still offer a battery option if hydrogen is so great, like you described earlier?
Because I don’t believe one size fits all. I’m very vocal about that. Battery is great for driving around the city. But when you’re towing trailers or driving long distances, it’s smarter to have hydrogen. Everyone needs an option. That’s why we offer both.
The Badger will start taking pre-orders next week (June 29). What does the production and delivery timeframe look like? And how much will it cost?
We are choosing our OEM right now, which will be announced soon. We expect production to start around 2022, depending who our OEM is. The Badger will be priced between $60,000 and $90,000 depending on options.
It’s quite an expensive truck! Since you are aiming for production in 2022. Are you worried about an economic recession that might hurt high-end pickup sales in the coming years?
Not really. We are a brand new company, so all we have to go is up. We’re not looking to build three million cars a year. If we get to build 30,000 trucks a year, that’s awesome. You’re talking about billions of dollars in revenue. It might take some time to get there. But investors are patient with us. People don’t expect us to have hundreds of thousands of vehicles out on day one.
Nikola’s share price has gone through the roof since its IPO. The company is valued at over $20 billion, more than Ford and Fiat-Chrysler, but has yet to deliver any products. What do you think of the stock price right now? Do you think it’s a bit overvalued?
I don’t really watch the stock price that much. Yes, we are worth more than some of the biggest automakers out there. That obviously makes them really mad. They don’t like that idea that someone new can ever beat them.
But what they don’t realize is that my generation want complete change for the better. These guys don’t truly believe in electrification. They’re building one or two electric cars just to keep their corporate jobs. The older generation can mock us all they want. But my generation care more about fixing big, complex problems. My business is not about just quarterly profits; it’s about how many people I can help. That’s why our valuation is higher. They’ll never understand it because they are not the same people we are.