Hyliion Holdings - A Solution the Trucking Industry Can Finally Integrate
The Hyliion Holdings is a publicly traded company under the ticker symbol HYLN and its almost at its 1 year mark in public markets. Needless to say, the stock price and the company tell a tale of two different stories. Hyliion aims to solve 3 specific problems (Total Cost of Ownership (TCO), Neutral-Negative Carbon Footprint & Performance) within the trucking industry and they are attempting to provide all three solutions to the trucking industry all at the same time. The core of Hyliion's roll-out strategy is one of methodical precision and meticulous product validation. Hyliion doesn't need to rush to market as the market is large enough for those seeking entrance to the over 900 billion dollar Class 8 over-the-road long haul global trucking industry. What Hyliion does need to do is "get it right," and I believe they are doing just that.
What Makes Hyliion Different?
How can we provide for transportation solutions to be better for the environment and ultimately the earth? TESLA is the dominant player in the EV space hands down with their production numbers steadily growing every quarter for small cars, it's difficult to imagine a Class 8 space without TESLA, or is it? TESLA requires charging from the grid. Question is, will the charging (down time) of proposed solutions by TESLA be of interest to Fleet Operators who are seeking efficiency and minimizing down time within their operations? TESLA gets a pass in everything stock market and it can do no wrong. No challenge is made to the charging hurdle. No question is made to the final disposition of all the Lithium batteries and the potentially harmful effect they will have on the environment when disposed of. Something as simple as asking where the electricity will come from to charge all of these battery electric vehicles (BEV). Is the truck powerful enough? Can it perform over the long haul? Anything that falls short of the 500 mile range shouldn't even be considered for Class 8 application, right? Is TESLA's solution powerful enough? Is the TESLA solution reliable? Finally, and dare I challenge the notion that the cost of production could potentially consume any expected profit margin for TESLA, ouch! This is a common theme that I keep coming back to in evaluating each Electric Vehicle (EV) play with as little bias as I can possibly apply.
Emerging from the shadows may present the greatest competition for Hyliion from its Special Purpose Acquisition Company (SPAC) older brother NIKOLA MOTORS. Catchy enough "Fleet of Tomorrow," speaks volumes about where the company has their sights set to grab part of the 900 billion dollar transportation industry bounty. "For Today and Tomorrow..." This is where it gets rather hazy for me as someone who enjoys due diligence on the EV space. Is Nikola Motors ready for today? Nikola fell victim to scandal, false claims and lost deals and at the center of it all; former founder and CEO Trevor Milton. Desperate for the limelight and a SPAC market salivating for innovation, Milton talked his way to the front of the pack enjoying a meteoric rise in the stock price many would dub as unjustified and premature. Nikola's Solution is Hydrogen Fuel Cell Technology which by all industry estimates is the wave of the future; in theory. In reality, it paints a different kind of narrative and leaves industry scratching their heads on where they are expected to fuel these fuel cell trucks when the infrastructure is, as of now, non-existent. Again, I'll remind the reader to understand Nikola is also a ground-up semi-truck manufacture. They know better than the trucking industry on how best to build a truck from scratch. Evidently they also have bold plans on providing a repair and maintenance network from the ground floor too. So the prototype has just been released, not too fleets, rather to the test track where it boasts a 375 mile range in "ideal test conditions." On the surface; sexy. Under the hood; flawed. At the end of the day Nikola has produced what is expected to be a truck that falls short of the 400 mile range and hasn't been subject to the product validation from fleet owners and drivers alike. Even if it did satisfy the product validation and demanding performance criteria, the lack of fueling infrastructure still exists and is a deal-breaker. This may be important at some point but Nikola has years before its solution will enter into its product validation stage and even longer before a reliable Hydrogen Fueling infrastructure is built out.
Founder and CEO Thomas Healy has disclosed many times he believes that many solutions will be put in to service in transportation as we step into a new era of trucking where ALL modes of transportation, technology and fuel are integrated or adopted where deemed appropriate by fleet owners. With that said, fleet owners will still need a wheel to wall solutions that satisfies ALL the pain points enough for them to take the leap of faith with new technology. Does Hyliion satisfy all the pain points of the industry? Let's break it down. As mentioned above, the ground up philosophy dominates the EV race and the Class 8 market where companies are asking fleet owners to adopt an entirely new truck and abandon the old. Hyliion comparatively wants to integrate with Original Equipment Manufacturers (OEM's) to focus on the aspect of the truck most applicable to improving carbon emissions and improving efficiencies; the drivetrain. If you believe diesel will go away, the "fleet of tomorrow" will work for you. If you still maintain a certain number of diesel trucks in your fleet, consider making it more efficient with the Hyliion Hybrid EX. Payback for the EX is about 3 years, improved HP, improved driver experience, and improved fuel efficiency to the bottom line.
Compressed Natural Gas (CNG) has been used for years because of its low cost to burn. Unfortunately, CNG is underpowered and inappropriate for applications requiring the extra horsepower (HP). The Hyliion solutions Hybrid CNG adds the additional HP, increasing payload capacity which in turn boost the bottom line over the life of the truck running the solution.
Hyliion's Hypertruck ERX is the flagship installation aimed to disrupt an industry. It's onboard generator is fueled by Renewable Natural Gas (RNG) which charges the proprietary battery system which powers the drive motor and auxiliary systems. The company boasts a net carbon negative emission profile which in laymen's terms is better for the environment the more it's driven. Unlike it's competition, the ERX boasts a 1000+ mile range and even a 75 mile completely electric or battery electric vehicle (BEV) to run in the strictest of emission free cities. No grid necessary with the ERX solution as it can be fueled with RNG at any of the over 730 fueling stations in North America alone with more permits being issued for new RNG installations into the future. Seems to me the solution for today is Hyliion; NOT Nikola. Ultimately, fleets will be able to chose the solution that makes the most sense for their operations and routes. It will be exciting to see how each of these technologies evolve as competition for the 900 billion dollar market heats up.
Is it even necessary to build the trucks from the ground up or integrate with existing OEM's. How will the trucks be fueled and is the fuel of choice available/sustainable/cost effective? What is the total cost of the fuel compared to 1 gallon/diesel equivalent? Can the cost of the fuel over the long haul drive down TCO enough to justify fleets taking on the new technology. What is the environmental impact of each companies solution and its ability to impact the carbon emission footprint of a business? What is the range capability of each of the companies solution? How will each of the trucks be fixed for routine maintenance or un-planned repairs? How reliant upon the grid are the solutions being brought to market and how much expected down time is expected from said reliance? Finally, has each of the companies had a chance to run each solution through product validation enough to justify mass-scale adoption? The X-factor in all of these deliberations may come down to how much the US government is willing to supplement each of the fleets with incentive to adopt the almost certain unknowns of each new technology in an effort to advance a more sustainable pollution profile for each fleet and ultimately the planet.