Is Nikola’s buck-a-mile all-in vision achievable?
To outsiders, trucking is an industry that seems ripe for disruption. I can’t tell you how many press releases I’ve seen from start-ups that promised to “Uberize” the trucking industry. When I scan through them, I see little they are planning to offer beyond what existing online load-matching services do today. How is that disruptive? Trucking can’t be
Uberized, because not everyone has a Class 8 truck sitting in their driveway.
Trucking is not an industry that’s archaic, or lagging others when it comes to innovation and technological advancements. It is progressing on these fronts at a rapid pace. Look at the electrification of Class 8 vehicles as an example.
Yes, Tesla, Nikola, Xos (formerly Thor) and other start-ups have boldly proclaimed they’re going to disrupt trucking by producing electric trucks. But who’s winning that arms race?
I’ve seen more working electric trucks from the incumbents, such as Freightliner, Volvo, and Paccar, than I have from the so-called disrupters.
So, it was with a healthy skepticism that I traveled to Scottsdale, Ariz., in mid-April for the first ever Nikola World. And I have to say, I came home a little less skeptical. It’s not just because I got to see working versions of two Nikola Class 8 tractors. A couple laps around a track, watched from the bleachers, was underwhelming, as it did little to convey what the driving experience will be like.
However, where Nikola really stands to disrupt the trucking industry is in how it plans to sell these trucks. In fact, it doesn’t want to sell them at all.
Nikola is planning a full-service lease model, but with a key differentiator from what’s available in the market today. It plans to include fuel. And tires. For seven years. At a cost of less than a buck a mile – comparable to the operating cost of a diesel. Now that’s disruptive.
If Nikola can pull this off, a fleet manager or operator would know their total cost of ownership for a seven-year life-cycle when they take delivery of the truck. Fuel surcharges would be history. Diesel price volatility would be a non-issue. But is it realistic?
Nikola believes it can produce hydrogen cheaper than anyone else in the world, on-site through stations that will be located adjacent to all 700 or so of its fueling sites. Even more ambitious, it says it will do so in a renewable manner using solar and wind power generated at these sites. This eliminates the need to transport hydrogen and the associated costs of doing so.
That’s extremely ambitious. Is it possible? Maybe. Is it possible at a retail price of $6/kg (about half of what most hydrogen stations in the world charge today)? When I consider the vast tracts of land that will be required at each and every fueling station to generate the wind and solar power, I can’t see how. And that’s where I believe Nikola’s model could fall apart. I’ve become a believer in the truck technology and in founder Trevor Milton’s abilities to execute on his vision.
But can he do it for less than a buck-a-mile? That’s where I remain a skeptic. I could see costs spiraling out of control and while the Nikola is a sleek, environmentally-sound machine, it doesn’t have a future if its total cost of operation can’t rival that of diesel. And that’s where the wheels could come off Milton’s grand vision.
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