‘We’re going to completely control trucking in America’ – Nikola’s Trevor Milton

Nikola founder tells Martin Kahl the company has its sights set on becoming one of the top truck manufacturers in Europe and the US

Automotive World Magazine – July 2020

Heavy trucks, according to the California Air Resources Board (CARB), are the US state’s largest single source of vehicular air pollution, “responsible for 70% of the smog-causing pollution and 80% of carcinogenic diesel soot even though they number only 2 million among the 30 million registered vehicles in the state.” No great surprise, then, that in late June 2020, California would adopt the world’s first mandate for emissions-free truck sales; binding annual targets from 2024 to 2035 require truck manufacturers to sell zero emissions trucks. By 2045, notes CARB, every new truck sold in California will be zero-emission.

“Big news for Nikola and BEV / FCEV demand,” tweeted Trevor Milton, Chairman and founder of Nikola Corporation in response. “The markets are asking for more options. We won’t be the only ones, it’ll help everyone. Nikola is in a great position. Our 300+ mile BEV is amazing and needed. Our 500+ mile FCEV is long haul game changing.”

In the six short years since it was founded, the Phoenix, Arizona-based company has become a leading name in Trevor Milton Nikola tweet response to CA electric truck mandatethe truck industry, thanks primarily to securing the confidence of a number of major names in vehicle manufacturing and trucking, and the recent IPO which saw Nikola Corporation’s value briefly surpass Ford Motor Company’s US$30bn market capitalisation, before settling at a nonetheless eye-watering US$23bn.

That valuation

Whether such a valuation helps or hinders a company that has yet to produce and sell its first vehicle “depends on what the conversation is about,” Milton tells Automotive World.

“When you have the kind of success Nikola’s had in the stock market, you become a target for those who don’t understand the business model or make profits in shorting,” he explained. “For the most part, it’s a positive. The market cap allows us to have incredible conversations and relationships with groups around the world. It brings a validity to our business model when it comes to joint ventures and partnerships.”

Trevor Milton Nikola
In the days after it went public in early June 2020, Nikola Corporation’s value briefly surpassed Ford Motor Company’s US$30bn market capitalisation. It is currently worth around US$23bn. Pictured: Nikola founder and Chairman Trevor Milton

The company has the backing of Robert Bosch and CHN Industrial, the owner of Iveco trucks, and prominent shareholders include VectoIQ, Iveco, ValueAct and Fidelity. Milton is keen to insist that it is Nikola’s long-term strategy that attracts investors, who see greater value in vision than in near-term revenue.

The only thing many people have against us is that we don’t produce anything,” he notes. “And we just laugh at that. It took Tesla nearly ten years to get to where it is today, and it took it many years to get to where we are now in our first year.” Like Tesla, Nikola has a passionate online following, counterbalanced by equally passionate critics and doubters—and Milton is prepared to engage and debate publicly with them.

“We went public specifically because people could see exactly where we are, that we’re legitimate,” he insists. “Everyone’s willing to give you one year. We have the most advanced semi-trucks in the world, built. We’ve shown them on video, at Nikola World, and we’ve delivered beer with them. We also have one of the most advanced pick-up trucks in the world coming out. So, yes, there’s no doubt we have to deliver, but it’s not really that big of an issue.”

Blank cheque?

If it felt like the stock market launch and the subsequent valuation came around very quickly, there’s good reason: a complex reverse merger by New York-headquartered VectoIQ—a ‘blank cheque’ investor in future mobility companies led by former General Motors Vice-chairman Steve Girsky—played a major role in Nikola’s sprightly appearance on the NASDAQ. So too did the recent WeWork scandal, which caused panic amongst investors, explains Milton. When WeWork went public, “all the ugliness started to show,” he says, and understandably, investors questioned Nikola. “That was one of the big reasons why we decided to go public and show everything. When you go public, you can’t hide anything—it’s all there. We decided it’s time to let people see our business model, it’s time for people to ask questions.”

Nikola Tre_800
“We came to the conclusion that if you took Nikola’s intellectual property and combine it with Iveco’s 50-plus years of chassis manufacturing and supply chain for heavy-duty trucks, we could become one of the top manufacturers in Europe, and also the USA” – Trevor Milton, Nikola

The relationship with VectoIQ offered mutual benefits. “Our bankers and advisors saw an opportunity with a company looking to go public with a company just like ours. We met with them and six months later we were public.” Much of this was facilitated by Girsky’s presence, notes Milton. “That brought considerable comfort to the investors, knowing that someone who used to run GM along with all of his due diligence team came in and looked at Nikola and gave a stamp of approval.”

VectoIQ voted in favour of the reverse merger with Nikola on 2 June 2020. That move boosted Nikola’s value from US$3bn to US$10bn before it went public under a new NASDAQ ticker, NKLA. Its stock surged 104% on the third day of trading, briefly giving the company a higher market cap than Ford.

Nikola’s planned range consists of the Nikola One, Two and Tre heavy trucks, the Badger pick-up, and electric powersports vehicles including a dune buggy and a jet ski. The company has booked orders worth over US$10bn, primarily from Budweiser owner Anheuser-Busch, which has ordered 800 units. In terms of revenue, Nikola plans to have sold or leased 7,000 BEV and 5,000 FCEV trucks by 2024, by when it anticipates annual revenue of US$3.2bn.

Nikola will build its own hydrogen fuelling stations and locate them strategically along routes where it has customer orders, reportedly starting with ten stations in California

As for production, Nikola will break ground in July 2020 on a 35,000 upa factory in Coolidge, Arizona. In Europe, it will build vehicles in partnership with CNH Industrial’s truck brand Iveco.

‘The perfect relationship’ with CNH

Among the major companies working in fuel cell trucking—notably Toyota, Paccar, Hyundai, Daimler and Volvo—there was previously no sign of Iveco, but the companies were introduced whilst Nikola was raising capital and Milton calls it “the perfect relationship”. A leader in natural gas trucking in Europe, Iveco has been pushing a post-diesel agenda since the 2018 IAA when it ran a diesel-free stand; however, it was Iveco’s lack of expertise in heavy-duty truck electrification that drew it to Nikola. “We came to the conclusion that if you took Nikola’s intellectual property—the batteries, the inverters, the controllers, the HMI, the vehicle controls, electrification—and combine it with Iveco’s 50-plus years of chassis manufacturing and supply chain for heavy-duty trucks, we could become one of the top manufacturers in Europe, and also the USA.”

The partnership, says Milton, will enable Nikola to produce and launch the first zero emissions semi-truck that can go more than 300 miles (482km). “That’s one of the greatest achievements in the world. We beat Daimler, Volvo, Tesla, everybody. And that comes out next year. We have hand-built units coming off the assembly line right now and we enter into limited assembly next year.”

Nikola Tre hydrogen fuel cell truck for European market
Based on an Iveco S-WAY chassis, the Tre is Nikola’s pure battery electric cabover truck with a range of 300 miles (482 km)

The trucks are built via a joint venture operation at Iveco’s Ulm, Germany factory, which is currently assembling test versions of the Nikola Tre pure battery electric cabover truck. Based on an Iveco S-WAY chassis, “we revised it dramatically to be completely built around the Nikola electrification platform,” explains Milton. “All the electrification was provided by Nikola—the batteries, e-axles, motors, inverters, controls, as well as the infotainment system and over-the-air updating. The chassis is co-engineered with Iveco. You could not ask for a better relationship.”

Selling routes

Nikola’s strategy hinges on more than the sale of the trucks. The biggest problem in trucking is the unpredictable operating cost, explains Milton, due to frequent fluctuations in diesel, service and warranty costs. “Your daily truck operating cost is different from the day before. And sometimes it can go up 30% over one month. This is a huge problem.” With its pay-per-mile business model, says Milton, “Nikola figured out how to simplify that whole process.” Nikola will build its own hydrogen fuelling stations and locate them strategically along routes where it has customer orders, reportedly starting with ten stations in California.

nikola_two-cockpit
With Nikola’s connectivity platform, says Trevor Milton, “We could theoretically take Uber Freight down quite quickly. The platform will probably be one of the most powerful freight systems in the world”

“All customers do is pay us per mile,” he explains. “We cover everything—the truck, the hydrogen, the fuel, the service, the warranty. You don’t do anything except pay the same cost per mile for seven years. It’s the first time in trucking that customers could standardise their rates. We’ve seen a huge success on this, and one reason why Nikola’s valuation is where it’s at is because it fixes the supply chain of trucking. No-one’s been able to do that, until Nikola came along.”

On taking down Uber Freight

A key area for Nikola is connectivity, which serves to provide fleet managers with clear visibility of truck and driver performance. Crucially, however, Nikola’s connectivity plans also benefit drivers beyond operating in a state-of-the-art cab. “We’ve worked hard on allowing private drivers to be able to see all the loads available within the city. And the algorithms will actually make the most money for them. It’s all built in,” he explained. “Because we are the only ones that own the truck and the fuel, we have a unique advantage. We could theoretically take Uber Freight down quite quickly. And that’s because they don’t control the cost of the fuel. All they control is the load.”

Nikola’s platform, says Milton, “will probably be one of the most powerful freight systems in the world because it’ll allow truck drivers to see every load. You can tell it where you want to go, it’ll give you every load going that you could pick up and how much time it will take you to go get the load, how much money you’ll make on the route. And everything’s through our system. There are no variables. You don’t have to worry about what the fuel prices are going to be along that route.”

nikola_one_interior
“Unfortunately, we’ve reached the pinnacle of what you can do for a driver in a diesel truck. We have yet to even scratch the surface on what you can do for a driver with an electric truck” – Trevor Milton, Nikola

So confident is Milton of Nikola’s load matching algorithms, that he tells Automotive World: “I think in the next ten years we’re going to literally completely control the supply chain and trucking in America.” Moreover, drivers are “lining up to work for companies that are going to offer our truck,” he claims, adding: “Unfortunately, we’ve reached the pinnacle of what you can do for a driver in a diesel truck. We have yet to even scratch the surface on what you can do for a driver with an electric truck.”

Autonomous trucking creates jobs

Autonomous drive technology is widely seen as finding its first success in trucking; how, then, does Milton square the excitement of driving Nikola trucks with autonomous trucking?

No threat, he says. “Autonomous trucks will definitely be the future of all transport across the freeway systems, but not inside the cities. Our trucks are fully autonomous capable. We’ve built it to where they can handle Level 4 and 5 directly to our gateway. We don’t do autonomous ourselves, but it’s compatible with pretty much all the top autonomous systems. And that allows us to move all of our freight on the freeway without a driver,” said Milton. “Drivers want to be inside the city anyway. They don’t want to be on the road, away from their family, having to deal with travelling and food and poor health and everything else. We’re going to move drivers away from freeway driving and move them to city driving. The autonomous trucks will drop their loads off outside the city and then these drivers will take five, ten or 20 loads into the city a day.”

Crucially, he says, autonomous drive technology does not replace jobs. “It just increases the number of jobs within driving trucks in the city. Because now you have more loads arriving quicker, they need more drivers to deliver.”

Nikola Badger
Available as a 120kWh blended FCEV/BEV with up to 600 miles range, and a 160kWh BEV with 300 miles range, the Badger will be built from 2022 through a joint venture with a yet to be announced major automaker

The Badger

Nikola could hardly be described as lacking momentum, and reservations opened at the end of June for the Badger, Nikola’s bold entrant into what looks set to be a crowded electric pick-up truck market, going up against offerings from Ford, GM, Lordstown Motors, Rivian and Tesla. Available as a 120kWh blended FCEV/BEV with up to 600 miles range, and a 160kWh BEV with 300 miles range, the Badger will be built from 2022 through a joint venture with a yet to be announced major automaker, and sold as a product line alongside their offering. By side-stepping the need to develop manufacturing and sales operations, Milton believes Nikola could save five years and US$5bn, and “allow us to kick our competitors really hard. We will become the leader in electrified pick-up trucks.”

The company is currently planning to host the 2020 edition of its open doors event, Nikola World, in early December, at which it will unveil the Badger. “But obviously we hope COVID’s fully under control by then,” he added.

Global leader?

With seemingly incredible ambitions for a company currently without any market presence other than merchandise, but a host of highly credible industry partnerships and a stunning market cap, it’s easy to understand why Nikola commands equal measures of passion and cynicism. Confident communications that open with statements about being “a global leader in zero-emissions and infrastructure solutions” may have excited the stock markets, but it’s in the truck market and out on the road where Nikola will need to show that it can convert those solutions into credible products.

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