Nikola Corp. NKLA 22.05% said Monday it secured an order for 2,500 electric garbage trucks from refuse giant Republic Services Inc., RSG 0.38% with the announcement coming less than a week after analysts complained about a lack of clarity on the business plan and order bank.
The electric-vehicle company has for several years been touting robust interest in the electric and fuel-cell trucks it plans to mass produce and sell. Last week, Nikola published its first earnings report since going public in June, losing $86 million while pulling in essentially no revenue.
Analysts complained the companyâ€™s timetable is confusing, with some wondering how much demand for its products and services there actually is.
â€śIs this what we get?â€ť JPMorgan analyst Paul Coster asked executives last Wednesday on a conference call after executives walked through financial results. Mr. Coster wanted to know when the company would expand its business model.
Electric and fuel-cell vehicles have long captivated the publicâ€™s imagination, but have had little success without hefty government incentives. While Tesla Inc. is widely celebrated and now the most valuable U.S. auto maker by market capitalization, its founder, Elon Musk, spent years battling skeptics, struggling to meet timelines and swimming in red ink.
In an interview, Nikolaâ€™s founder, Trevor Milton, said the garbage-truck deal with Republic Services fulfills one of three major milestones recently promised by the end of 2020. In addition to a major order, Nikola executives are committing to also announce this year which auto maker will be its partner on production of a â€śBadgerâ€ť passenger truck; and it aims to name a partner for a hydrogen filling station network it wants to build.
â€śIf we didnâ€™t have anything to talk about weâ€™d have a bad situation,â€ť Mr. Milton said. Last month, the company broke ground on a new factory on the outskirts of Phoenix.
Founded in 2014, Nikola has drawn comparisons to Tesla. In June, when Nikola went public via a reverse merger, investors quickly drove up its value amid broader enthusiasm about electric vehicles. Teslaâ€™s recent string of profits and success expanding production have fueled that exuberance.
Nikola shares soared after the IPO, briefly surpassing the market value of Ford Motor Co. As of Fridayâ€™s close, however, shares were trading only slightly above the IPO price and 60% lower than its June 9 high. Shares recently traded at $41, up 11.7% from Friday, reflecting optimism surrounding the Republic Services deal.
Tesla also plans to build electric trucks, including semi trucks that could compete with Nikola. Mr. Musk plans to in-source as much production as possible, while Mr. Milton wants to take the more conventional route for the auto industry, relying on a network of partners and a deep supply chain.
Nikola has announced orders for 14,000 trucks, including a commitment to start selling its first units to Anheuser-Busch in 2021. Initially, Nikola aimed to start delivering those trucks this year.
US Xpress Inc. an over-the-road shipper, has also placed a significant order with Nikola, helping fill out a backlog of orders estimated to be worth several billion dollars.
Other customers exist, but havenâ€™t been disclosed, the company said. Nikolaâ€™s long-term plan is to be a leader in passenger and heavy trucks that rely on batteries or fuel cells for power. Larger trucksâ€”such as semisâ€”now run on diesel or compressed natural gas.
The company doesnâ€™t currently sell trucks to end users. It pulled in $36,000 in revenue from solar panel installations during the second quarter
The U.S. subsidiary of Anheuser-Busch InBev SA placed an order two years ago for as many as 800 Nikola hydrogen-electric trucks, among the largest orders for alternative-fuel vehicles. It plans to use them for long-haul deliveries from breweries to its distributors.
Mr. Milton said Mondayâ€™s announcement represented an important development for the trucking industry he hopes to disrupt. Traditional garbage trucks, he said, are â€śdirty, loud and pollute like crazy.â€ť
Republic Services President Jon Vander Ark said predetermined routes, constant stopping and starting, and the ability to park the trucks for charging overnight or to swap out batteries bolster the business case for a shift to e-trucks.
Production of the vehicles is slated to take place at a factory Nikola is starting to build in Coolidge, Ariz., near Republic Servicesâ€™ headquarters.
The battery-powered versions will travel 150 miles on a charge, he said, capable of emptying 1,200 garbage pails before plugging in.
Nikola aims to start testing the garbage trucks in 2022 and begin full production in 2023. While Republic Servicesâ€™ cost per truck is currently undisclosed, Mr. Milton committed to a price tag under $500,000 per unitâ€”which is the going rate for electric garbage trucks currently sold by competitors, he said. Prices for new gasoline-powered garbage trucks fall in a range of nearly $200,000 to more than $300,000.
â€śWeâ€™ve done our homework, and weâ€™ve talked to everybody,â€ť Mr. Vander Ark said. The trucks will come with higher upfront costs that could be driven down over time due to lower maintenance and usage costs. Republic Services said it could bump up its order to 5,000 units.
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