Nikola Corporation exhibited significant progress in its transition to hydrogen-fuel cell trucks by securing 277 non-binding orders. This achievement comes in the wake of challenges in the form of battery fires that affected the company’s business in the third quarter, resulting in substantial losses.
Robust hydrogen-fuel truck orders
Nikola reported a surge in non-binding orders for its hydrogen-fuel trucks. These orders are poised to surpass the company’s manufacturing capacity for the year. However, the trucks that were ordered will not be delivered until the second quarter of the following year. This positive development buoyed Nikola’s shares, leading to an approximately 11% increase.
The company has set an ambitious target of delivering up to 50 vehicles in the current quarter, reflecting its renewed focus on hydrogen-fuel cell technology.
Battery fire setback
In August, Nikola issued a recall for all 209 battery-powered electric trucks it had previously delivered. This decision was prompted by an investigation that uncovered a coolant leak within the battery pack, leading to vehicle fires. Subsequently, the company suspended sales of these trucks.
Upon further examination, Nikola determined that the issue with the battery packs extended beyond the coolant manifold, underscoring the magnitude of the challenge it faced.
Despite the recall and related setbacks, the company still managed to secure orders for 47 Tre battery-electric trucks from a dealer.
Cost of recall and repair
Nikola disclosed that the anticipated cost of the recall and subsequent repairs is estimated to reach $61.8 million. This cost encompasses expenses related to re-engineering, validating, and retrofitting trucks with an alternative battery solution.
Financial outlook
The company anticipates recognizing revenue in the range of $11.3 million to $18.8 million for the fourth quarter. These figures are notably lower than earlier estimates, which projected revenues at $44.3 million. The cost of the recall is also expected to increase the capital required for Nikola to achieve profitability by 2025.
For the quarter ending on September 30, Nikola reported a net loss of $425.8 million, a substantial increase from the $236.2 million loss recorded during the same period the previous year.
Cash position and future investments
Nikola’s cash balance as of the end of September was $362.9 million. This was partly bolstered by the company’s successful fundraising efforts, securing $250 million in the third quarter.
Despite the setbacks, Nikola expressed optimism about its assembly line efficiency, suggesting that it may not need to invest additional capital in capacity expansion for several years. This outlook offers a ray of hope amid recent challenges and aligns with the company’s efforts to navigate a new path in the electric vehicle industry.