Nikola Plans $1 Billion Arizona Fuel Cell Truck Factory

Hydrogen-electric semi-truck startup Nikola Motor Co. plans to build a $1 billion factory in a Phoenix suburb.

The company detailed its plans Tuesday in a joint announcement with Arizona Governor Doug Ducey.

The fuel cell truck developer said it will build a 500-acre, 1 million square foot facility west of Phoenix in Buckeye.

Trevor Milton, Nikola’s chief executive, and Ducey said the plant will create 2,000 jobs and bring more than $1 billion in capital investment to the region by 2024.

Arizona will provide up to $46.5 million in various job training and tax abatement incentives. But the package is performance-based and Nikola benefits only if it makes investments in plant and employees, said Susan E. Marie, senior vice president of the Arizona Commerce Authority.

“Arizona has the workforce to support our growth and a governor that was an entrepreneur himself. They understood what 2,000 jobs would mean to their cities and state,” Milton said.

Nikola will relocate its headquarters and research and development team from Salt Lake City to Arizona by October.

Nikola says it has 8,000 pre-orders for its fuel cell truck.

Ryder System Inc. will serve as Nikola’s exclusive provider for distribution and maintenance nationwide and in parts of Mexico. Caterpillar dealer and early Nikola investor Thompson Machinery will supplement Ryder’s sales and services in Tennessee and Mississippi.

Nikola said its Nikola One sleeper and Nikola Two day cab trucks will be able to run up to 1,200 miles between refueling stops. The company plans to lease the trucks to users. It will supply fuel as part of the lease cost through a nationwide network of 376 hydrogen fueling stations. It still has to build the network.

The powertrain is rated by the company at 1,000 horsepower and 2,000 pound-feet of torque, which analysts said fits the need for long haul trucking.

“This incredible new technology will revolutionize transportation, and we’re very proud it will be engineered right here in Arizona,” Ducey said. Nikola’s “selection of Arizona demonstrates that we are leading the charge when it comes to attracting innovative, industry-disrupting companies.”

While the factory is under construction truck components company Fitzgerald Gliders will build the first 5,000 production models.

Nikola did not provide any details on how it would fund building the factory. But in December, truck components company Wabco Holdings acquired a 1 percent stake in Nikola for $10 million. That deal valued the startup at $1 billion.

The company also raised $110 million in a funding round last year.

“A key challenge for Nikola is to demonstrate that they can raise the significant capital necessary to be a true competitor in this space,” said John Boesel, chief executive of Pasadena-based clean transportation incubator Calstart.

However, Boesel said there is room for Nikola.

“Zero emission truck technology is rapidly evolving,” he said. “There is the opportunity for disruptive companies like Nikola to come into this space.”

Nikola has partnered with well-regarded truck components manufacturers, a smart move that builds confidence in potential customers, said Antti Lindstrom, an analyst with IHS Markit.

It has tapped parts supplier Bosch for joint development of powertrain systems for the Nikola One and the Nikola Two. Bosch also has worked with Nikola to develop the truck’s “eAxle,” which houses the electric motor, transmission and power electronics.

Swedish fuel cell developer PowerCell AB will provide the fuel cell stacks that produce electricity from hydrogen, and Nikola will build the completed fuel cell system.

Nikola plans field tests of truck prototypes this fall using the Nikola Two truck and Nikola test divers. Real-world testing with potential fleet customers will come after that. Testing of the Nikola One sleeper truck will begin later.

“I believe the fuel cell solution is better than battery electric trucks for long haul deliveries,” Lindstrom said. “You don’t have the same weight issue that you have with heavy batteries.”

That allows trucks to have a longer range between fueling and enables heavier freight loads, he said.

“This is a technology that is here and now,” Lindstrom said. “It doesn’t require advancement in technology that battery electric long-haul trucks will require.”

Nikola, however, faces potential competition from well capitalized and mature rivals.

Other players include Toyota, which is testing a Class 8 fuel cell electric drayage truck in Southern California. Kenworth, the Paccar brand, is developing a Class 8 hydrogen fuel cell electric truck prototype.

A host of companies including Tesla, Daimler Trucks, Volvo Trucks, Navistar and Cummins are working on electric trucks that could compete with fuel cell commercial vehicles.

Milton said Nikola settled on Buckeye following a 12-month site selection process that considered nine states and 30 different locations. He said he liked the city’s economic environment, engineering schools, educated workforce and geographic location that provides direct access to major markets.

“The Greater Phoenix region is elevating its brand as a hub for innovation, and companies such as Nikola have taken notice,” said Chris Camacho, chief executive of the Greater Phoenix Economic Council.

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