Nikola has 'first-mover advantage' with new hydrogen fuel cell electric truck, CEO explains

Nikola Motors CEO Michael Lohscheller discusses the company's decision to enter the EV truck market and details how the new hydrogen fuel cell electric truck gives the company a "first-mover advantage".

Video Transcript

SEANA SMITH: We are shifting gears to the world of electric-- of electric vehicles. Shares of EV truck maker Nikola moving to the downside today, with shares off just about 13% after the company missed on its most recent earnings results. Joining us now to break all that down and give us a look ahead for the future of Nikola vehicles, we want to bring in Michael Lohscheller. He's the CEO of Nikola Corporation, also Pras Subramanian, our autos reporter, joining the conversation as well.

Michael, it's good to see you here. So certainly, judging by the reaction in shares today, off just about 13%, the Street was not satisfied with these results turning lower here after your revenue miss, also the production pause. What's your message following this quarter?

MICHAEL LOHSCHELLER: The message from our side is we are very focused on North America and the fuel cell truck. And we also built up the hydrogen infrastructure at the same time. We have taken important decisions. We have actually sold our European business to Iveco, because it's in very good hands there.

And, obviously, it's important that we stay focused going forward in terms of the pause of the battery electric truck is something which makes sense before we launched our fuel cell truck. And we are happy to take orders for the battery electric truck going forward, because we have a flexible manufacturing line. So we are very focused, focusing on the key things for Nikola, and that is certainly North America, the fuel cell, truck and hydrogen infrastructure.

PRAS SUBRAMANIAN: Hey, Michael, Pras here. So I guess help us understand the-- why the joint venture between you and Iveco, the big, large European truck maker, why did you guys decide to sell that business off to them? I know you want to focus on the North American market, but does that deal continue forward? Do you guys still want to work with Iveco and use them as a parts and chassis supplier?

MICHAEL LOHSCHELLER: Yes, absolutely. I mean, it's a strong partnership. And Iveco will stay a shareholder of Nikola. And we will take their cabins and their e axles. So we have a long term supply agreement. So it's a really good partnership. But the reason why it makes so much sense, I mean, it's better that Iveco in Europe focuses on the European execution of things and we do the same here in North America.

It's much easier to do this here. And we also need our engineering resources now to finalize our fuel cell trucks. So I think this is really a win-win for both companies.

SEANA SMITH: So, Michael, here in the US, you are pausing production of that battery electric truck, like you said, at the Arizona plant as you work to modify that plant. What do your production targets look like for this year? And given the fact that we could see slowing growth in the second half of the year, how do you see that potentially affecting your business?

MICHAEL LOHSCHELLER: So we are actually more optimistic for the second half of the year, in particular, because we will launch our fuel cell truck, which is a best in class truck with a range of up to 500 miles. And we gave guidance this morning between 375 and 500 trucks for the total year. But we lean more towards the fuel cell truck, because we get feedback from customers that they prefer the better range, the lower fuel time, and also the weight.

So this is clearly going in the direction of the fuel cell truck. We are also-- Nikola has a first mover advantage. There is nobody else out there. And at the same time, we put up the energy infrastructure. So we lean more towards the fuel cell truck here.

SEANA SMITH: But, Michael, you don't see any signs of curbing demand or anything from some of your clients out there, potential clients, just in terms of the fact that we could, in fact, see a harsher slowdown than we had initially anticipated?

MICHAEL LOHSCHELLER: Well, look, I mean, the zero emission mobility segment is still very small and it's growing. And we see that customers are very interested in that. So we don't sense that we are impacted by the overall economy. It's more about, like, the ESG roadmap and that people really now want to go into trucks without emission.

That is what is happening. Our biggest bottleneck is really setting up the infrastructure for the electric trucks. But we try to find solutions with customers and dealers to do this as quickly as possible.

PRAS SUBRAMANIAN: Hey, Michael, I know those customers include companies like Walmart and also another private provider of service, the US Postal Service. What are they telling you about that whole infrastructure buildout? Because there aren't that many hydrogen stations in the US that can actually refuel these fuel cell trucks?

MICHAEL LOHSCHELLER: Exactly right. And that's why Nikola is uniquely positioned to set up, really, the hydrogen infrastructure. And we will produce green hydrogen, distribute it, and then dispense it. Because you have to really offer both things.

I think we have a world class truck, but we also need to have the energy infrastructure. And we also offer very innovative things like a mobile fueler, so that we can bring our mobile fueler to the customer and then the customer can fuel there. But it's very, very important.

You need to have both. We always say, you need to have the chicken and the egg. That is what customers are expecting. And I think Nikola is uniquely positioned to offer this.

SEANA SMITH: Michael, there's a big focus on your cash reserves, your cash burn that you just reported here in Q1. Some concerns just that you're going to have to need to raise more funds. Do you have another, or are you thinking about considering more stock sales?

MICHAEL LOHSCHELLER: I mean, two things. First of all, cash burn will come down quite a bit because we have invested a lot in R&D. And you see the results. I mean, we have fantastic products. But going forward, R&D will come down, and also cash burn, then, will go down.

At the same time, yes, we will have to raise capital. We also ask stockholders for approval beginning of June so that we have a foundation then to issue more shares and raise more capital going forward.

SEANA SMITH: Michael Lohscheller, CEO of Nikola Motors, thanks so much for joining us this afternoon.