Nikola Corp. booked $6.5 million in revenue in the fourth quarter. But the cost of those sales was more than seven times as much.
Such is the life of a startup trying to launch battery-electric vehicles (BEVs) and fuel cell-electric Class 8 trucks. And simultaneously start a hydrogen production, distribution and sales business.
While the numbers looked pretty ugly, Nikola still has nearly $1 billion in cash and borrowing ability to keep the business going into 2024, Chief Financial Officer Kim Brady said on a call with analysts Thursday.
In a detail-rich conference call Thursday, Nikola executives said four of five trucks it sells by 2026 will be hydrogen fuel cell-powered, capable of up to 500 miles between fill-ups.
Nikola Tre battery-electric truck production to remain slow
Production of battery-electric trucks will number just 250 to 350 in 2023. That’s because infrastructure for charging them trails the ability to produce them. Nikola plans to deliver 30 to 50 Tre BEVs in Q1, generating $10.5 million to $17.5 million in revenue. Nikola dealers and the company hold most of the current Tre BEV inventory, 115 and 127 trucks, respectively.
“We don’t believe these challenges will be abated anytime soon,” Brady said. “And all the stakeholders will need to work together to address them. This will take some time.”
Nikola plans to produce 125 to 250 hydrogen-powered Tre fuel cell electric vehicles (FCEVs) this year. Second-quarter production will slow to allow Tre FCEV integration on the BEV assembly line and the installation of fuel cell power module assembly, battery module and pack production lines.
Romeo customers left holding the bag with Nikola takeover
Customers of battery-pack maker Romeo Power, which Nikola purchased in an all-stock transaction in August, should not expect to get packs they ordered because “Romeo will no longer operate as a merchant pack supplier,” Brady said. He added that Nikola is in arbitration with some former Romeo customers.
Startups Lightning eMotors and Lion Electric are among those potentially left holding the bag.
Nikola employment will shrink to about 1,500 this year from 1,583 at the end of 2022. Nikola laid off 7% of its workforce in September. It appears most of those cuts were at Romeo. Nikola is moving battery pack production from a Romeo facility in Cypress, California, to its assembly plant in Coolidge, Arizona.
“The new battery line in Coolidge includes automation, which is expected to improve the quality of modules, increase module impact throughput and enable significant cost reductions” of $33,000 per vehicle, said Michael Lohscheller, Nikola CEO and president.
The goal is to shave $100,000 off the battery pack by December, just short of the $110,000 incentive Romeo placed on each pack it sold to Nikola before the merger.
“We have already realized $31,000 in material savings per truck,” Brady said. “We expect to achieve an additional $41,000 in material savings.”
Nikola’s high cost of sales
Nikola produced 258 Tre BEVs and delivered 131 to dealers for revenue of $50.8 million in 2022. But it cost $155.6 million to sell the trucks, resulting in a gross loss of $104.8 million.
Not counting $255.4 million in stock-based compensation, $23.2 million in legal expenses and the $14.6 million to acquire Romeo, Nikola’s net loss for the year was $450.2 million. The company produced 133 Tre BEVs in Q4. It delivered 20 trucks and 21 chargers to dealers, with an average selling price of $374,000.
“On a consolidated basis, the cost of revenue for the quarter was $52.3 million, generating a gross loss of approximately $45.8 million,” Brady said.
As a percentage of revenue, the gross loss increased because of fewer truck deliveries, higher fixed costs and freight spread over fewer deliveries, Brady said. One positive: freight costs that ate 30% of revenue in July fell to 9% in December.
Nikola slowed production to implement several enhancements to the Tre BEV, including a software update that increased usable battery capacity by up to 40 miles of increased range while enabling 350-kilowatt charging capability. That allows the truck to achieve an 80% state of charge in 90 minutes.
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