Nikola pilot plant to speed electric truck production

Nikola Corp. (NASDAQ: NKLA) will assemble electric trucks in a pilot plant on its 1-million square-foot manufacturing site in Arizona while plant construction proceeds in phases.

“It will be a hand-built, very, very low volume, very slow build,” Nikola global head of manufacturing Mark Duchesne told FreightWaves. “It allows us to gain the experience of building these trucks. [And it] allows us to get trucks to our customers as fast as possible.”

Nikoka marked the starting point for battery-electric and hydrogen-powered fuel cell electric truck production at a groundbreaking on the 430-acre site on Thursday. The manufacturing facility in Coolidge, Arizona is located between Phoenix and Tucson. It will create 2,000 new jobs.

Multi-phase plant construction

The $600 million plant will come together in phases after the pilot facility. The first phase is to be ready in late 2021. Both the battery-electric Tre and the fuel cell Class 8 Two day cab will be assembled there. The second phase comes 12 to 18 months later. Cab assembly and a paint shop would follow in the third phase if projected demand holds up.

The Industry 4.0-designed facility will incorporate the latest technology to increase round-the-clock connectivity throughout the building and equipment to make the most of overall energy, productivity and quality. 

“The reason our company exists is in support of a sustainable future so everything we do in our manufacturing process and our building site will be done to ensure the smallest environmental footprint possible,” Duchesne said. 

Cabover coming to conventional market

Nikola begins cabover Tre production for Europe in mid-2021 in a joint manufacturing venture with IVECO at a plant in Ulm, Germany. Snub-nosed cabover design is favored in Europe for its maneuverability, tight turning radius and visibility.

The Tre will be unique among American heavy-duty trucks, where fuel-saving, longer hood, aerodynamic designs dominate long-distance driving.

“We found last year when we brought in some of our largest customers in North America, virtually all of them said [they] would buy [the Tre] for use in metropolitan areas as a delivery truck,” Nikola CEO Mark Russell said. “So, we’re bringing the cabover back to the U.S. market.”

Balance sheet cash will cover construction

Nikola will fund construction with about $900 million on its balance sheet following its emergence as a public company on June 2. Nikola completed a reverse merger with VectoIQ, a special purpose acquisition company (SPAC) whose sole purpose was to find a clean transportation company in which to invest.  

VectoIQ raised $230 million in its own initial public offering in 2018. Then it amassed $525 million through a private investment in public equity (PIPE) that allowed mutual and hedge funds and other investors to buy discounted VectoIQ shares and warrants for new stock. All that money became Nikola’s at the close of the merger.

“Right now, we don’t need to raise anything,” Executive Chairman Trevor Milton said. “But it really depends on where the market goes. If the market’s very receptive and loving everything that we’re doing, there comes a time when financing is better to pull in money. Sometimes share offerings are better. [It] depends on where you are with the valuation of your company.”

Governor’s approach swung site selection

The pro-business attitude of Gov. Doug Ducey helped Arizona win the plant over South Carolina, Tennessee, Texas and other states, Milton said. 

Arizona’s solar power-favoring climate helped. So did the state’s proximity to California, which will be Nikola’s biggest market.

“The fact [is] you can produce 365 days a year without worrying about humongous hail storms wrecking all your vehicles or freezing weather messing with your paint,” Milton recalled Ducey telling him. “We don’t deal with any of that.”

Milton bonded with Ducey, the former CEO of Cold Stone Creamery, as a fellow entrepreneur.

“He’s like, ‘Look, I don’t like the government any more than you do, Trevor. There’s a place for it. And it’s very important for this society to have. But my goal is to make sure it never hurts you,’” Milton recalled.

“‘I’m going to make sure you get all the permitting you need. As long as it’s safe, we’re going to expedite. We’re going to make sure it’s done with all the right processes, but it won’t hold you up.’”

Ducey also gave Milton his cell phone number. And he answers when Milton calls.

Click for more FreightWaves articles by Alan Adler.

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