Nikola’s wildly ambitious plans to enter the fuel-cell heavy truck and battery EV/FCEV pickup-truck businesses just took a giant step toward viability with today’s announcement that it’s partnering with General Motors. The upstart automaker will utilize GM’s Ultium battery technology and its Hydrotec fuel cell technology, which has been developed and will be manufactured in conjunction with Honda. Nikola will also leverage the BET electric chassis that is to underpin the Hummer EV pickup due in 2021, adapting its own Badger “top-hat” to this flexible platform. General Motors will then build the 2023 Nikola Badger under contract at an as yet unnamed plant (Detroit-Hamtramck will be building the 2022 GMC Hummer EV, so that’s an odds-on favorite).
What’s in it For General Motors?
GM receives a $2 billion equity stake in Nikola (equating to 11 percent ownership) via newly issued common stock in exchange for its in-kind contributions, which are to include final engineering, validation, homologation, and production of both battery and fuel-cell electric versions of the Badger. GM values this partnership at $4 billion in supply contracts for batteries, fuel cells, and EV credits over the 10-year contract. GM becomes Nikola’s exclusive supplier of fuel cells globally except for Europe to power Class 7/8 semi tractors, with this production coming from a Brownstown Township plant operated in conjunction with Honda. This gives General Motors access to a profitable sector it is not currently engaged in without having to expend the capital to develop its own heavy-duty truck. And when companies like Honda and Nikola choose to partner with GM in ventures like this, it builds the company’s reputation as a technology leader.
What’s in it For Nikola?
Nikola saves over $4 billion in battery and powertrain costs over ten years and over $1 billion in engineering and validation costs, and gains access to the supply chain and logistics network GM and Honda have been developing for years. Nikola also saves the expense of constructing a new assembly plant or expanding its existing Coolidge, Arizona heavy truck plant to accommodate light-duty Badger pickup production. And by joining forces with GM on batteries and fuel cells, the two companies instantly get access to economies of scale that would otherwise be unavailable to either.
Do Customers Lose Anything?
What of the fuel cells and batteries Nikola was engineering? Last November Nikola made headlines by alluding to a novel battery cell technology boasting double the energy density, 40 percent of the weight, and half the cost of the 2170 lithium-ion cells in use by Tesla. Without divulging the science behind it, Nikola CEO Trevor Milton claimed that the gains came from eliminating pricey metals like nickel, cobalt, and magnesium; from using free-standing electrodes; and a unique new chemical. In a media call regarding the new collaboration with GM Milton said that his engineers would share their research with GM’s battery experts to explore whether the technology could benefit the Ultium pack.
But clearly it was going to take Nikola significant time to fully develop its new chemistry and technology and adopting the Ultium battery technology and leveraging GM’s extensive manufacturing and logistics footprint will bring the Badger to production “in late 2022.” By and large, the truck-buying public stand to gain more than they’ll lose, thanks to faster market penetration of battery and fuel-cell trucks enabled by the faster time to larger scale production.
Wasn’t Badger Scheduled for 2021?
Yes, but COVID-related shutdowns have caused some delays, and a bit of time is required to adapt the Badger top-hat to the BET platform, and for GM to ensure the entire truck conforms to its more stringent quality/reliability standards.
Why Does GM Want to Build a Hummer EV Competitor?
Naturally the two companies see very little overlap in the electric-pickup market, with Hummer targeting high-end personal-use buyers and the Badger going after somewhat more mainstream and commercial customers, its unique fuel-cell option offering great range for towing of long-term exportable power for job sites. GM also gets to commercialize its fuel cell technology in a pickup truck without risking its own brand equity, and every unit sold by either brand hastens the point at which economies of scale are achieved.
How Many Badgers Will GM Build?
Nikola expect to sell “tens of thousands per year” and envisions a 50/50 split between battery and fuel-cell energy, but advises we check back for more precise predictions following the Nikola World event, to be held on December 3-5, 2020. It is also possible to place a $100 deposit on a Nikola Badger today at nikolamotor.com/badger.
