At risk of ceding ground in the race to battery-electric trucks, Hyliion Holdings will launch its natural gas generator-powered hybrid powertrain with 75 miles of electric range, enough to qualify the Hypertruck ERX for zero-emission credits in California.
"We saw it as a way that we can be relevant in the push that the government is having towards zero-emission vehicles," CEO Thomas Healy told FreightWaves in an interview on Wednesday. "We can participate in that but still offer all the same benefits that our product has right from the core."
The main benefit is a driving range of up to 1,000 miles — 75 miles of which would be pure electric. No battery-powered electric truck currently exceeds 300 miles on a single charge, limiting them to local and regional use. More energy-dense batteries, such as those being developed by Quantumscape Corp. (NYSE: QS) and Romeo Power Inc. (NYSE: RMO), could change that.
Getting Zero-Emission Credits
Hyliion (NYSE: HYLN), sees natural gas and hydrogen fuel cells doing the same thing — providing power to make electricity for the battery, A longer-range battery helps address California's requirement that 9% of a company's commercial trucks operating in the state have zero emissions beginning in 2024.
Fleets can use zero-emissions credits, such as the three-quarters of a credit the purchase of a Hyliion powertrain would generate, to offset pollution from diesel trucks.
"We're not 100% of a credit, but we're not 5% of a credit either," Healy said.
"Think how much more of a market we've just opened up," he said. "With the products coming to the market right now, we're talking less than a 200-mile range. We've just said, ‘Hey, anything from 100 miles to 600 miles a day, we can actually go get zero-emission vehicle credits for that whole market segment."
Few customers are signing up with any urgency, a frequent complaint by posters to Hyliion's social media accounts. Expressions of interest are high but orders are low because the Hypertruck ERX is unproven technology.
Hyliion took a nonbinding reservation this week for 300 Hypertruck ERX systems from Detmar Logistics, which serves the frac sand industry. Detmar ordered 10 Hyliion Hybrid Electric units in May for retrofit on its Class 8 Volvo models.
"Most fleets are going to go with the single-digit option. No one's going to just come in and say, without even trying it, ‘I'm ready to take 200 trucks.'"
Thomas Healy, CEO, Hyliion Holdings
"Most fleets are going to go with the single-digit option," Healy said. "No one's going to just come in and say, without even trying it, ‘I'm ready to take 200 trucks.'"
Exceptions include American Natural Gas and Kuwait-based Agility Logistics, which allowed their respective reservations of 250 and 1,000 Hypertrucks to be made public. ANG is partnering with Hyliion on natural gas infrastructure and Agility is an investor in Hyliion.
In April, Hyliion formed a Hypertruck Innovation Council of fleets, logistics, and transportation companies including Ryder System Inc., Penske Truck Leasing, Anheuser-Busch, Schneider National, and Werner Enterprises, to test Hypertruck ERX prototypes by the end of this year.
The long-term vision for Hyliion is to be a factory-installed powertrain option at major truck manufacturers similar to Tier 1 supplier Cummins' engines being offered alongside their own powertrains.
Meritor, Not Dana, Supplying ERX
Until then, Hyliion will rely on bodybuilders like Fontaine Modifications to retrofit trucks it buys from Peterbilt with the ERX system. Hyliion and Meritor Inc. (NYSE: MTOR) said this week that Meritor's 14Xe e-powertrain will supplant Dana Inc. (NYSE: DAN), an early investor in Hyliion before it went public under the sponsorship of Tortoise Acquisition Corp. last October.
"We have ended the exclusive dealings with Dana," Healy said. "We are still going to use Dana components. They're still supplying us. [There's] still a strong relationship there. But as we're going down our product road map, we decided to choose the Meritor axles as the launch solution for the Hypertruck."
The Hypertruck ERX that Hyliion will show at the Advanced Clean Truck Expo in Long Beach, California, in late August will feature the 75-mile electric range requiring a bigger battery. That likely means a different supplier than Toshiba, whose lithium-titanate-oxide technology allows a full charge in eight minutes for 25 miles of pure electric driving in the base ERX.
Hyliion decided to extend the electric range after listening to what governments, specifically California's, expected of truck manufacturers. The company is still deciding who will supply that critical component.
Shares Under Pressure
Hyliion continues to grow its physical presence in Austin, Texas, with an expanded footprint and more employees.
But Hyliion's stock price, which at one point touched $58 a share, is languishing below its original offering price of $10, along with other electric vehicle startups.
"It's obviously difficult having the share price down around that $10 a share," Healy said. "If we were unique, I would probably be more concerned. Not to discredit it at all, but we're more looking at what's to come as opposed to where we are today."
So, Healy is not panicking. The company had $600 million in cash at the end of Q1 and reports Q2 results next week. The cash burn may have accelerated, but don't expect its pre-revenue status to change much, if at all.
"From a cash capitalization standpoint, we're in a good space," he said. "I know there's been some [electrification startups] saying, ‘Hey, we need to go raise' already. You can see just from our balance sheet, we're in a pretty strong cash position right now."
