Nikola Corporation revealed significant progress in its transition to hydrogen-fuel cell trucks on Thursday, securing 277 non-binding orders despite a turbulent third quarter marked by battery fires that led to substantial losses. The company’s shares also saw an approximate 11% boost following the announcement.
Nikola indicated that the demand for its hydrogen-fuel trucks has outpaced its manufacturing capacity for the current year. Consequently, customers placing orders now should expect delivery in the second quarter of the following year. The company anticipates delivering up to 50 vehicles in the present quarter.
In a bid to recover from a challenging period, Nikola initiated a recall in August, affecting all 209 battery-powered electric trucks it had previously delivered. This move was prompted by an investigation that unveiled a coolant leak inside the battery packs, which had resulted in fires in some of the company’s vehicles.
The investigation’s findings indicated that the issues extended beyond just the coolant manifold. Nevertheless, despite this setback, Nikola managed to secure orders for 47 Tre battery-electric trucks through one of its dealers.
The cost of the recall and repair effort is estimated at $61.8 million, encompassing expenses related to re-engineering, validating, and retrofitting trucks with an alternative battery solution. This situation has caused Nikola to anticipate recognizing revenue ranging from $11.3 million to $18.8 million for the fourth quarter, a figure well below initial estimates of $44.3 million.
Furthermore, the expenses incurred due to the recall are expected to lead to an increase in capital requirements as Nikola strives to achieve profitability by 2025. The company reported a net loss of $425.8 million for the quarter ending on September 30, compared to $236.2 million during the same period the previous year.
Despite these challenges, Nikola’s cash balance at the end of September witnessed growth, reaching $362.9 million after securing $250 million in the third quarter. Notably, during an earnings call, Nikola expressed the possibility of not requiring additional capital for capacity expansion for several years, thanks to streamlining efforts on its assembly line earlier in the year.
