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6 September 2019

Nikola gets cash and Iveco’s Euro network behind its hydrogen strategy

Large motors conglomerate CNH Industrial has announced it will put $250 million into the Nikola Motor Company and wants to create a single lease plan for vehicles which includes the vehicle, service, maintenance, and fuel costs in a single lease price – this will be done to offer early adopters of the electronic and hybrid trucks predictable prices to run a zero emissions truck fleet.

The investment is all about getting the three Nikola announced truck designs to market across the US, then bringing them to Europe, using the financial muscle of CNH Industrial commercial vehicle and its powertrain technology. Nikola expects to raise as much as $1 billion in the funding round, giving away 25% ownership to new investors.

“The increasing focus on the recognition that there needs to be fundamental reduction in automotive emissions is driving our industry to rapidly seek advanced technological solutions. Iveco is now ideally placed to offer customers an even wider range of transport solutions including natural gas, electric and fuel-cell powered vehicles,” said Hubertus Mühlhäuser, Chief Executive Officer, CNH Industrial. “Nikola’s choice of IVECO as its strategic partner is testament to our internationally recognized excellence in heavy duty trucks and alternative powertrain technologies.”

CNH Industrial is fresh from announcing its own dramatic transformation,  repositioning its famous Italian Iveco truck brand and merging it with its parents efforts in both Hydrogen and Electric vehicles and separating from the division that builds tractors and equipment for the farming community.

These revelations came out of CNH Industrial a week ago, which says the changes will take two years and be complete by 2021. This is all part of its five-year business plan ‘Transform 2 Win’ which it explained as its Capital Markets Day in New York

The highlights of the plan is so that both sales and margins will rise, not fall during this transition; more money will be funneled into product development –  around $13 billion over the five years – and it will split into two separate businesses “On-Highway” (commercial vehicles and powertrain segments) and “Off-Highway” assets (agriculture, construction and specialty segments) which will lead to two separate listed companies.

The ‘Off-Highway’ business will have revenues of around $15.6 billion, predominantly from agriculture with some from the construction business and include brands Case IH, New Holland Agriculture and Steyr.

The ‘On-Highway’ will have revenues around $13.1 billion, led by the Iveco and Iveco bus businesses (69% of revenue) but throwing in its FPT Industrial powertrain business which is leading to zero emissions large trucks and which will now partner with Nikola to provide power trains for its three EV trucks.

The strategy of CNH Industrial is naturally split in that some trucks will go down the hydrogen fuel route, and others down the EV route, and some will be hybrids, initially hybrid EV petroleum, but  eventually between the two alternative zero emissions technologies – hydrogen and electricity.

Ivenco will throw its engineering and manufacturing expertise behind Nikola in the push to get Nikola’s three fuel cell and battery electric heavy truck platforms ready for manufacturing.

Work will happen under a new European joint venture that brings together the leaders in fuel-cells, e-axles, inverters, independent suspension, on-board hydrogen fuel storage, over-the-air software updates, vehicle controls and vehicle-to-station communication, with access to a hydrogen fueling network.

This is perhaps one of the first majors to open up over its interest in hydrogen. Initially all of Japan had planned to move all of its vehicles to hydrogen, but slowly as EVs have taken off, most parts of the world have agreed a consensus that it is only large vehicles which have to transport heavy goods that need more than just pure electric, and will need a global hydrogen network of fueling stations.

If old entrenched businesses of this type are ready to embrace hydrogen, it shows that both the powertrain and the gas fueling business should be ripe for take-off in trucks in the next few years.

In June last year Nikola ordered 448 electrolyzers and associated fueling equipment from NEL in Norway, to create hydrogen stations across the US for trucks and other large vehicles, a move it will now extend into Europe. Nel is to deliver 1 GW of electrolysis and fueling equipment. It was by far the largest electrolyzer and fueling station contract ever awarded and working alongside Iveco should make that easier to finance. Nikola also plans to leverage Iveco’s European sales network to gain a foothold for its Euro-spec Nikola TRE truck.

“Nikola has the technology but needs a partner with a European network to achieve it in a timely manner. With CNH Industrial’s investment and partnership, we can now bring zero-emission trucks to Europe,” Trevor Milton, Chief Executive Officer, Nikola Corporation said.