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Nikola Corporation stock jumps 22% after new order announcement

Written by Theo Koenig - August 18, 2020

Edited Asaf Kedem

Nikola Motor Company is to build battery-electric trucks for the second largest recycling and solid waste provider in the US.

Nikola founder and Executive chairman Trevor Martin will hope to appease some of the unrest regarding the company that just went public in June 2020. The deal announced recently with Republic Services Inc., a U.S. specialist in waste management, includes a minimum of 2500 electrified chassis, with the option to increase the units up to a total of 5000. Although excitement regarding the stock has slowed down since the $79.73 peak at after the IPO, news of the deal sent NKLA stock on NASDQ up by 22%, back up to $45.97.

While no details have been released regarding how much Nikola will charge for each truck, some specs of the trucks have already been released:

- Expected to outperform Diesel and natural gas competitors in terms of horsepower and torque

- Truck chassis and body to be delivered directly to Republic Services from the Nikola factory.

Full order deliveries are anticipated for the start of 2023, but an accelerated deployment is expected, with prototypes for on-road testing set for the end of the next year. U.S. states of California, as well as Arizona, are anticipated to be the first markets to see the battery electric trucks due to lucrative state incentives, as well as high demand for alternative fuel vehicles in those states. The new garbage trucks will be manufactured in Coolidge, Arizona, with the company headquarters situated an hour away in Phoenix. The new 1,000,000 square-foot factory began breaking ground in early August and is expected to finish construction in late 2021. The company will certainly hope to recreate the production environments experienced notably by Gigafactory competitors Tesla.

The deal comes at an opportune time for Nikola Corp., who recently reported in its first earnings report a loss of $86 million USD and practically no revenue. Analysts have raised concerns regarding the lack of clarity of the business plan and potential customers of the alternative fuel vehicles. CEO Trevor Martin, who founded the company in 2015, commented on the company strategy, “This is a game changer, refuse truck customers have always ordered chassis from truck OEMs and bodies from other suppliers. Nikola has fully integrated the chassis and body, covering both with a single factory warranty”.

Auto Trendy’s take:

Certainly, in the battery-electric vehicle market, this move will help establish Nikola Corp. as a company planning for the long-run. Concrete forms of revenue of the company, as well as the ground-breaking work on the new Coolidge factory, will be seen as a huge step forward. Impressive specs, especially regarding refill-time, will also be worrisome news for competitors in the electric market. Further individual agreements with private companies, such as this one, will only help to establish the company in the market. Nikola Corp progress in other departments such as hydrogen-electric vehicles remains one of the priorities of the company. Diversification into these new forms of technology means the company will remain an exciting prospect in the automotive industry.