It's been more than 3 years since the Hydrogen Truck Company Nicola was exposed as a near total fraud, infamously rolling a truck down a hill and tilting the camera to make it look like it was driving on its own. In October of 2022, founder and Chairman Trevor Milton was convicted of Securities fraud and eventually sentenced to four years in prison. We've made two videos about Nicola in the past, all the way back in 2020. When the fraud was first exposed, we published a video going over the core allegations.

This is one of the First videos we ever made. 2 years later, in 2022, we made a follow-up video stating our surprise that the company still had a $2 billion market cap even after it had been proven to be a fraud. Today, It's almost 3 years later and to our even greater surprise, the company has still not gone bankrupt. Its market cap of $810 million is a fraction of its peak, but it's nonetheless significant.

Following Trevor Milton's conviction Nicholas Tried to turn the page on their troubled past and focus on executing on their business plan today. They have indeed sold about 200 electric trucks and recently began deliveries of hydrogen fuel cell trucks. With that being said, they're still losing more than $600,000 for each truck they sell and have been entirely dependent on dilutive Equity raises to survive. They have also had problems with a number of their trucks spontaneously combusting in this video.

We'll look at what's happened at Nicola since our last video. Do they have any chance of a turnaround? or is it slowly marching on its way towards Z After Nicholas fraud was exposed in 2020, the company was in crisis. Their stock price was tanking and as they didn't have any Revenue their cash reserves were burning up fast. Over the next 3 years, the board went through three CEOs before the Strategic direction of the company was finally decided.

Back when Trevor Milton was running the company, the main selling point to investors was a company's supposedly groundbreaking hydrogen fuel cell technology. Unfortunately, this technology mostly didn't exist and they were years away from Mass producing a hydrogen truck. In addition to the hydrogen fuel cell trucks, Nicolo was also working on a battery electric truck as well as an electric pickup truck called the Badger, and an electric off-road military vehicle called The Reckless. They even announced they would make an electric jet ski called the Wav.

We now know that most of these product announcements were little more than Trevor Milton's pipe Dreams designed to create excitement among retail investors and pump up the share price. The company never had the capabilities to finish these products, let alone mass-produce them in the foreseeable future. By early 2021, Nicola announced it was canceling the Badger Electric pickup truck as well as their off-road military vehicle in jet ski. This would allow them to focus their efforts on the Battery Electric Semit and eventually release a hydrogen fuel Cell semi-.

TR once they figure out the technology. in December of 2021, Nicola delivered its first battery electric truck to a logistics company in California In March of 2022, they began mass production at their Factory In Arizona, which they said has the capability to eventually make 2,500 trucks per year. In our previous Nicola video, we compared the total cost of ownership between the battery electric trucks and diesel semi- trucks. Nicola's electric trucks cost about $390,000 more than double the price of diesel trucks, which can start as low as $150,000 even accounting for fuel savings.

The total cost of ownership of the battery truck is far higher and is greatly constrained by its limited range. It takes 3 and 1/2 hours to charge, even with a fast charger. The only place electric trucks could possibly make sense is California due to the generous subsidies and high taxes on diesel fuel. Even so, electric trucks are still uneconomical.

Some fleet operators have purchased a few electric trucks, but these have mostly been smallscale purchases for experimentation and publicity stunts. While Nicola claims its Arizona Factory is capable of producing up to 2,500 trucks per year, Thus far, their production has been a tiny fraction of this. throughout 2022, production ramped to a peak of 133 by the fourth quarter, But interestingly, in that quarter of record production, the the number of trucks they ship to dealerships actually decreased to just 20. Nicola trucks are piling up in the parking lot instead of being sold to customers.

There are likely a couple of reasons for this. Firstly, demand for the trucks has been underwhelming. Second of all, in September of 2022, the company had to recall all of the trucks they had sold today due to a seat belt issue. While this seat belt issue was resolved, it was a troubling sign about Nicolas Manufacturing competence and Quality Control.

In June of 2023, a Nickol Electric truck caught fire in the parking lot with the fire spreading and ultimately damaging four additional trucks parked nearby that very same day. Nicola put out a tweet disclosing the incident to the public. Notably, they said that Foul Play is suspected as a vehicle was seen in the area of the affected trucks just prior to the incident and an investigation is underway. It's pretty incredible that they were able to suspect Foul Play within a few hours of the incident taking place.

Just a couple weeks later, the fire department released a statement that there was no evidence of arson at the scene of the fire as we now know the cause the fire was not Foul Play and Nicola likely knew this from the beginning. Nicola sources the batteries for its trucks from a company called Romeo Power just like Nicola Romeo Power went public via as SPAC. In 2020, Romeo was about to go bankrupt which would have been a disaster for Nicola. So in October of 2022, Nicola acquired them.

As it turns out, since at least June of 2022, more than a year before the fire at Nicola's parking lot, Romeo's Engineers had identified issues whereby in some cases the cells were corroded and would self- discharge. The Green Energy Publication Electric contacted a former Romeo employee who recommended shutting down production of the batteries due to the safety concerns. but Romeo's then CEO decides to keep production going anyway due to Romeo's precarious Financial condition. a cessation of production could risk bankruptcy.

Allegedly, Nicola's leadership was also made aware of the issue, but they had already purchased millions of dollars worth of batteries and couldn't afford any further delays. If these reports are true, Nicola may have known the batteries were unsafe, but moved forward with them any anyway. in August of 2023, a second Nicola truck caught fire. By this point, it became clear that both incidents were the result of problems in the battery packs and were not the result of Foul Play Nicolo was forced to recall all 209 trucks they had delivered.

today. In September, two more Nicola trucks caught fire in their parking lot for a total of four combustion incidents in August of 2023. Shortly after the second fire in recall, Nicolas CEO Michael L Sheller resigned. The stated reason was a family health matter, but given the timing, one might make comparisons to rats and sinking ships in November.

The company estimated that it would cost $62 million to replace the batteries for the vehicles that were recalled. This has been financially disastrous for the company. even before the recall Nicolo was hemorrhaging cash. Their gross margins have always been negative for each truck they sell.

It cost them hundreds of thousands, if not millions of dollars more to produce compared to the sale price. In the third quarter of 2023, they reported revenue of 1.7 million. Ion they only sold three trucks that quarter. The cost of replacing the batteries on the trucks they recalled was greater than the warranty.

Provisions They set aside this unexpected warranty expense is deducted from revenue, leading to reported Revenue being negative. Historically, Nikolai relied almost entirely on the equity markets to fund its bouncing losses. Since the company went public in 2020, their number of shares outstanding has more than doubled from less than 400 million to more than 1 billion. As their share prices now declined to pain stock levels, it may be difficult for them to continue funding their losses.

Thus, by the end of 2023, the company was in a truly desperate situation. If they want to survive, they need to start turning things around quickly. In the fourth quarter of 2023, Nicola finally began mass-producing hydrogen trucks. They claimed that during the quarter, they produced 42 hydrogen trucks and wholesaled 35 of them to dealerships.

It's unclear how many have yet been purchased by end customers. While Nicola has not publicly disclosed pricing is believed that each truck truck will cost about $750,000 Even with government subsidies, it's hard to see how this could be commercially viable. Another problem is that in the vast majority of places, hydrogen charging infrastructure does not exist. Nicola Plans to eventually create hydrogen refueling stations across California and eventually Nationwide However, this will require many years and billions of dollars that Nicola doesn't have.

In the meantime, they've created mobile refueling stations which are basically giant compressed hydrogen tanks attached to the back of truck. If you've watched our previous video about hydrogen, you'd know that compressed hydrogen is extremely flammable and combustions can be deadly. given. Nicolas previous track record I Wouldn't want to be within a one mile radius of one of their mobile refueling stations, but the main issue is economic viability.

The total cost of ownership of diesel trucks is currently cheaper than battery electric trucks. Due to the high cost of hydrogen, hydrogen trucks are the most expensive of all. For a detailed breakdown of the cost comparison, check out our previous Nicola video link in the description below. In the short to medium term, the only place where battery or hydrogen semi-rs are likely to catch on is: California California Recently introduced new rules where only zero emission trucks will be allowed to receive permits to work at cargo ports.

Diesel Trucks which already have permits can continue to operate, but no new permits will be given. By 2035, all new semi trucks sold in California will need to be zero emission. A market for electric semi trcks will develop eventually, at least in California but comp competition will be fierce. Established truck companies including Volvo and Damler already have electric trucks on the market.

For example, Volvo has been selling electric trucks in the US since 2021. Today, they have sold well over 4,300 electric trucks globally, more than 20 times more than what Nicola has sold. Tesla's electric semi- truck is expected to begin mass production in late 2024. The Tesla semi was unveiled all the way back in 2017 and is way behind schedule.

This is because building trucks is hard because Tesla already has a viable Core Business They have the luxury of taking their time. They can afford to wait until they complete all the necessary safety and quality control checks before beginning mass production. Nicola is in a very different position due to their Rapid Cash burn. They need to show progress to investors to stay alive.

This has driven them to rush their development timelines and allegedly Overlook safety issues. This has delivered catastrophic results, which likely deters many customers from ever wanting to do business with them again. In the extremely unlikely event that sufficient hydrogen refueling infrastructure is built and hydrogen fuel somehow becomes cost competitive, there are other companies which can make hydrogen trucks. For example, Hyundai has a hydrogen truck, which they've been selling in Europe since 2020.

If you had to buy a hydrogen truck, why would you roll the dice with Nicola when there are alternative options from respectable companies? At the end of the day, Nicola was built on a foundation of Lies. They had very little, if any, proprietary technology that could be useful in achieving their Ambitions Over the past 3 years, three different CEOs have tried to turn this Shirat into a real business, but as of now it looks like a slim chance. All right guys, that wraps it up for this video. What do you think about Nicola Do you think their hydrogen trucks will be successful? Let us know in the comments section below.

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