NKLA - Earnings call transcript Q4 2021

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Operator

Good morning and welcome to Nikola Corporation’s Fourth Quarter and Full Year 2021 Earnings Call. [Operator Instructions] We begin today’s call with a short video presentation followed by management’s prepared remarks. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Nikola’s Chief Legal Officer, Britton Morgan. Thank you, Britton.

begin. may You

Britton Morgan

and good quarter and me Welcome Nikola of to are Financial Thank full morning, year fourth Nikola Officer Executive and Russell, With Brady, XXXX Corporation’s Chief Mark Officer. you Chief everyone. Kim earnings today call.

this Pacific laws. found statements slides call, for our forward-looking views a we press and a.m. along full XXXX. the QX release on and presentation the and morning. business certain Securities on XXXX QX presentation Time The release company’s within can share for the X Investor financial accompanying after with The distributed results the of Today’s little includes be financial the will today’s meaning results detailing and call. today’s the Relations of environment During our Section our Q&A Federal was our outlook website, the year

projections Forward-looking Many statements events on assumptions materially forward-looking expectations in and based statements statements to from to are this and events a subject predictions, about actual future the future current could are cause risks as and and differ other communication. result factors uncertainties.

subsequent and refer more Commission we the of factors information cause please may results with earnings Exchange to materially Report on SEC. risk filings Annual company’s For our the with differ well statements, Securities forward-looking in press filed that to release as as the issued from section today actual the about to factors the XX-K Form addition

not they forward-looking put on made. Forward-looking undue statements. only statements Readers should the speak to be cautioned to are as date reliance

remarks from will which video Brady. prepared begin Mark [Video by now Kim will We brief followed presentation, a Russell and Presentation] be

Mark Russell

XXXX. had we year extraordinary an in What

trucks and battery released or or fourth the e-axles, component XX of spec commissioned The our Tre vehicles have to for waiting chips, or starting manufacturing revenue Coolidge, supply Angeles to service delivered BEVs one test got a range charge. two production for on continents. road network, the QX. day when and and completed of pre-series partnerships constraints during strategic first these more The and and from have only expanded video, Beach produced to journeys hydrogen commissioning. Tre BEVs testament production you series we trucks line of completed launch the start TTSI. single the partners the the Nikola of are extraordinary routes remaining of next single we last first Long are delivered was the fleet great facilities so our two they BEVs just to and XXX manufacturing Port distribution XX% extraordinarily reliability of XX components, Tre and It with all teams uptime to ranging Los XX, sales dispensing. electric far. engineering is month production We the has significantly saw the They The this are that to forward far Tre hubs, generating XX added far. the Nikola. of at of As looking the quarter, battery and of way Arizona The we official delivering in here tells BEV are great for on capability have because and displays performing on customers, been production off December public final We our the they and us and is have charge in a other Beach nearby plus run have no Fontana, scheduled but gone customers mile end TTSI on a well. so Long a staged the we late trucks Nikola’s truck on in thus line tested in dedication

the to we who and them. as soon dealers trucks customers release these are we As complete waiting commissioning, for anxiously can

to end work line series pre-series straightforward Completing remaining trucks off March XX the of trucks clear, production start complete. is conflict won’t the or on on line. the of They second all and the saleable it in the are these is work these the production of offline trucks Just with be remaining line production delivery commissioning quarter. of the

Turning Ulm, to X completed X quarter and third Germany. you the FCEV XXXX, and FCEV, know, alphas, Tre as during in Coolidge we Tre of in fourth the X

half from with year. the continue which we Port alpha customers. incorporate Beach half XXXX validation in be beta building on value AB been Tre will through In half the series extraordinary committed program XX% of have testing of by start will chain in second FCEV of AB start fleet. long Europe of Long their testing. by to in commitment both with we sustainability. delivery in of QX, the across scheduled their reducing of and conjunction in been at XXXX pilot the validation with Beta emission and has AB, U.S. will this are its X-month And vehicles rest continue XXXX. honored the the Validation TTSI California the in momentum emission zero and the After to achieving Anheuser-Busch in the U.S. Southern XX with with We versions an then beer other partner FCEV with and year’s the the to improvements Stadium. completing pleased from are a there pilot of in first will Tre as with production unprecedented zero-carb pilot continuing alpha with testing XXXX. its Tre FCEV, of fleet ongoing FCEVs program of second Two continue Bowl SoFi part with February learned is and in the vehicles including there, Super the to we will

Coolidge and the phase We year in operating phase into will capacity with manufacturing are first production growth of X,XXX for trucks our facility, giving expand we very the XXXX. where of pleased the the shortly are next us

two complete quarter of begun first phase the already year have XXXX. is to next be time, that the a production shifts. At have XX,XXX trucks expected plant will on work We on the by of per which capacity expansion,

of pleased our similarly Ulm, year built in expand XX,XXX joint plant delivered production are XXXX the there The the to ability by ramp-up will The has with manufacturing be Hamburg that facility that with a per up vehicles Germany. the Ulm. year. per We X,XXX XX to Port in to capacity Authority of end will of venture BEVs be the Tre

trucks. terms BEVs agreements, up X,XXX binding trucks, and trucks longstanding XX USA XXX anticipate trucks have During up Heniff LOIs for Thompson by Centers, all to QX led agreement LTL dealer customer Truck trucks, comprising in our for we made fuel we for continued including Truck with announcements, BEVs Systems our Tre LOI contracts, with operations also XXX an MoUs these XXX pilot Logistics will Covenant success and a with Group with Under cell Centers, BEVs Anheuser-Busch with orders. an up Saia Thompson LOI January Truck an purchase to network, the for up XX in XX Transportation in FCEVs. to up through through into XXXX trucks XXX of additional Freight FCEV BEV LOI to and XXXX, for BEV result for LOI entered X,XXX to total, an In have and XXX we

program for to that BEV This vehicle’s up eligible costs. California BEV vehicles, means the incentives, to ruled potential Turning Air Tre on to upfront zero the the we emission the announced XX, government HVIP certainly accelerate to for influenced that the and Nikola January which have incentive customer transition was Resources Tre can the by reduce incentive Nikola qualify Board. buyers $XXX,XXX demand

the in when vehicle. are of they customers by up and incentives it’s are drayage a working educate and fact, XXX,XXX the are to on trucks ports purchasing our state in case these of In which available Nikola to dealers we

incentives. Additional states passing in and as are refueling as incentivize vehicle infrastructure legislation to zero well charging considering emission purchases development

pending that the vehicle the up would state and application submitted could example, of worth BEV voucher a New that, of per the duty program Tre list. for already one be heavy we trucks make which on approved vehicle their an has York have first XXX,XXX to For

government response and customer for diligently first Our challenges mobile and in of quarter have the power. charging works or trailer, policymakers face the to team Nikola orders solutions, inevitable and our FCEVs. sold received federal their and Charging for into transition and the MCTs and to monitors MCT, incentives police BEVs to one Proterra a and helps BEVs so or maximum zero allows XXXX, far. alternative MCT, of cells that needs BEVs. their accelerate for In vehicles. to for infrastructure commercial affairs state And with dealers with entered With at charging and our charge flexibility. XX, fleets January developed the we depot Nikola’s delivered vehicles field with is in XXXX, a X can has considering more charge supply with agreement their long-term both X modules when On we packs, key including purchase we units battery we emission

Tre We production end expect of from by packs the receive to BEV QX for fourth prototype Proterra packs the in the and quarter.

of XX, not XXXX, otherwise customers We with to and over have help $XXX we providing confirmed more civil by The On our our its the dealer we the a X facilitate build customers solutions in we to and January Nikola settlement ramp years. financing and December fleet made core allows production. a team solution financing million chain Our SEC first robust the XX, up sales. five December. and will to network our partnership On more diversify may in with option. penalty supply SEC payments continues supplier announced a supply agreement to as dealers Nikola base pay installments these chains who centric vehicle funding reach

from SEC As our the action for in matters a business. seek XXXX connection Milton has we to great costs investigated. reimbursement already with taken year damages the shared the and company for energy have was before, also Trevor

partners. dispensing We to additional production, construction our continued hydrogen network. adding hub And distribution to to later announcing and We establish ground year. hydrogen build hydrogen forward production refueling ecosystem anticipate of also and first and this commencing breaking strategic refueling look locations our we station partnerships

we pleased progress it and now are will in front beyond. made in in the this the year and the we I to to Kim far you prospects pass XXXX with over with of through We take XXXX. numbers. And thrilled so are us

Kim Brady

everyone. Thanks good Mark morning, and

begin Let’s our XXXX with results.

end spending guidance and year of the decisions. came and in hydrogen deferred were our expenses remain low disciplined range capital operating expenditures XXXX. certain We the for infrastructure to at capital allocation Our in

and for year $XXX.X million a loss million. $XXX.X net EBITDA Our non-GAAP the basis, adjusted was on negative totaled

million. XX Mark QX, the as recorded regulatory were Tre and and net assets $X.XX. road mentioned, loss million and were testing per expenses. for As $XXX.X the trucks million and net have and R&D $X.XX. mileage Basic including approximately DOJ basis, in sheet and loss compensation in matters, adjusted million, were EBITDA were on million. testing was cell we excludes R&D expenses share loss $XX.X including and was and fuel the costs demo and million quarter customer delivery net development and and the Basic of Adjusted in with share SEC million on stock-based building, $XX.X legal, fully BEVs the expenses trucks quarter, X was fourth incurred And a connection $X.X previously developing, incurred $XX.X million professional commissioned and million, stock-based diluted the negative advisory $XX.X and two, amortization. of Nikola investigation; and three, built include BEV Two in SG&A for validating legal In Tre in expensed. X $XXX.X non-GAAP $XX.X Research for R&D EBITDA expenses depreciation legal accumulation. Nikola were trucks. remaining fees $XX.X trucks compensation $X.X and totaled balance other per in million non-GAAP cost. compensation; and diluted stock-based which consist in regulatory

million fourth $XXX Turning to cash cash including equivalents, cash restricted and of ended balances. sheet, the balance the we quarter with

two of of In through as of XX/XX/XXXX. also addition, equity us million total million with with liquidity $XXX we approximately lines, providing available have $XXX liquidity roughly our Tumim

and and Greenfield and million manufacturing the the totaled expenditures Coolidge We diluted equipment quarter capital of quarter purchases for shares of $XXX.X basic approximately Bev supplier ended million Tre facility, production. tooling $XXX.X comprised fourth construction related million. average shares to were year-to-date with outstanding. Our are Weighted about the our both XXX.X

was accepted XXX December Our of XX, offers, of headcount, inclusive employees. as

X QX commission our we Nikola to to BEVs XXXX to Moving pre-series Tre QX. and XX guidance, in build plan

they will are the are production We will limiting half year. the since pilot purposely demo be as vehicles of and and pre-series available of testing become Besides, readily in vehicles. saleable critical not more second the used components

assets. CapEx the quarter as includes stock-based $XX.X trucks pre-series to million, QX will of million $XXX.X At including from compensation. recorded of to stock-based range our shares the such, balance range As which $XXX.X of R&D million $XX.XX expenses outstanding the expense million. in outstanding million. average $XX.X first ranges first QX, $XXX.X weighted compensation. approximately roughly sheet million, of the XXX $XX.X approximately $XX.XX Estimated of having SG&A the to is and on quarter million end for million of million million be for $XX.X is we in shares the anticipate

to Now, in guidance, QX. we first ‘XX BEVs Tre to saleable the fiscal to deliver expect customers year production

cells volume negative and is Our with packs. gross $XXX cost delivery negative anticipated The full approximately to full and commitment to to million. high is trucks XXX battery to $XX year XX% revenue year million due of XXX for the the XX% expected production margin be of low to

a includes As and XXXX. to of we compensation. packs potentially for XXXX for XXXX full in to full million the sourcing some place, get for in stock-based is expenditures $XXX million, is pack margin including ultimately year $XX million $XXX expected volume compensation. to second have million, stock-based The range Capital year ramp should and approximately in Tre to expected be from $XXX into $XXX the Estimated the R&D is supplier for ‘XX improve million and models steadily including of $XXX year up territory XXXX. in fiscal $XXX million $XXX positive BEV million. gross production to million which SG&A

spending, balance fully In consideration At our million. and Phase next manufacturing of million be $XXX Coolidge to include We throughout possible. equipment cell associated volatility is line whenever have manufacturing market of make CapEx. liquidity of end, hydrogen engineering equity plan plans We always finance and cash will utilize credit months equipment, in manufacturing the to our tooling, cash fund with will additional highly paying we be the supplier facility with X approximately our other fuel of rather investment timing no the Tumim, $XXX raised of capital than including plan infrastructure, XXXX. to we year light operations capital and anticipated uncertainty, current equipment and we sure capital careful Our disciplined to adequate XX expenditures.

end includes total XXXX year to estimated full and weighted the estimated will We approximately raise We markets stock up when the Tumim Stone at outstanding closely stock December for of $XXX.X additional of XXXX, equity million. monitor XXXX. shares exercises, employee restricted capital about and shares estimate capital appropriate LLC. This million ending the in distributions option XX, $XXX.X unit and issued purchase Capital notice average

would our Supply some chain insight limit the what can into constraints deliver. we produce supply we to guidance. like provide chains concerning Next, and

that is visibility, year have Tier not suppliers the confirming validating for Tier not components Based but and only quantity same critical addressing and the chain skewed towards supply components. X is the X our of are delivery their our suppliers’ constraints. on current We the date, and critical half availability also second of the confirmed

transparency, the quantities. trucks. to confirm for Battery Tre we sight and can spirit BEV cells the have a line of following However, critical of XXX build in components Nikola

to with model meet We is in execution supplier our improving battery Tre of the packs build and schedule. are for XXX dependent second the cell to yields Battery the additional working half chips, suppliers’ This production to XXX XXXX. BEVs. Nikola manufacturing on allocation Nikola’s

when second challenging, will optimize chips been We and to are the e-axle Tre have shift down build the closely to the the XXX BEVs the meet more year, everyday than It supplier than XXX XXX is securing than module build Tre volume, environment, paranoid are cause start bit microprocessors verifying, Nikola believe build the third a To and output, to we with chip supply checking build subcomponents key status and production to Nikola BEVs. there to each chasing a the the BEVs, XXX today’s very to not navigate ETA and comes to for of of of build plan displays double components. be no suppliers the more BEVs remains to Tre confirming schedule. Nikola and second inverters chain more guarantee delays provide in fluid but more critical working shortages than vigilant to components and clear trying electronic BEV Tre trade meaning power quarter. we half We it constraints adding ease and to Nikola in incredibly control and our serious to updates

intentionally focus strengthened execution. chain supply with team leadership, greater which to also new We better led have has and and our existing

We BEV you AB pilot deliver monitor trucks testing as attention Tre XXX to two, one, suggest Tre are build, and alpha and with and XXX others; follows: cell milestones. fuel pay XXXX. of three, closely dispensing beta wraps of successful from TTSI They hub the validate critical and Tre BEV trucks; priority supply been and what top XXXX and strategically build. anticipate reported to the chain we the Tre production investors press, available in Contrary startup we we X,XXX hire speaking, way at is our asked erroneously to of continue has to remarks. and trucks; commence test will to to headcount production up station fuel roles. XXX two beta first in prepared partners our X,XXX the This Many Tre gauge vehicle will announce for for and have progress fuel to Arizona; Broadly five, Our four, the more ensuring other increase break production end important announce in hydrogen of ground in employees best California. cell electric end have have components XXXX. location, been construction Nikola’s cell or employees by our approximately

of your line. Operator, use the questions. time please the address the to open will remainder We

Operator

you. Instructions] Thank [Operator you. Thank

Partners. Vertical your Please from question. with Our first is Jeff Kauffman proceed question Research with

Jeff Kauffman

in change, well surprises and some detail hands thank as starting very with much. I Thank the running discovering? are you helpful. the on ask that highway we I are are the that very then vehicles, by the you all Fontana? And of mentioned the people positive you secondly, they And your test the about for track. kind of today, feedback are you What on know trucks to discussions are how curious what range retuned? driven now wanted you got very, the the trucks going just on in to the And discovering learning you be on have to customers, where you was I have your hands. think of needs not what just own can to BEV. as trucks, moving now that are your are are I customers up put we further we into real that electric on battery well curve trucks customers the customer’s

those wondering So, topics? you could just if address

Mark Russell

Jeff. question. Thanks, That’s a great

several to to customers. years prototypes now, using specs have we For and talk been

critical, has And range trucks every have pre-series it’s ranges so vehicles, fuel they truck we restricted. because there paramount. that looking of, know think trucks, on ever one seen this truck. this us By with have We on. and – production everyday made capacity. battery tested is their than that run forward the a run that’s a on Phoenix the have side, They And – fuel get have they everyday. vehicles long customer regular with because longest to the go never so, Angeles battery to trucks both the to that Anheuser-Busch is of that getting we those already everything running course running already the And designed you as today And are is up alphas ranges told XXX absolutely basic battery most that reason with it actually transportation. in we the public the fuel the everyday, cell electric is cell build this count, have to XX course, has. range. battery trucks have go with XXX. they TTSI have to regular just verification important from highest are and and hands Range other of the of spare to roads, battery with cell approaching the truck them miles one we we out to test hands truck those the And any workloads And trucks vehicle trucks different that up commercial can to commercial that said thing have Los with further for we fuel designed been the they they in and their and range them – the run pre-production

to also the to not the kind have XX% time. for have truck. need be far money. so and be you operator all course, reporting Of a moving, TTSI are uptime They reliable. available commercial of making the that’s Because is a uptime they when not they is

been get the so driving far. to has has very very the then uptime also So, been and we important characteristics. And good

visibility feedback And most very This most North Compared so relatively has power characteristics. it’s it’s far, truck torque the turning to And and tight a trucks, driving radius. to compared great great is trucks. positive. got got American

even lot drivers a of on, feedbacks those I have is is even the I – with a get one We we case is of which course truck. don’t trailer there a not – diesel tell of common can’t from

of we with So quiet, territory well zero vehicles. comfortable. And emission course, feedback get that comes clean, with the as this

things and and that all and the to the cab cab information the of they that important Those get us. the power want the about comfort and be electronics enjoy driver have the trucks as operating the crushes in And Now, well. they good interface that to drivers we feelings to trucks. enjoy comfort, happy are the

them. all so far, And love they

Jeff Kauffman

Okay. customers vehicles And learning are have there the out hands can those curve conversations their are get now they changing? on your then you discussions how and with real customers climbing as

Mark Russell

had always conversations. great have have customer they Well, – we

you you of do truck we are prove That’s real target a a conversations actually match your that it? truck public diesel course. with on replace the And the can we proposition hey, ownership. say today. world because of changing, cost have And everybody can same current it’s mission a your performing got But zero that’s road, in emission the loads it? cost and Can trucks in, have customer is I proof their to the in total you a – the face. real are And If now hauling to come on perform interested where customer you of roads. own

lot So, for solution people it, be and more change conversation, prove because we more conversations waiting in and it the those just the does this of there to the a is prove to customer out the marketplace. expect the we there and see change it more momentum

Jeff Kauffman

Okay, and you thank congratulations.

Mark Russell

Thanks, Jeff.

Operator

Thank you.

Our next question is from Chris McNally your with Evercore ISI. question. Please proceed with

Chris McNally

Thanks team. so much

the industry have of for what is around you and I secured a limiting little you about encouraging So, are clearly, I year. it it But talk Because prepared about it more was for in everyone is Could sort to this cells delivery that packs see year is and like is delivered. and batteries even like mean, title really the factor seems guidance. the the bit being the remarks, capacity. seems guess ‘XX-’XX trucks Kim, XXXX? your critical worried

cells So as going impacts will that you issue X,XXX the towards forward? ramp how again, capacity, much

Kim Brady

Chris, thank you. And that’s a great question.

you and that’s that units cell in suppliers at in for in are are to work allocation excess we approximately our we you XXXX, of X,XXX have can continuing tell I been we with confirmed point with Not a terms we with for of we pack long-term As a pack and into agreement battery arrangement cells Proterra. LG. supplier battery indicated have that have only cells think that, of terms entered delivery. We know, this

optimistic continuing yield capacity them as you we and our we or where additional efficiency are module at expand we as to are this two point, as expand allocation. work know, – and pretty suppliers to to slow and well impact are with capacity have to feel to looking starting manufacturing optimistic and cautiously to improvements As well we manufacturing continue receive we as

Mark Russell

Chris, And little let add me bit just a more…

Chris McNally

Yes, sorry…

Mark Russell

now And going little our you of talking all ‘XX to just keeping at XXX%. forward bit would their know going of with single to that’s about and or But ‘XX. us. from expanding this don’t suppliers reducing the level in that, sure out just conversations a than a capacity Chris. add the are more hear capacity suppliers I am color number with about virtually our C-suite was into I capacity right that person is that there I talking more

So ‘XX see we it’s things why and I how in and And get ‘XX conditions. time we’re different cautiously that for get capacity. capacity optimistic these to solved lead eventually matter am more as a going of that’s the that that’s

Kim Brady

as we our cell could cells in additional we And for allocation to and some there battery also with suggested, proactively working us been And Mark what are allocated suppliers. that receive XXXX. potentially for is has increase indication XXXX

Chris McNally

Proterra, that included used mostly that Is – sure is just worth term, so the or new want be not a the of just side, agreement for cells in help obviously make is is the side? I – there that’s is And obviously that to a meaning cells lot of be on to benefit would allocation, then on going because supply tax And that XXXX, second number? to – big I Is a going that’s follow-on trucks a penalty to the XXXX pack right X,XXX the worth your XXXX. secured? that’s if because delivered,

Kim Brady

So, packs, we pack that of may Proterra, XXXX. to to the it able most will that side the including comes when We for end year. be of anticipate cells receive for some towards

XXXX, working timing. comes it that cells to have for having we secured And X,XXX still are already sets We battery when through secured.

Chris McNally

again, am the Can missing $XXX,XXX, I looks quick it then trucks? on roughly there the like maybe the just divided It’s revenue And by that some per in into one Tre one $XXX,XXX. it’s just I real something, but was $XXX,XXX $XXX,XXX discussion just Fantastic. you price model through more the think was to back revenue just literally BEV, we when just dynamic? walk that us Secured.

Mark Russell

and Yes, you then around we a answer they negotiation the using And more that us when Jeff early these numbers committed average market. we go numbers the Chris, more the early more that’s kicked the to Kauffman are have have those asked are that about to those trucks with higher early just in that are, the just are customers about the are get sales who are ever. the the and the periods. have talking and the pilot the proven up we are how an is changing, that terms for program, we from in in there. folks Obviously, question momentum weight best marketplace.

So to coming wouldn’t from are out on of forward the on you numbers. going those gate. of numbers I average kind the Those are us project see

Kim Brady

conservative think somewhat So Chris, when it we number. about is that,

in of number As trucks you limited we know, to have we able XXXX. that deliver will be

focused as markets, very restriction in greater well as as is especially as you qualify demand. on standards in greater know, California, be there terms of key will we HV well in And as We for California.

And much as so maximize our as plan to we possible. pricing

guidance providing are purposes conservative we modeling the range. We for want on be simply and some to purely

we will more we when with negotiate aggressive be much customers. actually However,

Mark Russell

in just to be in say And Chris, the just that doesn’t mean we are that – cells we to them they secured, inventory, clarify, have have we possession when necessarily. not our

and at is the the that’s the we secured some as ones Kim our we you and we in of cash in from We some have possession, advance have but committed manufacturer the number as this prepaid point. you have get that that in gave secure allocation have

Chris McNally

to does last it’s couple see all Budweiser? for points. investment really to the that anchor just program? it’s I previous possible client so given the just far an think one am update all on even like play, it’s second lead is a take of the them the another squeeze that it fuel make your gave mega is X, Slide I sort second the curious one And could slide. to important such a because obviously, the announcements having – Are can one it years important. of if vehicle, able to it great on appreciate all it’s I times just it’s diversity detail. on out, idea or out, understood sense cell I on of a whether get XXX% of you to you be by it size strategic seems

something you that’s down next more curious are be or so of capacity the road. Just constrained something that years. if That’s entertained couple the that’s for could

Mark Russell

or a the the that first anchors questions customers about kind that of talking are these number number to are be ones you all can ones here are years. most a few time, of of interesting through talking are the the us Chris. in We And

you have we pretty have have adding see, the a marketplace. point. and trucks backlog LOIs every pretty And because selling would the to can robust are, more right that. in more And I to lot point at and we everyday But stronger about this So, momentum we wouldn’t here, be now, a contracts. got we to stronger, in MoUs more that’s week be these why open whole get as previous trucks interested proven the much the

Chris McNally

Appreciate the detail guys.

Operator

Thank you.

is question proceed Mike Davidson. Shlisky D.A. next question. Our with Please from your with

Mike Shlisky

start Hey, we going trucks color Proterra just could you very why really on the to then of whole in have off Proterra, smooth was guys. it’s do it add and to the here? if reevaluate can behind what product transition to kind usually the the or that system follow-up in battery a all down as some I are and good went place? to with particular be And will agreement, If some morning, going have even different them that some give the you just the their road all orders about customers why first scenes

Mark Russell

Most Good don’t on to a question, single we want components. reason The Proterra added any threaded be to that importantly, Mike. critical is have we second source.

Proterra are So, to we a The a it’s form module got and back using the solution, cells. have one solution proven pack not supply in chain of and now cell. a the is we the different pack

cells the had securing are own have some helpful work also cells, and of But in what’s which bus market. the very in both are with they is attractive Proterra case they the about module the environment. cells current ones because was generally, of We although we already a they of lot the have their done same a Proterra, in is using suppliers that proven, the

us module technically. So, Class lift relatively for A upscaling of truck that for the a size easy was

fourth – gets ramps up gave us next availability, and we in quarter so second even as this more a year. year have it Kim quick pack source said us that the And

lot So, commercial work. have have In they data their really of sources from data And Proterra they good behind to we and already. have got on. a it got the previous with transportation, rely background pack a in case, some two

Kim Brady

lot we issue test have design, with lot trucks. So to Mike, folks is with this of integration are our respect following similar Nikola our about and manufacturing becomes a terms already Romeo trucks. is that thought you are what something packs as to packs and configuration less to discussions our integrating into had such provides to that design and of we that with in know, of Romeo similar have something there respect an a And integrating to and packs Proterra,

a comes We also make are we battery sure there want whereas that is packs delivering with Romeo cells. Proterra distinction. to battery clear cells, agreement

Mike Shlisky

And or… you those with have if the different a again, them, this battery trucks they follow-up, reevaluate system to have in correct again, that customers a is all is

Mark Russell

that’s work a along that pack is There – point, good validation goes the There changing Mike. there with at – is all.

and anything it. change retest have you you validate If to

Of have pack Proterra course, until truck all we all on until Romeo will be reasons be then. the it will yes, that’s fourth true. That’s one a won’t why – the quarter. of a It

Mike Shlisky

Fair be obtaining just first will both before you building the you not equipment okay. Phase of mention prepared Do that Coolidge feel I X chain your remarks Asheville, issues Phase you delayed having the the in are didn’t the secondly as supply in ask question, X you like ‘XX? or any anything Okay, hindrance to need in and as QX some on with it phase, enough. wanted far by that a itself.

Kim Brady

No, it issue. be will an not

already Phase – process. will for by we in units in have our X now, capacity schedule two on of increase we will And have terms working X. XXXX our And We our have we to point, on approximately facility And QX shifts. running that right XX,XXX anticipate we started And that of Coolidge. plan build Phase at are been completed. our

Mark Russell

our manufacturing. on both Arizona should to have Coolidge, performance particularly great in these the facilities. building vehicle facilities job shortages, basically budget, And teams just materials we dedicated getting built and a facility awesome. But were the Because that an Ulm construction running. on of and same the has of up teams, done extraordinary in team manufacturing Mike, time question. that’s highlight And which U.S. environment, the as the German here and in today’s extraordinary building their and It’s facility

Mike Shlisky

so will much, guys. Indeed. leave I Thanks it there.

Operator

Thank you.

Our next question your with with question. is Please from Peterson JPMorgan. proceed Bill

Bill Peterson

for thus the as far. as questions on the morning Yes, the hi, this release and thanks a lot details press in providing call well taking my of

to release, hydrogen last you locations, structure, of to somewhat quarter. basically and ground what in relative the in mentioned seems begin the find delay you we expect It break On like it’s production. a the saw

provide an your I some that it hoping of then update in are the guess production wrapping plans, you your partnerships the last So as well can were production maybe using own as hydrogen least quarter, of I at partnerships? and your on announced financially, like and these was up, what commitments timing electrolyzers

Mark Russell

to have We the wanted up. by further that are construction Bill, something point. to both at partnerships and hub of are answer not be because now. have be first our this of get who we announced. the me And been wanted to talk let Kim commenced this year. ground the financing. we get are to something broken about to is ask – station related it are and want But I So on announced that the commitment correct to the part they then And we first first and where will And you line able

difficult, can progress committed anticipated forward. this of tell done do. not lack turns and are are it out effort. to been It’s turns be commenced, – we close. be we get out it be more a going knew haven’t it’s to for broken, to first We the we would work to because difficult thing than locations more This you, we but So, making actually ground difficult permitted, construction yet. to I

an we have the be one proven fairly These we unique well. on quickly to of to world. extraordinary actually once in commencing breaking about will get am We I go the facilities And as the and team that this is are have our of the construction remember facilities. ground to construction, of be confident – things we as point are facilities you manufacturing with they to got going able these

us And That’s The on that electrolysis to we first facilities and – are partnerships locations. made we the balance in and APS they build be facilities They Nel we facility where get intent and commercial marriage get some hydrogen in the potential cases, at this hydrogen be In bring us. can they the be happy somewhat the the making get TC reason us – just the in facilities these this TC with on production. that other from between to hub using petroleum the slide. Energy to the business already hydrogen, And into build hydrogen in strategic and from That’s for help business. will are may basis together the carbon of some have the to heaven, capital capturing as with has moving see electrolysis. those locations to we they budget demand cases an we unique that for making great rather using locations of Energy will intent produce at in and is are WVR it sheet electrolysis. why have we hydrogen many in all are and water add the world the That’s for that going scale that around. have we that ideally you will have the hub and we well. a electricity. reason Indiana, partners actually suited be Trans sources Canada because of That’s that to have we have rate partnership reason or hydrogen the had But

has been the And puzzle all it’s about the is in concept the about That’s getting beginning, on right the model of execution. now from into the place. pieces this plan and have We what execution. the

challenge our to that. that’s do this So, year is

financing? Now, Kim talk do to about want you the

Kim Brady

hubs special you way think know, want about well as as the as Bill, is announced be we as you will purpose to vehicles. this dispensing hubs, that locations,

well the In that typically efficient. little Nikola, very that about XX% few And is own as be Nikola asset situations, as the those may be we financed of sheet. equity, because think way equity. the first will by project concerns, debt, we or are So, we very going many equity cash And should with be off could balance XX% TC you that will sessions, owned decide in capital Energy. to be our we purposely will

However, agreement Nikola, we be the molecules. XXX% will an with will the off-take hub control

marketing million, When controlling our gas on-site hydrogen $XX be and million And dispensing have let’s generation, of and per station. so we respect CapEx locations. we then discussed $XX with million, about talked $XX we base will to And think previously, to selling customers. about

be be are per locations likely hydrogen, cost stations funded building mostly what to And leveraging small that own And talking that we both we again, dispensing will are control for dispensing where of various not the CapEx. at once we once we where partnership million, delivering is actually molecules generating who looking partners, the we where arrangements, locations. we dispensing third-parties And And again, then station. be will at locations $X TA, potentially their million will are such CapEx many are will around parties. footprint. as stations also fund could means We looking to be existing such these by dispensing $X as

capital highly but So, be still do to approach, execute that efficient. going we that. to is that we control what I going am extent telling can SLA molecules, to you the are we And are

Mark Russell

combination. a the all case that that. other is, same in to that be America, basic part the of will of slightly partnership operation are by in part operators structure the then fence, in by their will the have you of Opel a where replicated fueling in by this will one with Europe. thing to want the It’s the be remember provided large similar they OGE, that’s probably is which terminal reason here case, operator the Europe, of TCE the being TCE But with they And large played terminal is Europe. of a what the in North approach operator, in differences largest behind in And There pipeline we be And one trucks, Europe. are in that’s And Opel, and/or in. some where expect played that’s we in specialized the in inside capital Europe. slight that see like different the

established with fuel of gas advantage they IVECO that that side. working of dealers, the an on established not through they because gaseous natural already supply have only have network but have We the

to those us currently help existing that, intends delivering OGE they manner, since to in piggyback to especially that are So, hydrogen natural enables deliver gas that the same that stations.

So, Europe is substantially on ahead that front.

we ahead emphasizing first, America will Europe in looking what also little is terms are to We that’s be bit, North here actually hit have infrastructure. because And just Europe a behind of that.

Bill Peterson

more guess but ramp? all this I hydrogen, this cell, the build about is earlier details internal that for and we basically with next successful improve guess, your think likely something release, key sales half initial on second beta. are that’s potential presentation, the in is press the I to more the milestones planned for this validate guess sense. this somebody you guess to I clarification, to Thanks year And And lead and would alpha test looking then makes plan I I think you is you but or asked I going about for for – are beta Sticking this this finally, the areas be fuel customers, year? that with ‘XX maybe just partners how should applying Is about talked the or testing, learnings there? then what beta. point for the for your are

Mark Russell

is work already cell customers. fuel The with the Bill. questions, Great

a hauling cell. trucks Anheuser-Busch two are beer fuel now, day that with on every have We

Bill Peterson

understand, trucks? the for to I about the beta am – the talking That’s beta test,

Mark Russell

continue. Yes, will that

trucks, there very validation. on We and to have what similar work with like to testing customers track with beta a of on side, launch continue we will own tracks the testing winter be just locations. customers cell done well tracks, use fuel absolutely. in will beta Well, battery Yes, side. as weather testing. the third-party combination the our on will and our And the battery then will do track, to hot It we in be

Bill Peterson

what of alpha the – kind moving in of kind already I was point from areas question? of beta, saw you that to prior improved guess key What areas

Mark Russell

and We at intent are gives point. whatever the us vehicles. take feedback, Yes. to testing the customers production try But improve these the this and

they prove know what trucking. as go – do, are they that love specified We can the that we that operators and you have can the we drivers they Because all need them miles vehicles. we particularly the to in XXX uptime to know kind do that commercial trying already of that and

proving proving reliability about the range, it’s and the the quality. Now,

Kim Brady

at next second and regarding point, somewhat especially will still sales, idea, it’s better this we the year towards And Bill remember, half this have early of year.

learning better as about by beta are there We our the that will certainly excited And And fuel next build cell are of we of take place be continue much and and in test. we will validate reliability suggested greater demand as and for terms to year. uptime understand be Mark will going alpha. to the what

Mark Russell

the Although that’s does my the And going me? is can X to truck don’t I that the of million be as only who The least – front people away, can world the to Europe it to and million range, is are X There is And out that the And you one happen can whole cost who And far that experience, overall that’s we zero, I questions cost. want have And get do I will to I got ourselves with questions. the equivalent want this have are situation. worried on in have cannot certain or of and And there jurisdictions in front be a we structural one who be by diesel at forward have it here. the either Diesel them solution. going ahead doesn’t what can that’s diesel. go replaced. that anybody to it question to point we it’s those would out on why understand to answering to in as trucks are far emission two actually what tell is, same people current about for are it – is country, reliability. this a going replace going gone. go by going demand there operate zero is unanswered same reasons in

that the as transportation speak. right answering and as don’t marketplace And the commercial kind the Nobody as our we terms about I the replace same. prove road them buy And going up off is questions I this are ability on hey, a exponentially are be now proposition total goes that, We can your emission for with And take better see to it is basically future of and nobody cost to I sustainable of – the our that, zero about out. in won’t doesn’t the we well, get we do nobody who we diesels trucks nobody says the way. It’s always that, the out, – are than into to momentum conversations said don’t no that. years it long-term are. that can you anybody we doing has do the proving can we about ever now right we looking proving all that. there of to really And And customers no with you and this, now. is are

Bill Peterson

as and of the of cells. makes nicely kind bit no, years I to And totally environment lie the on what Europe the more answer. And orders out final authority, is of terms look outside last am few curious, next in versus fuel, strong little products. going fuel you is the question, you leads demand these guess intent over where light. recognize your specifically, like And batteries Yes, that, for the a say and the the sense. illustrated looks into is that letters –what’s that It are Maybe Hamburg the for of I there? of tie types of the kind the interest

Mark Russell

because tend ahead hydrogen well. infrastructure Bill, the that a side an side, we And like on your as than less Europe should. to is bit market little question is Europe just on one, about airtime we excellent the give

has United the that Germany, replaces the place Europe in vehicle emission here between has of over And Right it for already XX% a in Europe time. a zero incentives some additional some for States, is about purchase incentives. but had one example. covers just now incentive the and talking vehicles diesel difference there are in for for We

you mandate. mandates The that at that’s ahead. So, a or rapidly the incentive, in Europe can dates books no which longer much have as bigger the operate the there legally that’s of a place. – are number not in operate is United And that’s jurisdictions than and on that market of diesel number only on point on vehicle is expanding over in States Canada,

into gave of launch sense, in see, place market And with show on So, the customers. the see that early to kind without you in don’t lead the ahead And is Europe as the because Kim is trucks we not we side. away is of big giving more at that will times, the early us to would not terms customers, backlog you said, fact the Europe that there. you kind the expect come also that a demand

Kim Brady

our Europe. closely homologated sell very of electric cell are to do European working in IVECO. we we manufacturing to We have are recognize, very fuel with facility. vehicle. Bill, terms We have And do joint in Now, integrated venture

production that. resource we timing the market. version thereafter, XXXX. and focus go And the on we in And U.S. truck on can very first. cell into Shortly right making full working truck have that now, fuel sure we address the of markets allocation. the But European European So, much we that for on are that will it’s a we focused are really cell

you in a this lack purposely decided, about, of that not as of and demand, priority we fact, have it’s ahead. about athlete talked are really execution it’s So, Mark

Mark Russell

is X execution said, our XX But as we about States. Kim from lag in what United months to Europe in do the months

here, market the So, in XX months months no Europe, as more to should it than to market behind. come comes vehicle and X

Bill Peterson

and all again Appreciate Thanks disclosures color. for it. the

Mark Russell

Bill. Thanks,

Operator

you. Thank

Bank. proceed Our your with Please with comes Emmanuel question. Rosner question next from Deutsche

Emmanuel Rosner

is deliveries, very questions the your look so also obviously, first financial much. economics. of being you at there Thank first for of sort one, XXXX early of me, couple saleable with early year A an

And seems said on guidance its of I so or or about trucks manufacturing that. on of cost cost the material about towards it that so XXXX. trucks and positive of maybe an way you $XXX,XXX guess then so I those gross early selling goods margin there to then them number sold is in be you sometime maybe And divided though, to so seems seems upside these understand trucks, $XXX,XXX the taking after just by price gave

and of sight positive? to so that factors of help line months having initially next you the months is directionally what then XX are are of of over first all, So – improve is this What XX towards correct or sort what math a the will there? sort the equation

Kim Brady

right high. worldwide to And COGS, do now, there battery you that pricing, is similar about as in XXX,XXX. capacity believe we make sure that price comes packs room to for as revenue, in units is We best, talked well terms of well very This there provided there little cells, there and know, is average and when asked. what modeling we is ASP talked shortage to we question reduce are will approximately math to And the great optimize the comes understand do expansion the XXXX. to about, and we as that. is Emanuel that surely of purely cells. Chris from battery too When would worldwide we as our it we and for suggest purposes. that And it cost can XXXX as Mark absolute do XXXX.

So, cells, we make of flexibility comes XX% to a electric is and think approximately your there it truck. greater battery cells. up modules packs bottom for Remember, do when

make to there ultimately, are the for important machining to modules improve us. optimized. not suppliers going that they transition from is that to casting And now, are focused trying think price we enclosure. that’s it making to that comes to cost. we And able what yield to really on is our to reducing when the yield, be we about when pack packs sure improvement. And sure packs, to also are need and comes And are you So, especially our right their from exhaust

XXX on focused implementing initiatives, those to very the so have scale Even When modules that about a ultimately packs. class, purely on can it’s the throughout with to components So, and volume. know components can XXX, we components. We well we for it we inverters. respect are at price other much cost to as and really reduce we will based comes visibility volume able go that that as those to certain more. as price on our even we as we e-axle on reduce increase, those volume such continues be will And when to into XXXX, and

even about to have reduce we further so can to targeting costs which localized that cost. And idea and what very we a components good be are reduce

we And on so much focused very are that.

Mark Russell

is Each look the plan us. over the part pretty supplier, And In want be shared the target, volume. most to down of x with to those a plans has in have what robust and terms a to producing cost we get time. y plan we at shared cases, volume

the battery cost the to that’s our the every been those current that, the we XX And we going went market – the we drive after in are going against in that way And why get in are that’s XX back to so are as up. mentioned in plan that’s for that has not But time. thing is – favorable we is gone pretty were price, down only first year those why are year are the cost that changing And down. in Kim situation short conditions by The months. And a cells. down think going for long that months this say much as to the we next confident well.

confident we build as So, get volume. will cost down we feel do very we the

Emmanuel Rosner

comments was positively sales board encouraging. and cells. benefit, like in the would the without XXXX, remarks sometime type year, positive in you by cost. the definitely you it between on I on next to because I cost around of margin guess with prepared gross surprised now any $XXX,XXX seems probably improvement cost require That’s am the these potentially Yes. really of I driving

And the so an this just curious, achievable you like such using if levers? improvement magnitude other is of is – feel

Kim Brady

that pre-series is that’s we in we as of actually to production the decrease terms build that there improvement, cost are go case realizing. not the in from magnitude fact, of So, Emmanuel build, quite

fuel likely fuel be so especially what starting it a idea when do drop. cost target BEV, higher to of Nikola – how And be from half each are to we talking be than clear, second about have what want for our sold able what in production goods will it We will and are will cost localized. visibility we have are make selling good and cell And we XXXX want is of to pretty we to for we to cell, we Tre that about XXXX, and average it course, about much XXXX, we make trucks, comes production is since price. talking of in component,

Emmanuel Rosner

second that in question then needs. terms makes Yes, of sense. quick your And capital

something So, at will availability north take of it for of the you components initial same in sort have this capacity Phase the you in you XX,XXX Coolidge, you so. in units. I about X next guess or started the X,XXX to mentioned of time, of units terms years,

next it does you still beginning all make of capacity anywhere sense year, likely preserve capital? units XX,XXX make spend when this it to sense phase won’t need XXXX, that to and of at or does in So, sort near get most this year and slower through the

Mark Russell

And as is possible. will that’s as CapEx allocated only And have X, XXXX, CapEx thing when this are we And think something else. that that about in it’s going something we Phase is that’s otherwise, build, question. to to Phase And are we need a everything different that essentially X great And for debated. we being looking show. we much at delay really

to being to up Coolidge recognizing think build to ramifications in delay return units. about think XXXX. how have we thoughtful, will build capacity But what we are when terms right we very, X,XXX our allow does that we CapEx we that of now, have about so And us very if

as much as that allocation possible. have so, we capital really down skinny And

gone So, through we have that exercise.

Emmanuel Rosner

Thank Perfect. you.

Operator

Thank you.

Greg your Lewis question. Please proceed BTIG. with from comes question next with Our

Greg Lewis

they Kim Yes. deposits bit running and you Realizing one question. I morning. a I just little the to that is material your to the want the long Thank understand we wanted bit go better as every kind seem like you made here, call higher. that stick Clearly, and allocations. I of think a allocations, prices raw appreciate good just little some have day about on will just but

the or ability your and mechanism about there price cell they cost a where are an I pass those ‘XX, ‘XX higher function I – battery think to get to cells? to fixed is a am through of trying are of allocations we just As understanding guess in

Mark Russell

a great question. That’s

capacity longer are there example you As XXXX, suppliers, not there is we while to simply know that make wanted fixed the for we and beyond. there you expansion anticipating a any XXXX, if because with a know, we drop. are short-term price negotiating any commit for that term, we do to worldwide sure and in is price, fixed cell And price and to XXXX in is not price

some XXXX have to XXXX price, to with battery provision materials. with suppliers And that, key for allocation. the the However, only even fixed all without the not we fixing get respect and costs with that price could installation respect not raw

Greg Lewis

very Got you Thank it. much.

Operator

There would for any closing you. remarks. no over to turn the time. back floor to management are like this further Thank at I questions

Mark Russell

and everybody, Thanks. we Appreciate again you in interest will talk participating today. quarter. next Thanks, Nikola for your to

Kim Brady

you much. very Thank

Operator

conference. today’s concludes This

your may this your at participation. time. you lines You disconnect Thank for

Nikola (NKLA) 24 Feb 222021 Q4 Earnings call transcript