Since then, its market price has fallen to $10.5 billion more reasonable, however, it is still quite spiced for a company that has not yet generated revenue. Its most promising products are its heavy trucks, which are powered by electric batteries or hydrogen fuel cells.
The rise of Nikola (whose name, bratably, is another evocation by electrical engineer Nikola Tesla) will have reinforced the concept among european automotive industry leaders that the U.S. inventory market operates under other rules. Although Tesla Inc. is only profitable, its price is approximately $275 billion, more than the five largest European car manufacturers combined.
At least Europe has an interest in the new high-profile project. Founded through Trevor Milton, a 38-year-old American defector, Nikola relies heavily on the experience of the old continent. Robert Bosch Gmbh, a German automotive equipment manufacturer, has contributed to the progression of the US company’s electric powertrain, and the first Nikola trucks will be built in a German factory owned by Iveco in Italy, a truck manufacturer subsidized by the multimillion-dollar Agnelli family. Bosch and Iveco own more than 6% of Nikola. CNH Industrial NV, Iveco’s parent company, has just posted a fair price gain of $1.5 billion on this investment. (1)
The most important question is whether a start-up that relies on so much foreign aid has a dazzling valuation as Tesla, which builds much of its own generation. And if Europe has that experience, why didn’t it produce its own rival for Elon Musk’s car manufacturer?
Maybe it’s a lack of bray. Nikola’s call isn’t the only explanation for why he’s compared to Tesla. Milton’s overactive presence on Twitter gives Musk a meek look in comparison. The two men’s ambitions go beyond selling zero-emission cars to produce and buy blank energy. While Nikola focuses on heavy trucks, he has promoted a variety of products to customers, adding a pickup truck called Badger. This is cat grass for retail investors, as shown through the excitement generated through Musk’s Cybertruck.
While Tesla and Nikola paint on electric heavy trucks, they differ by at least two points. The first is hydrogen: Musk is derogatory, while Milton believes hydrogen is the best fuel for long truck trips. The moment is his attitude towards internal construction.
Certainly, in its early days, Tesla worked with Lotus to build the Roadster, and Daimler AG expanded the Model S sedan. Tesla partners with Panasonic to produce battery cells. But Musk stands out for looking to create his own technology, electric propulsion systems and automated driving software in car seats.
Nikola has developed his own software, infotainment and battery control system, as well as the aerodynamics of the vehicle, according to Cowen analyst Jeffrey Osborne. He subcontracted or used a hired assistant to make the most of the other things. More than 200 Bosch workers were concerned about the structure of the vital parts of Nikola’s trucks, adding the electric axle motor, vehicle unit, battery and hydrogen fuel cell. The result is a set of high-value assets held separately or jointly through Nikola and its suppliers.
There’s no doubt, however, who has the deeper expertise. So far Nikola has been awarded 11 U.S. patents, about 1% of the total Bosch is awarded in a typical year. “Bosch gets paid to help us get to industry standards on products,” Milton told me.
Getting partners to provide the basics of generation has some advantages. Nikola has only three hundred workers and yet his first trucks are expected to leave the production line soon. Working with partners reduces the threat of production delays and quality issues that have affected Tesla.
It is also an effective use of capital. Nikola’s study and progression expenses were just $68 million last year. Tesla spent $1.3 billion. After his IPO, Nikola has about $900 million in cash, this will not go far in the automotive sector. For the North American market, Nikola plans to manage his own manufacturing, with the technical assistance of Iveco. Nikola opened a $600 million plant in Arizona this week.
Whether you think or not that the large participation of external partners deserves your high valuation, there are other things that may disappoint Nikola’s plans.
The structure of a refueling network is a central component of your business model, however, it will not be reasonable at $17 million per hydrogen station. The corporate also enters a competitive box populated through more capitalized and experienced rivals. Daimler’s Mercedes-Benz did not attend to its first experiments with electric cars and let Tesla through. I probably wouldn’t make the same mistake with the trucks.
Daimler is the world’s largest truck manufacturer and plans to start production of its eActros and eCascadia electric models next year. The German giant has also formed a joint venture with Volvo AB of Sweden to expand mobile hydrogen fuel systems for heavy vehicles. The company is valued through corporations at only 1.2 billion euros ($1.4 billion), which puts Nikola’s valuation in perspective.
Even if its percentage value is exaggerated, Nikola’s unlikely increase shows that investors demand demand from blank transport corporations that do not yet have one foot beyond combustion engines. European brands have the technical skills, however, they want to locate greater tactics to capitalize on investor enthusiasm through new business models or spin-offs. Otherwise, it will.
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