Wabco Bets $10 Million on Nikola, Acquires 1 Percent Stake

December 21, 2017 by Carly Schaffner, @carlyschaffner

Wabco Holdings is investing $10 million in hydrogen fuel cell truck developer Nikola Motor Co. as a move to keep on top of emerging transportation technology.

The companies will also jointly develop advanced safety technology specifically for the trucking industry. These include electronic braking systems and traction control systems.

The investment gives Wabco a 1 percent stake in the Salt Lake City venture, valuing the startup at $1 billion. It’s a sign of how the trucking industry and investors are embracing automated and zero-emissions technology for freight and logistics.

Wabco, based in Belgium, is the leading supplier of truck braking and stability control systems, which is essentially the foundation of autonomous driving technology.

“As vehicles become increasingly autonomous, electric and connected, Wabco continues to be at the forefront of breakthrough technology innovation,” said Jacques Esculier, the company’s chief executive.

The investment gives Wabco the inside track with a truck manufacturer, said Antti Lindstrom, an analyst with IHS Markit.

“For Wabco to be a bigger player than they are now in the truck sector they need to find some other ways than being happy in the role of part supplier,” Lindstrom said.

“Nikola definitely needs that money, they need that cap injection there,” he said.

The startup has been working on the development of a hydrogen fuel cell electric Class 8 semi — the Nikola One — since last year.

“Before they can move forward Nikola needs to have the infrastructure in place for hydrogen stations,” Lindstrom said. “I’m sure this is part of that picture to get funds together and then partner with other companies to move them in that direction.”

“The whole hydrogen distribution network is the key to the success,” he said. “The long-term concept they have is a very good one, a virtually emissions-free footprint they will be able to provide if they get the solar-powered hydrogen stations up and running.”

In late June, Nikola completed a $110-million funding round to give it a valuation of $900 million.

Validation from such a large international player gives Nikola an edge in what has evolved into a fiercely competitive market for zero-emissions trucks. But Nikola’s proclivity for adding marquee names to its development team is not new.

Nikola Motor CEO Trevor Milton and his dog Taffy.

Nikola Motor CEO Trevor Milton and his dog Taffy.

In June, Nikola Chief Executive Trevor Milton said the company would outsource much of the development of the truck to keep the team nimble. He’s delivered on that promise.

Truck components company Fitzgerald Gliders will build the first 5,000 production models of both the Nikola One and Nikola Two by 2021.

Nikola recruited trucking technology guru Scott Perry from fleet management firm Ryder System Inc. last month, naming him chief operating officer.

Miami-based Ryder System Inc. already has signed on as Nikola’s exclusive provider for distribution and maintenance nationwide and in parts of Mexico. Caterpillar dealer and early Nikola investor Thompson Machinery will supplement Ryder’s sales and services in Tennessee and Mississippi.

The company also tapped parts supplier Bosch for joint development of powertrain systems for the Nikola One sleeper and the Nikola Two day cab. Bosch also has worked with Nikola to develop the truck’s “eAxle,” which houses the electric motor, transmission and power electronics.

Swedish fuel cell developer PowerCell AB will provide the fuel cell stacks that produce electricity from hydrogen, and Nikola will build the completed fuel cell system.

Initial response to the Nikola One was positive. The company logged more than 8,000 reservations, including one from US Xpress. Official ordering for the semi was capped and will restart in the new year with Ryder at the helm.

Us Express NIkola One autonomous semi truck

U.S. Xpress Nikola One autonomous truck. (Photo: U.S. Xpress)

The orders speak to the credibility of Nikola’s credentials in the truck sector, Lindstrom said.

Though Nikola has been making progress, the stakes continue to rise.

Tesla unveiled its Class 8 electric truck in November. Pricing starts at $150,000 for the 300-mile range Tesla Semi — there also is a 500-mile option for $180,000 — that won’t go into production until 2019.

So far food and beverage companies as well as retailers make up many of the 381 announced orders for the Tesla. They all from major companies. UPS has reserved 125. PepsiCo said it wants 100. Sysco, a large food service company, has reserved 50. Anheuser-Busch is asking for 40. Canadian grocer Loblaw has ordered 25 and Walmart wants 15.

Nikola has more orders because it was first to the scene, but Tesla has more market visibility, Lindstrom said. “Considering that, I think it’s great for Nikola that they’ve been able to snag so many orders at this point,” he said.

Established commercial vehicle makers are taking a more measured approach.

Navistar International Corp. and Volkswagen Truck & Bus are moving to develop electric-powered medium-duty trucks in the U.S. and Canadian markets in late 2019 or early 2020.

Troy Clarke, Navistar’s chief executive and a veteran in the trucking and automotive industries, has said that “even the most advantageous technology, like the automated manual transmission, or electronic stability control, were actually adopted over really extended periods of time.”

Truck maker Daimler, which builds the Freightliner and Western Star brands, unveiled the E-Fuso Vision One, a prototype all-electric Class 8 delivery truck in October. E-Fuso is the newly formed division of Mitsubishi Fuso — the Japanese arm of Daimler — that will focus on electric powertrain development for commercial vehicles.

The company said it believes the E-Fuso and other heavy-duty electric trucks could be on the road in mature markets such as the U.S. and Japan “within four years.”

Other players include Toyota, which is testing a Class 8 fuel cell electric drayage truck in Southern California; Chinese-backed BYD, which is building electric buses and Class 6 through Class 8 electric trucks in Southern California; and Kenworth, which is developing a Class 8 hydrogen fuel-cell electric truck prototype it plans to launch early next year.

Even diesel engine giant Cummins Inc. is in the game. The company recently showed an all-electric Class 8 prototype. It purchased battery pack developer Brammo and said its aim is to become “a leading provider of electrified power systems” for the truck industry.

Read Next: Tesla Snags Largest Truck Order Yet, UPS Wants 125 Electric Semis

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