Beer giant Anheuser-Busch ordered up to 800 of Nikola Motor Co.’s semi-trucks in the largest single deal on record for heavy-duty delivery trucks powered by hydrogen fuel cells.
Anheuser-Busch said Thursday that it plans to replace its entire dedicated long-haul truck fleet in the U.S. with zero emissions vehicles.
Nikola is to begin delivering its rigs to Anheuser-Busch in 2020, with several pre-production models to be put into the fleet at the end of this year for real-world testing, Trevor Milton, Nikola’s founder and chief executive, told Trucks.com. The company has until 2025 to complete the order.
The deal, which could be worth as much as $720 million to Nikola, cements the Salt Lake City-based company as a leader of efforts to bring fuel cell technology into the mainstream. Nikola plans to debut the production version of its truck in January at the 2019 Consumer electronics Show, or CES, in Las Vegas
Landing the Anheuser-Busch contract also gives Nikola added credibility with the investment community and could pull it out from beneath battery-electric vehicle maker Tesla’s shadow.
The announcement “is a big plus indeed,” Antti Lindstrom, trucking analyst with IHS Markit, told Trucks.com. “Nikola has been needing something to pull them forward, to show potential investors they have a viable product, and this is it.”
Just one day before its leasing deal announcement, Nikola filed suit against Tesla Inc. in U.S. District Court in Arizona, seeking as much as $2 billion in damages for alleged infringement of three of Nikola’s truck design patents.
Nikola now has more than 9,000 non-binding orders worth about $8 billion, Milton said.
Most of the customers are fleets adding unspecified numbers of fuel cell trucks to help achieve sustainability goals and meet state or regional low-emissions requirements.
At least one, U.S. Xpress, is a major nationwide carrier. The size of that order hasn’t been disclosed, but Nikola will have several test trucks in the U.S. Xpress fleet by early next year, Milton said.
As with Anheuser-Busch, delivery of Nikola trucks to U.S. Xpress is slated to begin in earnest in 2020. Anheuser-Busch will get an undetermined number of trucks in 2019 as well.
Anheuser-Busch has committed to lowering its carbon footprint in the U.S. by 25 percent by 2025.
Converting its fleet of diesel trucks to fuel cell electric trucks with the hydrogen they consume produced using renewable energy would give the company a true zero-emissions fleet, said Ingrid De Ryck, vice president of sustainability and procurement for the brewer, whose U.S. headquarters are in St. Louis.
Anheuser-Busch’s U.S. long-haul fleet makes about a third of its deliveries nationally, she said. Switching to zero-emissions trucks will cut corporate carbon emissions from Anheuser-Busch’s logistics operations by 18 percent, the equivalent of taking 13,000 passenger cars off the road, she said.
Nikola’s business model is to lease its trucks on a per-mile basis, with the lease payments covering truck, fuel, maintenance and warranty.
“Everything, including the tires and windshield wipers,” Milton said. The company has said its leases typically will be priced at about 90 cents a mile. Ryder Services handles all of Nikola’s sales, service and warranty work.
Long-haul delivery trucks such as those used by Anheuser-Busch can easily rack up a million miles or more in lifetime usage, for a $900,000 cost per truck for a million miles.
That’s competitive with diesel costs, said Ties Soeters, the brewing company’s vice president for logistics procurement. “The business case makes sense,” he said.
Anheuser-Busch ordered a combination of Nikola One sleeper cab and Nikola Two day cab models. All of Nikola’s trucks are equipped with the hardware to provide the capability for fully autonomous driving, but those features won’t be activated until proven safe and properly regulated, Milton said.
While fuel cell cars and trucks get their power from electricity, the same fuel used by battery-electric vehicles, they produce it on-board from hydrogen gas and are not dependent on battery packs that must be recharged, often for hours at a time.
The hydrogen used by fuel cell trucks is stored in insulated tanks that can be filled in about 20 minutes, about the same amount of time it takes to fill a diesel truck’s tanks.
Nikola has said it will build 700 stations over the next eight years to support its trucks. Most are to be located at sites determined by companies that have ordered its trucks. All will be public stations open to fuel cell cars and trucks, Milton said.
Nikola plans to produce hydrogen with power from renewable sources, such as solar energy, to provide customers a true zero-emissions product.
Anheuser Busch determined that it would need 28 hydrogen fueling stations and picked the locations.
“Nikola differentiates itself [from competing electric truck builders] by providing infrastructure,” De Ryck said.
The first two stations for Anheuser-Busch will be under construction by the end of this year so they can provide hydrogen for the test trucks the company will be operating, Milton said.
The Nikola fuel cell tucks can cover routes of 500 to 1,200 miles, while battery-electric trucks have more limited range because of battery capacity constraints.
How many of the trucks make it into the Anheuser-Busch fleet depends on Nikola’s ability to build them to the company’s timetable, De Ryck said.
The initial Nikola trucks are to be built by a contractor while Nikola completes a recently announced $1-billion Arizona factory that’s scheduled to go on line in 2021.
If all 800 of Anheuser-Busch’s trucks can’t be delivered by 2025, the brewer will look elsewhere to complete the order, De Ryck said.
Anheuser-Busch already has ordered 40 Tesla electric semi-tractors, which will be used on shorter routes.
“There’s room” for competitors “and we welcome them,” Milton said, noting that several other companies are developing fuel cell electric heavy-duty trucks. “We will have four to five years” of market exclusivity before those trucks are ready to compete, he said.