Startup powertrain developer Hyliion Holdings has sufficient cash to run its business through 2024 without raising new capital. But it might sell new shares next year if the conditions are right.
With this week’s bankruptcy filing by electric bus and battery maker Proterra Inc., a massive increase in authorized shares sought by Workhorse Group, and fuel cell system maker Hyzon Motors suggesting it was available for sale or merger, survivability of new transportation companies took on new urgency.
Unlike those companies, Hyliion is in far better shape. It had $354 million in cash and investments at the end of June.
The Austin, Texas-based company reported a second-quarter net loss of $35.2 million, or 19 cents a share. That compared to a loss of $33.5 million, or 19 cents, a year ago. Total revenues were $266,000 compared to $172,000 last year. Hyliion sold a small number of its first product, a hybrid-electric add-on for diesel and natural gas trucks.
‘Shifts in the electrification space’
“We have seen significant shifts in the electrification space over the past few years that have impacted us and our peers. And we expect that these shifts will continue to impact Hyliion’s business model,” CEO and founder Thomas Healy told analysts on a conference call Wednesday.
Hyliion is taking a methodical approach to building its Hypertruck ERX natural gas-electric powertrain for upfitting into Peterbilt Model 579 trucks. Hyliion plans to deliver 30 complete trucks in Q4.
A decontented Model 579 chassis is the starting point. Hyliion then upfits its powertrain. The truck returns to Peterbilt’s plant in Denton, Texas, for validation where it gets a VIN before shipping. Eventually, Hyliion expects its powertrain to be available for spec the way a customer chooses between a Paccar or Cummins engine today.
The company declined to estimate how many powertrains it will build in 2024. Final orders depend on extended trials at potential customers. Those trials were supposed to start in Q2 but were delayed to the current quarter because of supply issues.
It is also waiting for Environmental Protection Agency and California Air Resources Board approvals before it can ship trucks. Hyliion received an all-clear from the National Highway Traffic Safety Administration that it complies with federal safety standards.
New products, regulatory pressures and higher prices
Hyliion originally envisioned its natural gas-fueled generator for making onboard electricity as an alternative to long-haul diesel trucks. Electricity generated from natural gas in urban areas and potentially negative net carbon renewable natural gas on the open highway could propel the Hypertruck 1,000 miles between fill-ups.
Now, Hyliion is adding a day cab version because potential customers complain that battery-electric trucks underperform on advertised range. And the charging infrastructure to keep the trucks on the road is lagging.
“We see fleets adjusting their electrification strategies as they move along the path to adoption,” Healy said. “We’ve heard from fleets that the additional weight of the Hypertruck ERX sleeper variant will hinder its ability to operate in weighed-out hauling applications.”
Regulation also plays into the decision. Hyliion received certification to use the Cummins X12N natural gas-powered engine in California. But the California certification expires in 2024. So, Hyliion is planning to integrate the Cummins X15N natural gas engine. It is available next year. Hyliion plans to integrate it into the Hypertruck ERX by late 2024.
Another factor: Cummins is retiring its L9 and X12 legacy engines. The engine maker is replacing them with a new X10 engine capable of powering medium- and heavy-duty trucks on a variety of fuels.
Hyliion said that despite increasing parts prices, the sleeper cab version of the Hypertruck will still sell in the high $300,000s — after a $40,000 rebate available under the Inflation Reduction Act. That is close to zero-emission Class 8 battery electric trucks.
The day cab is planned for 2025.
The Karno equation
Hyliion thinks it may be able to generate revenue from using Karno generator technology it purchased from General Electric Co. a year ago. It sees 200-kilowatt stationary generators going into demonstration next year with a version for the Hypertruck to follow.
“We see it as a prime power application as we anticipate being able to produce electricity for less than the cost of grid power in most locations,” Healy said.
Hyliion paid GE $37 million in cash and stock to acquire technology for the 3D-printed generator that can run on a mixture of low-carbon alternative fuels from natural gas to hydrogen and more than a dozen other fuels.
Hyliion also has completed integration of a 200kW fuel cell from Hyzon Motors into a Hypertruck. It is running on a test track.
The capital question
Hyliion won’t raise new capital this year but might test the markets with an equity offering in 2024 if conditions are favorable, CFO Jon Panzer said on the call. It is too soon to predict when Hyliion would reach positive gross margins overall or on any specific product. The first Hypertruck ERXs will be sold at a loss, he said.
“We’re not rushing to put out trucks as quickly as we were a year ago or even further back because it’s not necessary to get where we want to be,” Panzer said. “We will continue to sell in 2024, but it’s not a year where the more we get out there the better.”
Hyliion (NYSE: HYLN) shares traded intraday Wednesday at $1.52, down 8.42%.
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