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Alastair Hayfield

Alastair has over 10 years’ experience leading research activities in scaled, high-growth industrial and technology markets. At Interact Analysis he is responsible for electric trucks and buses, autonomous trucks and off-highway electrification. Read More

CNH Industrial – owner of Iveco Trucks and Buses, Heuliez Bus, FPT Industrial, Case IH, New Holland and Case Construction –announced yesterday that they are leading  Series D funding in Nikola Motors, the US developer of two hydrogen fuelled truck models and one battery electric truck model, with an injection of $250m. 

From the announcement: 

IVECO and FPT Industrial, the commercial vehicle and powertrain brands of CNH Industrial respectively, will assist in engineering and manufacturing expertise to industrialize Nikola’s fuel-cell and battery electric trucks. 

Nikola will contribute technologies for a European JV with CNH Industrial that will include class-leading fuel-cell expertise, e-axles, inverters, independent suspension, on-board hydrogen fuel storage, over-the-air software update functionality, infotainment, vehicle controls, vehicle-to-station communication protocols, power electronics, and access to a hydrogen fueling network. 

Fuel-cell technology is the logical next step to liquefied natural gas-(LNG) powered engines as it builds on existing refueling networks, enabling local on-site production of hydrogen. 

Strategic near-term project milestones include the industrialization of the Nikola TWO fuel cell- powered Class 8 truck for the North American market, as well as the integration of IVECO S-Way truck technology into the battery-electric powered Nikola TRE cab-over model for both the North American and European markets. In the long-term, a European joint-venture will cover both battery electric vehicles (BEV) and fuel-cell electric vehicles (FCEV) launched by Q4 2022. Nikola plans to leverage IVECO’s European sales, service and warranty channels to accelerate access to the European market. 

It should also be noted that CNH Industrial has decided to partition its business into two parts – with its on-highway business in one company and its off-highway activities in another. This is with the aim of improving market growth and profitability. 

Commercial and Off-highway Fuel Cell Vehicle Market Opportunity 

From Interact Analysis’s Global Hybrid and Electric Truck and Bus study, this our latest outlook for hydrogen fuel cell commercial vehicles: 

Hydrogen is, in many ways, an ideal choice for heavy duty and longhaul applications. The size of the batteries required for long haul applications will limit the uptake of battery electric models. For example, Freightliner’s eCascadia, developed for the US market, uses a 550kWh battery providing 250 miles of range. Given that a typical longhaul truck travels between 300 and 400 miles in a day, the integration into existing duty cycles will prove to be challenging as drivers will have to plan their driving breaks to coincide with available charging stations at least once a day.  

With an extended range and smaller batteries, fuel cell trucks are better suited for long haul application, but the cost of manufacturing fuel cells will have to be significantly reduced before they can become commercially viable. That being said, with the right legislative environment and financing options, the fuel cell truck market could take off sooner than expected. Nikola Trucks is adopting a subscriptionbased model which includes the hydrogen fuel and has already received over 11,000 pre-orders with a large portion coming from Europe, particularly from Norway and Austria. 

In 2018, Hyundai Motors signed a contract with a Swiss hydrogen producer H2 Energy to supply 1,000 fuel cell electric long haul trucks over the next five years. Confirming Hyundai’s commitment to fuel cell technology, it announced in December 2018 that it would invest $6.7 billion in fuel cell technology through to 2030 and produce 700,000 fuel cell systems annually.  

Greenstat, a company based in Norway, has made a similar target to get 1,000 fuel cell electric long haul trucks on Norwegian roads by 2023. A large number of reservations for Nikola Motor’s European fuel cell electric trucks have come from Norway. 

The Interact Analysis Assessment 

This investment is significant for a number of reasons: 

  1. Despite strong marketing, a large (mostly self-reported) order book and several industry partners (Bosch, for example), Nikola has struggled in some quarters to get the trucking industry to take it seriously. Comparisons with Tesla haven’t helped and nor has its US location – the US truck market is notoriously conservative and isn’t moving quickly towards electrification. Without doubt an investment of this magnitude by a partner like CNH should temper those who question the ability of Nikola to execute on its business model and introduce hydrogen fuelled heavy duty trucks. 
  2. Nikola will benefit significantly from production expertise, purchasing power, verified parts and logistics through this new venture. Compared to other start-ups who currently lack this, this is a major advantage for Nikola looking to scale and build credible products. Other start-ups may be seeking similar major brand investments. 
  3. For CNH Industrial, it has lagged behind other commercial vehicle vendors with its vehicle electrification development. With the possible exception of its bus brands (Iveco and Hueliez) where it has capability (and some recently announced products from FPT Industrial), it has pursued a strategy focusing on natural gas to meet emission goals. With the increasing number of low and zero emission zones, particularly in Europe, and ever tightening regional emission norms, electrification is likely now viewed by CNH as the most viable option for the future. As stated in the announcement, CNH will also get access to a raft of technologies from Nikola that will help jump start its electrification program. Notably, Nikola’s advances in SOTA and infotainment will also give CNH an advantage with regard vehicle connectivity and intelligence. 
  4. CNH’s experience and network in Europe will provide a channel for Nikola to grow in a market where its products will have stronger demand than in its domestic market. One of the key challenges for start-ups in the commercial vehicle space is the provision of in-market service and support. By partnering with CNH, Nikola lessens the risks for would-be customers by giving them access to an established, regional vehicle sales and support network. This is an approach taken by Chanje in the US, where it has partnered with Ryder to provide national sales and service support. 
  5. Where most of the focus in this announcement is around building the business case for Nikola in Europe, it should be mentioned that CNH has no commercial vehicle business in the US, whereas its European commercial vehicle rivals – Daimler and Volvo – have significant share. This partnership gives CNH a pivot to be able to build market share in the US and compete against Daimler and Volvo. This is a point of interest that is not covered in the press release but surely must be a potential major change for the US market if CNH were to begin operations for the first time in decades. 
  6. CNH Industrial’s experience with its CNG network will give it advantage when rolling out a hydrogen fuel network – particularly with site optimisation and also existing facilities that are capable of being used for liquid hydrogen refuelling. 

In the view of Interact Analysis this represents one of the most exciting announcements in some time with regard both the US truck market and the electrification of commercial vehicles. Nikola has made waves in the US but now has an established partner to help it scale and ‘go global’. CNH’s investment gives it a technology set and potential access to the US market that it hasn’t had before.  

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Posted by Alastair Hayfield

Alastair has over 10 years’ experience leading research activities in scaled, high-growth industrial and technology markets. At Interact Analysis he is responsible for electric trucks and buses, autonomous trucks and off-highway electrification. Read More