Nikola (NKLA) revamps its business strategy to focus on North America and fuel cell trucks

Nikola (NKLA) released its first-quarter earnings on Tuesday, announcing it will refocus business operations in North America. After building sales momentum in Q1, Nikola says it will focus on what it knows best, including fuel cell trucks.

Nikola is refocusing its business in North America

Heavy-duty electric vehicle and FCEV maker Nikola said it produced 63 Tre battery electric trucks, delivering 31 to dealers and 33 in retail sales in the first three months of the year.

Nikola CEO Michael Lohscheller said the company would refocus business operations where it believes it has an advantage, including the North American market. Lohscheller stated during the company’s Q1 earnings:

We have the right products at the right time, and as we move forward, we will be focusing on the North American market, hydrogen fuel cell trucks, the HYLA hydrogen refueling business, and autonomous technologies.

As a result, Nikola is selling its stake in its European joint venture with Iveco Group. In exchange, Nikola will receive $35 million in cash and 20.6 million shares of stock returned to the company.

The Nikola and Iveco joint venture just revealed the Nikola Tre BEV truck designed for the European market last September, claiming it was looking to expand the partnership last quarter. Meanwhile, Iveco will continue to supply Nikola and is expected to remain a prominent investor.

Nikola believes it has a first-mover advantage in North America and can capture a good share of the commercial trucking market. The company says it’s also building out its hydrogen energy business to enable long-term growth.

The news comes as Nikola, among most EV startups, look to conserve cash with growing losses in the first quarter of 2023.

Nikola Q1 financial results and highlights

Nikola fell short of Wall St. estimates, reporting $11.1 million in revenue and an adjusted loss per share of 0.26 in the first quarter of 2023.

The commercial EV truck maker posted a net loss of $169.1 million compared to $152.9 million last year. Nikola ended the quarter with $121 million in cash, down from over $233 million in Q1 2022.

Higher losses are the result of the growing costs to manufacture and sell BEV and FCEV trucks, hence why Nikola is looking to double down on its business in the North American market rather than expand further into another market.

Nikola also said it would temporarily pause production in Coolidge at the end of May as it retools the assembly line for both hydrogen fuel cell and battery electric trucks on the same line. After the upgrades are complete, Nikola says the battery electric Tre will remain a built-to-order product.

Production is expected to resume in July, with the first hydrogen fuel cell trucks going on sale. Nikola anticipates it will begin battery module and pack manufacturing at the facility by the end of July and Bosch Fuel Cell Power Module assembly by the end of the year.

Nikola’s backlog for hydrogen fuel cell trucks grew to 140 orders from 12 customers as of Tuesday. The first two of 10 gamma hydrogen fuel cell trucks are completed, while the rest are expected to be done by the end of July.