Nikola Corp. this summer became more valuable than Ford Motor Co. on big promises made by its then-executive chairman and the enthusiasm of small investors.
Now, with the executive chairman gone and shares of the electric truck maker down about 80% from their peak, the company must rely on the strength of its business model. That model attracted auto sector luminaries, big-name investors and industry giants. But it depends on delivering big technological advances and dramatic cost reductions.
Founded in 2015 by Trevor Milton, the company is one of several startups competing to find ways to accelerate the move to clean energy in the auto industry. Nikola has specifically targeted trucks, which have been more challenging because of the weight of batteries needed to power them. While Nikola plans to use batteries at first, Mr. Milton focused on the potential of hydrogen as a source of non-fossil-fuel energy for the trucks. Hydrogen hasn’t been tried in the auto industry in any real way because of its cost.
The company’s big insight was that hydrogen-powered vehicles could be economical if the same company that built them also sold the fuel to run them. The sale of the fuel would pay for the hydrogen station network needed to make hydrogen-powered trucks viable. That solved the chicken-and-egg problem—no one would buy the trucks without a place to fuel them.
“The only way to drive that cost down was to integrate it in with the truck to where, when you buy our truck, we provide the hydrogen service to you, all the fuel you need for the entire life of it,” then executive chairman Trevor Milton said on a podcast in July. “And you just pay us per mile.”