Nikola’s Costs Rise Ahead of Hydrogen-Electric Truck Launch

Nikola executives said the company has refined its battery-electric truck model and started another round of testing on its hydrogen fuel-cell truck scheduled to go into production later this year. Nikola also added partners to its hydrogen fuel network to support those trucks, while cutting expenses and its workforce.

“We have taken steps forward that will make a positive impact on our business and set us up for success in 2023,” Nikola Chief Executive

Michael Lohscheller

said during a conference call with analysts.

Nikola, founded in 2015, aims to be the first in the U.S. to market hydrogen-powered electric commercial trucks. It is competing with electric-vehicle manufacturer

Tesla Inc.

and established commercial truck builders, such as Daimler Truck North America LLC and

Paccar Inc.,

to provide low- or zero-emissions vehicles to heavy-duty truck users. 

Adding to Nikola’s challenges have been the high-profile fraud case against its founder and former CEO,

Trevor Milton,

who last year was convicted of securities fraud. The company is also building a hydrogen fueling network to supply fuel to its vehicles, which will convert hydrogen to electricity.   

Nikola reported a net loss of $222 million for the quarter, compared with a loss of $159.4 million for the same period a year earlier.  

Nicola said in recent months it has been boosting its overall cash liquidity by issuing shares to create additional lines of credit from which the company can draw cash in 2023. The company said it ended 2022 with access to $942.7 million of cash, compared with $958.4 million at the end of 2021. The company predicts it will spend about $635 million this year.

“We believe we maintain adequate access to capital to fund our business operations in 2023,” Chief Financial Officer

Kim Brady

told analysts. “We have remained disciplined in spending and managing cash.”

Nikola reported $149.7 million in operating expenses for the quarter, down 25% from the prior quarter’s level. Nikola said it postponed a planned expansion of its assembly plant in suburban Phoenix. Executives said the move would save the company $345 million in 2023. The company also laid off about 7% of its workforce in November. The company ended 2022 with 1,583 employees.

Nikola said it produced 133 battery-electric trucks during the most recent quarter, delivering 20 of them to dealers. The company attributed the low delivery volume to improvements made to the model’s software and other systems before they left the factory. The battery-powered truck is intended as a companion model to the company’s hydrogen-electric truck, which Nikola is giving priority to.

The company said Thursday it plans to deliver 125 to 150 of its hydrogen-electric trucks in 2023, with production starting late in the year. The company said it plans to deliver 250 to 350 battery-electric trucks this year. 

Analysts say Nikola’s management team is under increasing scrutiny from investors to deliver a smooth rollout of the hydrogen-electric truck after the company’s reputation and business strategy were undermined by Mr. Milton, whom prosecutors accused of repeatedly lying to investors and others about Nikola’s trucks. The company has said it has cooperated with government investigations, and in 2021 said it would settle a Securities and Exchange Commission probe for $125 million.

Nikola’s stock price, which soared to nearly $80 a share shortly after going public in 2020, now trades below $3 amid the company’s losses and a lack of trucks on the market.

“It’s all about execution and production scale,” said

Daniel Ives,

managing director for Wedbush Securities. “They need more cash to scale up production. If they execute, there will be more opportunities to raise capital.”

Nikola’s shares closed down 5.6% at $2.20 a share, while broad-market indexes were slightly higher.

Nikola last summer said it expected to produce more than 300 battery-electric heavy-duty trucks in 2022, but built about 258 after material costs soared. The company said it delivered 131 of the trucks to dealers, generating revenue of $50.8 million. The company said it is holding 127 trucks in its inventory.

In August, Nikola acquired Romeo Power Inc., the California-based supplier of batteries for Nikola trucks, in an all-stock deal valued at about $144 million.

Nikola said at the time it expected the cost for Romeo’s batteries to decline. Instead, Nikola said late last year that costs rose because of higher than anticipated expenses for the materials used in Romeo’s battery packs. Nikola said Romeo had been subsidizing the cost of the battery packs by about $110,000 for every truck Nikola assembled.

Nicola executives said Thursday the company is changing the production process for the batteries, but they don’t expect a significant reduction in costs until late in 2023.   

The company said it is selling the trucks for less than its cost to produce them, contributing to the company’s fourth-quarter loss. Industry analysts have said Nikola’s production costs for the trucks would fall if the company increased its production volume. 

Nikola has said it has orders for about 1,000 of its hydrogen trucks, with 800 of them going to beer brewer

Anheuser-Busch InBev

NV. The company is assembling a hydrogen fuel network in the U.S. and Canada to support 7,500 trucks in 2026.

Write to Bob Tita at robert.tita@wsj.com