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Courtesy of Nikola.
Nikola has begun construction of a manufacturing plant in Arizona, an important step in commissioning as it seeks to disrupt the heavy truck market.
Trevor Milton, founder of Nikola, pursues that goal with two main products: battery-powered or hydrogen fuel cell trucks, . Both will be done at the new plant in Coolidge, Arizona, although initial production will be done in Germany by Nikola’s partner CNH Industrial (CNHI).
The start of the work was on Wednesday.
After the Coolidge plant is online, the CNHI Iveco division will continue to manufacture Nikola trucks for the European market. Nikola will serve the United States outside of Arizona.
“We started in our basement six years ago and are now starting this 1 million square foot manufacturing facility,” Milton said in the company’s press release, released Thursday. “Coolidge residents will be a big part of Nikola’s history … These next 12 months will be even more exciting as we see this facility grow and add more Arizonans to the Nikola team.”
The first phase of the plant is scheduled to be completed in 2021. Phase 2 will take place another 12 to 18 months after that. The plant will assemble complete trucks at the end of the second phase.
The entire installation should cost the company around $ 600 million. Nikola has around $ 700 million on her balance sheet, while another $ 265 million will come as warrant holders pay for the shares.
Nikola has a lot of cash, but still has no sales. The company plans to launch its fuel cell model in 2023 and does not expect to generate positive cash flow until 2024 or 2025.
Nikola remains an early stage company. And the plant is in its early stages of construction. The “master plan is presented and the request for permission is with [the state]”Said Mark Duchesne, head of global manufacturing for Nikola, Barron’s in an email statement. “It is in the approval process, which is the stage we should be in to meet our schedule.”
Nikola shares fell 3.9% to $ 35.16 in trading on Thursday. The shares fell 25% to date as of Wednesday’s close as investors sold shares, anticipating that the first investors who had been issued warrants would be able to exercise them. Nikola has around 24 million warrants outstanding that can be exchanged for 1 share for $ 11.50, far less than the current share price.
It is concern over warrant conversions and selling that could follow, rather than the fundamental news about Nikola’s trading, that is driving stocks down.
Since March 3, when a special-purpose acquisition company, or SPAC, announced plans to buy Nikola, the company’s shares now listed under the symbol NKLA have increased more than 200%. The S&P 500, by comparison, was up about 7%. The Dow Jones Industrial Average has gained approximately 3%.
Write to Al Root at [email protected]
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