Nikola is temporarily halting electric truck production at its Coolidge, Arizona, facility amid an oversupply of its Tre battery electric vehicles.
The production shift will allow the company to modify its assembly line “to accommodate both hydrogen fuel cell and battery electric builds on the same line,” the company said Tuesday in an earnings release.
“We will change our model to build-to-order for the battery electric truck and focus on autonomous technologies, which help drivers and fleets,” Nikola CEO Michael Lohscheller said on an earnings call. “We expect this focus will reduce our cash burn and in turn help Nikola achieve profitability sooner.”
With the pause in production, the OEM suggested demand wasn’t meeting supply. In Q1, it produced 63 Tre trucks and delivered 31 to dealers.
Production will stop at the end of May and resume in July. The company is making the move to better align with the company’s capital allocation plans and improve working capital, according to a statement.
Nikola moves to sell stake in Europe venture
In addition, the OEM is also selling a stake in a joint venture in Europe with manufacturer Iveco Group for $35 million to focus on the North American market.
“This will reduce Nikola’s cash spent and capital commitment and allow us to dedicate our resources to the task at hand in North America,” Lohscheller said, adding that Iveco will remain an important partner and a key supplier for Nikola.
The move away from Europe comes amid Inflation Reduction Act and state incentives for more energy efficient vehicles and California zero-emission vehicle mandates, Lohscheller said.
Nikola established the joint venture with Iveco to “accelerate penetration” into the European market, and the partnership was updated as recently as June 2022 to expand engineering and development operations, an annual report said.
“The future of Nikola is hydrogen,” Lohscheller said, adding that the company’s hydrogen truck range of 500 miles is best in its class.
As of Tuesday, the company had orders for 140 hydrogen fuel cell trucks from 12 end customers, and Nikola said it remains on track to begin hydrogen fuel cell serial production in July, according to a news release. That’s when the company’s first hydrogen fuel cell trucks will become available for sale.
“The battery electric truck is a great product,” Lohscheller said, “and its development has allowed us to create many of the critical components and software systems that we can apply to the hydrogen fuel cell truck.”
