The decade is young, but zero-emission vehicle manufacturers teaming with special purpose acquisition companies to become public and raise funds is already a well-worn trend. As of today, July, 19, add Hyzon Motors (Nasdaq: HYZN) to the list that already includes Nikola Corp., Hyliion, Lordstown Motors, Arrival, and Electric Last Mile Solutions.
Now that the company has completed its business combination with Decarbonization Plus Acquisition Corporation (DCRB) and has access to about $626 million of cash, Hyzon is far closer to its goal of producing 40,000 fuel cell vehicles (including buses) annually by the end of 2025. DCRB public shareholders and founders gain 10% ownership in Hyzon, with private investment in public equity investors owning 15%.
According to the McKinsey Center for Future Mobility, the fuel-cell electric vehicle market is currently worth $1 billion and will grow 34% annually over the next decade to a value of $20 billion. Fuel cell trucks have a range and fill-up time at the pump closer to diesel trucks, while like battery-electric options, don’t produce tailpipe emissions, are quieter, and have instant torque. Hyzon trucks, for instance, are eyeing a 400-mile range
This has led to a race among manufacturers to find a long term solution for fleets looking to cut emissions. Once promising newcomer Nikola looked to have an early lead, though it has had several highs and lows since going public, while leading heavy-duty truck OEMs Daimler Trucks and Volvo Trucks have partnered on a new fuel cell company called cellcentric.
Hyzon is a spinoff of Singapore-based fuel cell manufacturer Horizon Fuel Cell Technologies, and already has several hydrogen-powered heavy-duty commercial trucks and buses on roads across the globe. Hyzon, headquartered in Rochester, New York, does not start from scratch, using industry-accepted bodies and components, such as DAF trucks in the Netherlands.
A MY2022 Freightliner Cascadia powered by Hyzon fuel cells was seen for the first time in California over the weekend. Fleet pilots in the state will begin in Q4 of this year. Fleet pilots in the state will begin in Q4 of this year.
In Australia, the company has been testing coach buses in extreme heat (>110 degrees F), delivering workers to a mine, and just signed a memorandum of understanding with Aussie waste management company Superior Pak to deliver 20 hydrogen-powered refuse vehicles to its fleet. The first five will be delivered Q2 2022.
On June 16, FleetOwner caught up with Craig Knight, Hyzon Motors CEO, who had been an executive at Horizon since 2006, to discuss what the merger means to the company and transportation industry overall.
[The following has been lightly edited for clarity.]
FleetOwner: There are a lot of companies working toward a viable hydrogen truck solution. Why should fleets take notice of you?
Craig Knight: Hyzon is a relatively new company, having only been set up in early 2020, but the business was set up on the back of almost two decades of technology development through the parent company, Horizon, a technology developer in the core fuel cell technology that's needed to drive heavy trucks on hydrogen.
With a very deep IP portfolio and strong internal vertical integration on manufacturing the core systems within fuel-cell heavy vehicles, Hyzon’s well positioned to offer vehicles that are not only going to meet diesel vehicle performance requirements, but also have benchmark efficiency and durability. And this is really, really important in the commercial vehicle scenario.
We're choosing a relatively low capital approach—an asset-light approach. We already have the core technologies in the fuel-cell hydrogen systems and how to manage heavy-duty electric driving the vehicle. And the main value of zero-emission commercial vehicle is not the chassis, the brake system, digital mirrors, or the seats in the cab. There is plenty of existing capacity in building those vehicle platforms, what we consider those non-core parts of the vehicle. What determines the efficiency and performance of the vehicle is the fuel cell system and the electric propulsion, and those are the things we have expertise in.
FO: Class 8 battery-electric trucks are already going into production, while hydrogen trucks still need a lot of testing and most importantly, an entirely new fueling station infrastructure to be built. What are some advantages to being one of the first to market?
CK: By being first in market at scale, we expect to be able to really cement our position in the market and zero emission vehicles. We will have the networks, the experience, the reams of data we get from vehicles operating, improving predictive maintenance, and establishing the best-in-class after sales service and support vital for commercial vehicles' success.
Because of our experience with Horizon, we had networks and contacts around the world, we were able to start working with counterparts on mobility. Because they knew us, we were able to create a customer portfolio in different parts of the world to start these early adopter activities around rigid trucks and articulated trucks, as well as coach buses especially, which are more demanding powertrain use cases than city buses.
FO: How will this business combination allow you to scale?
CK: What we needed for this business to be successful was enough capital to be able to set up the technology development and all the operations to facilitate moving to commercial vehicles. As much as we're relatively asset light, it still takes a fair chunk of money to build a world-class fuel cell production, system production, hydrogen subsystem production, and other vehicle powertrain components and end controls.
We need facilities here in North America and facilities in Europe. And the market is going to be extremely large within the next three to five years. So in our view, we needed at least $500 million of capital to really give it a good shake.
We could demonstrate a lot of technology know-how and capability, but it was a new entity, and we didn't have three years of history. It was easier to pursue this route. We could use all the credibility we bring with our background and history and proven operations, so consultants could go and visit and audit and verify as part of the normal due diligence process. And it was just a bit simpler than going through a traditional IPO. We will have around $600 million of working capital on the books, and we'll be ready to continue executing our plan a little more aggressively once we have enough working capital.
FO: What can you tell us about how Hyzon will affected by the recent spate of supply chain issues within the trucking industry?
CK: We work with the usual suspects who supply components, parts, motors, battery cells—all those sorts of things. There's obviously a whole supply chain that supports the vehicle beyond just the fuel cell itself. This is actually good and bad. Right now, we're all subject to a bunch of supply chain constraints that are certainly no fun. If you could do more of these things internally, you might be able to get around some of those problems. But, frankly, I think everybody has a substantial reliance on third-party supply chains, which occasionally have serious bumps in the road like we've had this year.
We've done our very best to kind of move early on ordering inventory for a lot of the components and systems that are affected by some of the longer lead time, so we still feel confident that our 2021 forecast is within grasp. But it did mean that we had to start ordering things in April that we thought we wouldn't have to order until September or August.
We internalize everything we could to get control of cost, and to be able to continue tweaking and improving. And that's provided a fantastic environment in which the team just continues to innovate in 100 little ways all the time. It's barely even noticeable, but it all results in better product.
The key differentiator within the parent company's activities was relentless, constant innovation to meet requirements, get cost down, to improve reliability, and to make things easier to install.
FO: There’s probably not a lot of actionable data yet on the various fleet pilot projects yet, but what are some of the early things you’ve been hearing?
CK: The best stuff that we hear is from drivers. They have been steeped in diesel a long time, and some of them are really cautious about trying something else. And their feedback when they drive these things for the first time is “fun, really fun.” They're shocked at how smooth, powerful and quiet these trucks really are. It's kind of like driving a Tesla—there's hardly any sound, there's no vibration, it's a totally different experience.
My favorite driver anecdote is from a guy who had been driving diesel trucks for years, and then told his boss that he wanted to drive the fuel-cell truck every day. The boss was trying to understand why and the driver said when he got home, his daughter ran up to him and gave him a hug, and his wife welcomed him into the kitchen and gave him a kiss. Whereas before when he came home, in his overalls soaked in diesel fumes, he wasn't allowed in the house. He used to have to go to the laundry, wash all his clothes, have a shower in the laundry [room] shower, and then come into the house. So he wants to drive a fuel-cell truck every day because he smells good when he gets home.
