These days there is a lot of news about electric vehicles. Here are three companies that we are watching closely.
Tesla’s (TSLA) eagerly awaited “Battery Day” came and went last week, with initial reactions from investors suggesting that the event did not live up to the hype. Or perhaps better said, Tesla once again confirmed what we already knew: battery technology is a major challenge for electric vehicle manufacturers and there are no quick and easy solutions to improve it.
Investors have a growing number of options when it comes to electric vehicles. For this reason, we are currently closely monitoring Kensington Capital Acquisition (KCAC), Tortoise Acquisition (SHLL) and Workhorse Group (WKHS).
A bet on a better battery
Lou Whiteman (capital of Kensington): One of the underlying themes behind Tesla hosting Battery Day is the idea that the current generation of lithium-ion batteries leaves much to be desired in terms of safety and capacity. Unfortunately, when it comes to mobile phones, laptops and electric vehicles, there has not been a better option for some time.
QuantumScape has a “who’s who” list of supporters, including Bill Gates and former Tesla Chief Technology Officer J.B. Straubel. Straubel, who serves on the board of QuantumScape, called the design “the most elegant architecture I have ever seen for a lithium-based battery system” and said “the company has the opportunity to redefine the battery landscape”.
As the Nikola investors have been reminded in recent weeks, there is a risk in companies that are in front of their source of income and pushing into public markets. But QuantumScape will have about $1 billion in cash available after the merger to continue development and perform a lot of high profile validation. The merger also helps to strengthen ties with the automotive business by bringing on board Kensington’s CEO and former investment banker Justin Mirro and his Rolodex.
Forget Tesla’s Semi, here is a better way to clean trucks
We have seen Tesla’s answer to the heavy truck problem: The Semi, a radical-looking battery electric heavy-duty truck that Tesla wants to build in a yet to be built factory in Texas sometime in the next few years.
But what if there was an easier way? What if there was a company that focused on developing hybrid and all-electric powertrains for heavy trucks that could be installed in the trucks of the six major global heavy truck manufacturers?
Hyliion, founded several years ago by Carnegie Mellon-trained engineer Thomas Healy, is this company. Healy and his team have just completed development of their first product, a system that converts an existing diesel-powered heavy truck into a hybrid truck, and it has already been installed in several customer trucks for workplace testing.
Rather than reinventing the semi from scratch, Hyliion has integrated itself into the existing heavy truck ecosystem with a product that cleans up existing trucks. And soon it will offer another product that will allow trucks already used by fleet owners to operate with zero emissions.
One final note: Tortoise shareholders will vote next week to approve the merger with Hyliion. If it is approved (spoiler: it will be approved), the merger will take place shortly thereafter. The name of the merged company will be Hyliion and will operate under the ticker “HYLN”.
Rich Smith (workhorse group): According to Elon Musk on Battery Day, Tesla’s Shanghai Giga factory is planning to produce 1 million Teslas per year. Bully for them. With a market capitalisation of $395 billion – almost ten times the market capitalisation of General Motors – Tesla would do better to start producing more cars faster. In fact, I would say that the assumption that she will do just that is already burned into Tesla’s share price.
If Workhorse wins – if it wins even part of this $6 billion contract – the company’s annual turnover of less than $0.2 million will explode higher if the share price is taken.
According to the Inspector General’s office, one of the Post Office’s biggest headaches with its current fleet of ageing trucks is maintenance. Annual expenditure on maintenance of the 140,000 car fleet of gas-powered trucks is currently $700 million. The purchase of newer trucks will reduce this expenditure. However, the two teams competing with Workhorse, Morgan Olson/Karsan and Ford/Oshkosh, offer the Post Office gas-powered vehicles that require significantly more annual maintenance than fully electric trucks such as those offered by Workhorse.