The Legacy Automaker Eating Nikola's Lunch

Focusing on engineering over marketing has put Daimler ahead in the race for hydrogen-powered semi trucks

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Oct 21, 2020
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Nikola Corp. (NKLA) has seen its fortunes fade over the past month amid reports that it faked a marquee demonstration of its hydrogen fuel-cell semi truck, which has threatened a crucial partnership with General Motors Co. (NYSE:GM) and resulted in the ouster of its founder.

Yet, while Nikola is flailing, hope remains for the fuel cell technology that put it on the investor map. Indeed, Daimler AG (XTER:DAI) has been busily developing a fuel cell semi truck of its own, one that it hopes will power whole fleets of zero-emission semi haulers in the coming years.

Established industry leader with an eye on tomorrow

As one of the biggest commercial vehicle manufacturers on the planet, Daimler has a lot invested in its trucking and freight segment. Thus, it is unsurprising that the German automotive giant has invested heavily in developing next-generation vehicles that can operate effectively in an era of greater fossil fuel scarcity and higher environmental standards. Hydrogen fuel cells are playing an increasingly important role in Daimler's new energy vehicle development efforts.

Last month, Daimler unveiled its first hydrogen fuel cell semi truck, the Mercedes-Benz GenH2 Truck. The company explained the new vehicle's significance in a Sept. 16 announcement and press event:

"With the GenH2 Truck, Daimler Trucks is demonstrating for the first time which specific technologies the manufacturer is driving forward at full speed so that heavy-duty fuel-cell trucks can perform flexible and demanding long-distance haulage operations with ranges of up to 1,000 kilometers and more on a single tank of hydrogen."

Impressive prototype and ambitious timeline

With more than 600 miles in range, the GenH2 concept truck boasts capabilities virtually on par with those claimed by Nikola, whose prototype semi hauler is supposed to be able to travel between 500 miles and 750 miles on a single tank. The GenH2 is slated to begin customer trials in 2023, with full-scale production to follow a couple years after that.

Of course, a working fuel cell-powered semi truck is just the first challenge facing any company planning to commercialize the product. Refueling infrastructure is critical to the hauling industry, whether it runs on diesel or hydrogen. Daimler is keenly aware of this fact and has published a "Roadmap for H2 MOBILITY" that aims to set the stage for hydrogen's success. In accordance with its roadmap, Daimler has begun building hydrogen filling stations across Germany. Eighty-six stations are already online, with 100 more planned to come online in Germany in 2021. Hundreds more are planned to be built in other markets as Daimler's various fuel cell vehicle offerings become commercially available over the next few years.

My analysis

Overall, Daimler appears to be well ahead of upstart rival Nikola, despite the far more extensive media and analyst attention paid to the latter. Legacy automakers are often dismissed out of hand by technology-focused analysts and investors who seem all too eager to ignore the value of established automakers' experience, infrastructure and know-how. As Nikola's recent struggles have shown, however, it is unwise to assume that agile upstarts always have a natural advantage over their ponderous established peers.

Investors excited by the prospect of fuel cell vehicles one day dominating the auto landscape might be better served looking at companies like Daimler over ones like Nikola. Daimler may not have Nikola's PR pizazz, but it has the eengineering expertise and experience to actually get the job done.

Disclosure: No positions.

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