Illustration: Aïda Amer/Axios
EV maker Nikola is no longer an EV absolutist. The troubled automaker is reportedly pursuing hydrogen production for trucks.
Why it matters: Hydrogen is among the most promising fossil fuel alternatives for heavy-duty transportation that is difficult to electrify.
Driving the news: Nikola said it began working on a hydrogen production plant near Phoenix in late 2022, per WSJ.
- It forecast the initial hydrogen production volume at about 30 metric tons a day by late 2024.
- Nikola is negotiating with a subsidiary of Australian iron ore company Fortescue Metals Group for an investment in the plant.
- Its first three filling stations are planned for California, and the hydrogen fuel-cell developer Plug Power is partnering with Nikola to store and transport the hydrogen after it's been processed.
State of play: Nikola's news comes as industry groups are scrambling to define what counts as "green hydrogen" in the wake of the Inflation Reduction Act.
- Though hydrogen fuel is considered a "zero-emission" fuel, some industry insiders are skeptical that it is a viable clean alternative to fossil fuels.
- Oil-and-gas majors, including BP, are pushing back against the IRA's tax incentives for hydrogen fuels, per WSJ.
- Nikola has struggled to make waves in the EV trucking industry as the infrastructure for EV charging lags nationwide and truck production stalled.
Between the lines: This isn't a signal that Nikola is giving up on EV trucks altogether, but it is betting that logistics groups will need hybrid fleets for the long haul.
- Some hydrogen fuels can be used in existing fossil-fuel powered trucks without an expensive engine retrofit.
- Nikola's stock rose 4% following the WSJ report, so investors are on board with Nikola's hydrogen experiment.
💭 Megan's thought bubble: Nikola needs a win after a disappointing performance in 2022, and the newly minted billion-dollar hydrogen market is a precarious space to bet on.