Nikola Adds Hydrogen Production to Business

Electric-truck maker Nikola is launching the HYLA brand, which will be the name of its hydrogen production and distribution business.

David Kiley, Senior Editor

January 30, 2023

4 Min Read
Nikola launches hydrogen production brand
Nikola

Electric truck maker Nikola announces that it will become a vertically integrated company, selling hydrogen-powered electric heavy trucks, as well as building out a hydrogen fueling network and business under the HYLA brand.

It’s a nifty piece of branding, combining the HY in hydrogen with the last two letters of the company’s name to create an easy-to-remember link between the two businesses. Nikola is named for electricity pioneer Nikola Tesla.

"The HYLA brand represents Nikola's hydrogen-focused energy business by supporting our fuel-cell electric vehicles and those of other OEMs," says Carey Mendes, president of Nikola's energy business.

Nikola has developed a hydrogen-powered FCEV Class 8 truck that has a range of 500 miles (805 km). The Nikola Tre FCEV, which has been in test phase with several haulers, including Anheuser-Busch, takes about 20 minutes to refuel, which is not that much longer than it takes to refill on diesel.

Hydrogen for decades has been a pie-in-the-sky proposition, but its technology and distribution has been given a recent jolt from regulators and politicians in the U.S., China and the EU.

While liberal political parties in the U.S. and Europe have been jousting for three decades about the seriousness of climate change and carbon emissions, both are trending toward a majority position that industrialized economies dependent on Russian and Middle Eastern oil and Russian natural gas, controlled by oppressive and unpredictable regimes, would be much more secure if they diversified their energy consumption away from fossil fuels.

The thrust of today’s hydrogen push is toward heavy trucks, as well as lighter trucks, to replace diesel, which emits far more carbon than gasoline. While diesel vehicles tend to have lower volumetric fuel consumption figures than comparable gasoline vehicles. the benefit in terms of CO2 emissions is significantly lower, as the combustion of 1 liter (0.26 gallon) of diesel fuel releases about 13% more CO2 than for the same amount of gasoline fuel.

Nikola is aiming its hydrogen-truck business at drayage shipping (port to internal distribution centers), as well as intermodal shipping and long-haul carrying. Longer-established truck makers including Volvo, Freightliner and Navistar have also developed FCEV trucks.

What advocates for hydrogen power have been waiting for is a push for hydrogen fueling infrastructure. The Inflation Reduction Act, signed into law last year by President Biden, allocates $7 billion to build hydrogen hubs capable of producing high volumes of hydrogen, with an emphasis on creating “blue” hydrogen (produced from fossil fuels but with the resulting carbon sequestered) and “green” hydrogen, which is produced from renewables – wind and solar.

Nikola, with its HYLA operation, figures to play in this growing hydrogen distribution and fueling space.

“Nikola is the only company that is successfully integrating a revolutionary new product, the hydrogen fuel cell truck, and the full hydrogen energy infrastructure supply chain under one roof," says Nikola CEO and President Michael Lohscheller. "The unveiling of our Nikola Tre fuel cell truck and flexible mobile fueling trailer demonstrates a real and sustainable competitive advantage for our customers and are significant proof points that we are accomplishing what we set out to achieve."

New Age For Hydrogen

Besides the hydrogen hubs now in development, the federal government has changed the prospects of hydrogen as a future competitor to fossil fuels with tax incentives – a 10-year production tax credit for “clean hydrogen” production facilities. Incentives begin at $0.60/kg for hydrogen produced in a manner that captures slightly more than half of SMR process carbon emissions, assuming workforce development and wage requirements are met. The tax credit’s value rises to $1.00/kg with higher carbon capture rates before jumping to $3.00/kg for hydrogen produced with nearly no emissions.

Nikola’s main hydrogen production unit in Buckeye, AZ, will finish the initial phase of production in second-half 2024, the company says. Upon completion, it is expected to produce 150 metric tons of the fuel per day. With additional production hubs, Nikola plans to produce 300 metric tons daily.

With plans to have 60 hydrogen stations in place by 2026, the first announced stations will be in Colton, CA, a location servicing the Port of Long Beach. California is a launch market for Nikola and these stations intend to support key customers to help advance the state's efforts to decarbonize the transport sector.

New big rigs and other trucks will have to be zero-emissions in 2040 under a proposed regulation from the California Air Resources Board. Under the proposal, manufacturers can’t sell new medium-duty and heavy-duty trucks fueled by diesel or gasoline that operate in California, instead forcing the trucking industry to turn to electric models. In addition, large trucking companies would have to gradually convert their existing fleets to zero-emission vehicles, buying more over time until all are zero-emission by 2042.

The move by Nikola to separate its hydrogen business from vehicle production comes as the company faces some challenges in delivering vehicles to customers. Nikola told shareholders in November it would miss its target of delivering at least 300 vehicles in 2022 and declined to specify when it would hit that target.

About the Author(s)

David Kiley

Senior Editor, WardsAuto

David Kiley is an award winning journalist. Prior to joining WardsAuto, Kiley held senior editorial posts at USA Today, Businessweek, AOL Autos/Autoblog and Adweek, as well as being a contributor to Forbes, Fortune, Popular Mechanics and more.

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