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SRSrocco

By The SRSrocco Report,

Last month a new company announced that it would produce a vehicle that would totally revolutionize the U.S. transportation industry.  It was Nikola Motors located in Salt Lake City, Utah.  Not only does the company plan on producing the vehicle in large numbers, it has already pre-sold $2.3 billion of the units.

Nikola One

The sleek aerodynamic semi-tractor called the Nikola One, is a hybrid gas-electric truck that will get 2-3 times the MPG (miles per gallon) compared to a typical diesel engine semi which accounts for 95%+ of the U.S. trucking fleet.

Here are some comparisons between the Nikola One Electric semi-truck and its diesel engine counterpart:

Diesel vs Electric

(Courtesy of Nikola Motors)

The Nikola One is certainly impressive as its horsepower is four times (2,000 hp) greater than of a typical diesel engine (500 hp).  The Nikola One has so much more horsepower compared to a standard diesel engine for two reasons:

    1) The Nikola electric motor is much more efficient than a diesel engine.
    2) There is an electric motor for each tire (or set of tires).

Powered by these six high-efficiency electric motors (six-wheel drive), the Nikola One pulling a 80,000 load can go up mountains at 65 mph while the typical diesel engine semi struggles between 20-40 mph.  Furthermore, not only can the the Nikola One accelerate twice as fast as its diesel engine counterpart, it can stop up to two times faster.

There are many other advantages of the Nikola One which you can check out at their site: Nikola Motor Company / Nikola One.

Now, if the superior performance and fuel mileage of the Nikola One doesn’t win over the U.S. Trucking Industry, maybe Nikola Motors leasing program will.  According to the recent press release, Nikola Motors will pay all the fuel and maintenance for the first 25,000 units leased for either 72 months service or 1,000,000 miles driven.

What a DEAL RIGHT?

Maybe… or maybe not.  When I first came across this new truck a few days ago and read about it, I was quite impressed.  However, as I started to read other articles and think about the truck and the company more logically, I became more skeptical.  Before I get into my thoughts on this truck, I can imagine many of you want to know what the STICKER PRICE is.

The Nikola One goes for $375,000 or can be leased for $5,000 a month for 72 months.  That’s a lot of money.  A typical brand new diesel engine semi-tractor ranges between $145,000-$160,000.  While it’s true that the Nikola One would have significant savings for fuel, let”s do some math here:

Based On 1,000,000 million miles of service (based on $2.50 gal diesel):

Nikola One = $125,000-$175,000 fuel cost

Diesel Engine = $400,000 fuel cost

If we add the cost of the unit, we have the following:

Nikola One:  Cost/ $375,000 + Fuel/$150,000 = $525,000

Diesel Engine: Cost/ $155,000 + Fuel /$400,000 = $555,000

Looking at the numbers here, there’s not much difference.  By owning a Nikola One, what a truck owner doesn’t pay in fuel, he pays for in technology.  Remember, technology costs energy to produce somewhere down the line.

The only benefit is seen by those who lease the first 25,000 units.  Nikola Motors says they will pay for the compressed natural gas fuel for the first 25,000 units leased.  Well, where are they going to get the fuel and where are the fueling stations?

THERE LIES THE RUB…. there aren’t any fueling stations currently.  This was covered in a recent article on the Nikola One:

The biggest problem with running a vehicle that uses compressed natural gas for fuel is finding natural gas filling stations, but Nikola Motors has “plans” for 55 “strategically positioned” CNG stations across the United States and Canada—about one for every 800-kilometer stretch of road along popular trucking routes. Nikola says it will supply these stations using its own natural gas wells, allowing it to pump out “millions of gallons of clean natural gas each day.”

As you might expect from a startup, all of this stuff sounds pretty great. But we’re obligated to point out that there are a lot of grand plans but little in the way of execution. Furthermore, this level of hype always makes us vaguely suspicious, especially when the one number that we can actually fact check, the preorder amount, is at best confusing and at worst deceptive. That “$2.3 billion in presales” refers to 7,000(ish) deposits to reserve a truck worth approximately $375,000. But each deposit is a fully refundable $1,500—not the full $375,000—meaning that Nikola Motors has received slightly over $10 million. It’s a significant amount of money, but that $2.3 billion isn’t really meaningful at this point.

Nikola Planned CNG Stations

(Courtesy of Nikola Motors)

As the author states, there are PLANS to build 55 compressed gas filling (CNG) stations, but there aren’t any today.  In addition, even though the company stated it presold $2.3 billion worth of the units, it only received a little more than $10 million.  This is based on a totally refundable $1,500 deposit on each unit.

Unfortunately, there is one additional catch with the Nikola One.  Even though they presold 7,000 units to very excited customers, they don’t have a prototype yet.  The images in this article are computer renderings.  The company says they will reveal the Nikola One prototype on Dec 2nd in Salt Lake City, Utah later this year.  I imagine that $10 million is being used to help with the cost of producing that prototype.

Nikola One 2

While the Nikola One design and forecasted performance are quite impressive, there’s a lot SIZZLE, but very little BACON.

This reminds me of Boone Picken’s plan to have the U.S. trucking fleet run on LNG (liquid natural gas).  There were a lot of LNG filling stations built across the United States and many are sitting idle.  Where I live, there is a nearby truck stop with a brand new LNG filling station, built a few years ago… with large barricades around it.  It’s never been used.

U.S. Shale Gas production

Furthermore, U.S. Shale Gas production has peaked and is already declining.  Sure, maybe part of the decline is due to the lower natural gas price, but two  of these shale gas fields (Barnett & Haynesville) peaked back in 2011 when the price was more than double what it is today.

It will be interesting to see how the Nikola Motors Company progresses over the next few years.  If they can come up with their Nikola One prototype by Dec 2nd, they still have to manufacture the truck and build all the 55 filling stations.  Oh, did I leave out the part where they are going to drill, produce and transport their own CNG from their own natural gas wells?

To be honest, I like the look of the Nikola One.  It would be neat to see one on the highway.  However, technology such as the Nikola One will not save us from the inevitable financial and economic collapse based on Peak Oil and the Falling EROI – Energy Returned On Invested.

Check back for new articles and updates at the SRSrocco Report.

First published here: http://j.mp/28KoFD8

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