Truck Talk: Short Sellers and SPACs Edition

It is becoming a right of passage for SPAC-sponsored electric vehicle companies to attract short-sellers, some with legitimate claims and others out for a quick buck; the Pittsburgh area is embracing autonomous transportation, and Nikola's greenfield plant in the Arizona desert that attracted trolls only months ago is making electric trucks.

Rise of the Takedown Artists

Short selling has always been a part of the stock market — borrowing shares and betting a company's stock price will fall, then paying back the borrowed shares and pocketing the difference as profit.

Of course, there is always a risk that a stock price doesn't budge, or that it rises, saddling a short seller with a big bill to cover the bet. One way this happens is through a short squeeze, in which investors drive the price of the targeted stock higher, making it expensive for the short seller to cover their position.

Short squeezes are a legal but unsavory form of stock manipulation popularized in the meme stock frenzy that created crazy valuations for companies like GameStop, AMC, and others.

Another approach to back a short-selling play is publishing a research report, alleging wrongdoing or misrepresentations by the company in the crosshairs.

Sometimes, like in the Hindenburg Research reports on Nikola and Lordstown Motors, there is fire behind the smoke the reports create. In both of those cases, founders of the SPAC-sponsored companies resigned and Securities and Exchange Commission and Justice Department investigations followed. Hindenburg made big money as share prices plummeted in both companies.

Shooting Low

Other short sellers take their shots with less effect and arguably sketchier research. Fuzzy Panda Research revealed a previously unknown SEC probe into Workhorse Group as part of a Sept. 1 report on alleged misdeeds at the company. Workhorse, operating as a public entity since 2013, is not technically a startup. But its many setbacks in the past eight years get it lumped together with newer companies.

And Workhorse WKHS is an easy mark. It didn't need Fuzzy Panda's help to call attention to its shortcomings. In fact, Fuzzy Panda could be accused of kicking the company when it was already down. It is hard to know how much of a difference it made to the already plummeting share price, which is trading at about one-seventh of its 52-week high.

New Workhorse CEO Rich Dauch ordered the recall of the 41 battery-electric delivery vans the company has delivered in recent quarters, halted production of C-1000 models for a design review, and sent the chief financial officer and chief operating officer packing.

He also dropped a challenge to the awarding of a U.S. Postal Service contract for new mail trucks that Workhorse claimed improperly favored defense contractor Oshkosh Truck Co.

Workhorse didn't publicly respond to Fuzzy Panda, denying its legitimacy by refusing to acknowledge it.

Hyzon Fires Back

Not so for fuel cell truck maker Hyzon Motors, the target of not one but two short-seller broadsides in recent weeks. Hyzon initially said it would review a short-seller report by Blue Orca Capital. Hyzon then came out firing on Tuesday, calling the report self-serving, inaccurate, and misleading.

Hyzon's would-be haymaker barely landed before Iceberg Research weighed in on Wednesday, picking up criticism of Hyzon's Singapore parent company, Horizon Fuel Cell Technologies. Horizon is the largest shareholder and a fuel cell supplier to Hyzon HYZN — at least until Hyzon can work through the supply chain mess that has prevented it from building fuel cell components in the U.S.

The one-two punch had its desired effect. Even with a 9% gain Thursday, Hyzon shares are trading near their low since concluding a business combination with Decarbonization Plus Acquisition Corp. in July. 

CEO Craig Knight told me in September that Hyzon is located in the U.S. because of investors are eager to get into zero-emissions and green technologies. He said Horizon's 17-year track record of making fuel cells, mostly for Asian customers, is helping it keep to a business plan that supply shortages would otherwise endanger.

What's next? One autonomous trucking company — TuSimple — is public. Three others are in SPAC-sponsored mergers. Can you hear the short-seller knives being sharpened?

Autonomy by the Allegheny

Autonomy is big in Pittsburgh, and not just because of all the bright minds in robotics that have passed through Carnegie Mellon University.

Certainly, CMU is a major factor, but a report prepared for Pittsburgh business groups identified the home of baseball's Pirates, football's Steelers, and hockey's Penguins as a region prime to become a global powerhouse in the autonomous mobile system industry.

The report by TEConomy Partners identified Pittsburgh as ranking second to Detroit-Ann Arbor in the number of autonomous companies with a presence there. That includes 71 autonomous companies, including Argo AI, Locomation, Waymo, and Aurora Innovation, which recently named Pittsburgh its headquarters.

Pittsburgh has nearly 15,000 full- and part-time jobs directly in or related to autonomy, providing an estimated $651 million in labor income, $34.7 million in state and local tax revenue, and $126.7 million in federal tax revenue. Read more here. 

Troll Trumping

Battery-electric and fuel cell truck maker Nikola NKLA is doing exactly that at its greenfield plant in Coolidge, Arizona. It wasn't that many months ago that internet trolls questioned if anything was really being built on the desert floor between Phoenix and Tucson.

You can drop the skepticism.

Cowen analyst Jeffrey Osborne reported on a recent visit to the plant. He said he came away impressed "with the quality control and enthusiasm from the approximately 100 employees on site." He said the trucks consist of 1,300 individual components. The two largest are the cab that comes from Iveco in Spain and the frame that is built in Mexico.

Osborne reported 14 trucks in beta production with eight more gamma builds in formal testing for the crash, safety, and compliance with Federal Motor Vehicle Safety Standards. Pre-production is expected to begin in December assuming all approvals are received.

The plant has 14 manufacturing stations, with the build process starting with the frame upside down before being flipped midway through the assembly when the axles are added. Each station involves about 90 minutes of work before the final inspection.

Fuel cell electric trucks trail the BETs coming out of Coolidge, but Osborne reported seeing five alpha versions of the FCETs being assembled, two using the Bosch fuel cell modules that Nikola recently confirmed. The FCETs use only two battery packs versus nine on the BETs.

Best of the Rest

Wanna know what the coolest thing made in North Carolina is? The Western Star 49X off-highway vocational truck was built by Daimler Trucks North America. It beat out the HondaJet Elite S business jet.

Two former Transportation Department officials are joining the board of directors at the nonprofit Partnership for Autonomous Vehicle Education (PAVE): Wiley Deck, former acting administrator of the Federal Motor Carrier Safety Administration and currently vice president of government affairs and public policy at Plus, and Finch Fulton, formerly deputy assistant secretary of policy at the DOT and currently vice president of policy and strategy at Locomation. 

PAVE claims it is more about education than policy influence, but if it decides otherwise, having two government operatives on the board cannot hurt.

DTNA is investing $3 million over three years in the American Center for Mobility in Ypsilanti, Michigan, in suburban Detroit. The money gets DTNA use of the 500-acre facility for customers and dealers to check out the latest in-vehicle technology from Detroit, Freightliner, Western Star, Freightliner Custom Chassis Corp., and Thomas Built Buses.

That's it for this week. Thanks for reading. Click here to receive Truck Talk in your email on Fridays.

Alan

Image Sourced from Pixabay