Nikola Bites The Dust, Hyllion Might Follow Suit

The recent presidential election fueled gains in EV stocks as Biden's leadership is green-centric with large tax credits for EV purchases and investments in charging infrastructure.  More and more people are shifting toward EVs, with the main reasons being cost-efficiency, improved battery life, and enhanced performance. However, the EV space is getting crowded, and not all the players in this booming market possess sound fundamentals.

GM Pulls Out On Nikola Deal

As in every market, there are ‘weaker' players such as the controversial Nikola Corporation NKLA. Nikola and General Motors Company GM did seal a deal on Monday, but not the one that was initially planned. A nonbinding memo has been signed by both parties for GM to supply the fuel-cell technology that Nikola needs to produce commercial long-haul trucks. But, there will be that as GM decided to withdraw from assuming an 11% equity stake in Nikola as initially proposed.

Accusations of the company being "an intricate fraud built on lies" based on false statements by its founder were only made worse when Nikola admitted that the video showing the driving prototype was fake. Such a shame as hydrogen-electric vehicles and its Badger had a lot of promise. But the reality is that Nikola has not produced any products yet and doesn't even possess a manufacturing factory where it intends to produce the competitor to Tesla's Cybertruck sometime by 2022.

Hyllion Might Be Subject To A SEC Investigation

Hyllion Holdings Corp HYLN designs, develops and sells electrified powertrain solutions, particularly electrified powertrain solutions for Class 8 commercial vehicles. It covers both hybrid and fully electric vehicles with its battery management. The company has recently gone public via a special purpose acquisition company SPAC through a merger with a shell company, Tortoise Acquisition II Corp SNPR. But since it began trading on October 2^nd after a deal worth over $500 million, its stock has lost nearly 38.8% to date.

Hyllion claimed that its technology would improve the fuel efficiency of its trucks by 10% to 30%, but Bonitas Research claims this to be a lie, with an external test by PAM Transportation Services confirming only "a small percentage" improvement in fuel efficiency. Moreover, the company might be subject to an investigation due to its claim of owning over 700 natural gas stations whereas, in reality, they have none.

The company did install eight hybrid electric units during the third quarter this year for four fleet-based customers but despite anticipating $1 million in revenue for the year, Hyllion actually recorded zero revenues to date. It reported a loss of $0.76 per share compared to the year-ago loss of $0.45 per share. Over the quarter, it did enter a partnership with American Natural Gas resulting in a pre-order agreement for a purchase of 250 Hypertruck ERX vehicles but this is still not long-term revenue as the product is yet to deliver its promise. For the above reasons, its stock is prone to setbacks just like Nikola's.

Outlook

The automotive industry is gearing up for a race to deliver the world's first all-electric pick up as the upcoming era of electrification is being created in front of our eyes. But like in any race, there are always winners and losers.

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