Nikola CEO & President Mark Russell joins Yahoo Finance’s Brian Sozzi, Myles Udland, and Julie Hyman to discuss the company’s latest quarter.
BRIAN SOZZI: It has been a turbulent few months at electric truck maker Nikola, but the company's new CEO Mark Russell is in fact promising better days ahead. And he joins us now. Mark Russell, good to see you on Yahoo Finance Live this morning.
Listen, a lot of folks I've talked to on the street this morning, they're giving you high marks for the conference call you had last night. Lots of details on development timelines and battery technology. But I'm also getting a lot of questions on some subpoenas inside of the 10-Q. Five officers received subpoenas from the SEC. Three more got them on September 21. Can you share with us what the SEC is exactly looking for here?
MARK RUSSELL: Well, you know, no company would comment on ongoing SEC matters. So we're cooperating with them and doing everything we can to help them in their work. So we don't comment on an ongoing SEC matter.
BRIAN SOZZI: Fair enough. Should investors be concerned about these subpoenas?
MARK RUSSELL: We're very focused on our milestones going forward. At the break, before we came in, we were talking about the trucks that we have being completed in Ulm, Germany, the first one of which has gone on the track. And it's been on the dyno. It's very exciting. We think that's going to be a groundbreaking truck that the world is going to love. And it's going to help us go to zero emissions.
BRIAN SOZZI: And you're right, you're important. Before we came on we were talking about that new semi truck. You put a picture of it in the earnings release. Take us through that. So it is up and running? I know there were some concerns coming off the Hindenburg report on what you actually have in terms of trucks that move. So you're saying, this runs. And when might that be available to customers?
MARK RUSSELL: So we have a number of trucks that run. We have a couple of hydrogen fuel cell prototypes that have been running for more than a year on test tracks and on and test runs. We actually haul beer for Anheuser-Busch on public roads with that truck with one of those prototypes. This will be the first prototype, however-- the one that's on the track in Germany-- that's the first prototype of the Nikola Tre, which is our new battery electric vehicle that will go into production next year. So we've got five prototypes coming into completion right now. And they will go on the track for testing and then later road testing. And then we'll have another batch of prototypes, and that truck goes into production next year.
BRIAN SOZZI: What about the battery technology, Mark? There are also some concerns raised in the report of what IP, in terms of battery technology, Nikola does, in fact have. What do you own and what don't you own?
MARK RUSSELL: Well, we use the same basic cells as pretty much everybody does. There's only four or five major producers of battery cells, particular cylindrical cells, in the world. And pretty much every battery in a vehicle uses one of those. And even if you're using a different format, it's often from those same suppliers. There's really a small concentration of global suppliers of battery cells. Those are put into battery packs, or usually into a module, that's then assembled into a pack.
So what most people own, if they're doing batteries for a vehicle, is the pack. And that's what Nikola has. We've designed our pack. It's proprietary to us. But it uses a module from a company called Romeo. And we use cylindrical cells in those modules that come from suppliers in Korea.
BRIAN SOZZI: And you know, Mark, I want to ask about, thinking about the roadmap, and you kind of outlined when you think you'll have some products ready. And you look at how much cash you have in the balance sheet, how much you're burning each quarter. And just think about the stock and the ownership base that you have now. I mean, it's been a crazy year for shares of Nikola. It was an $80 stock at one point. How has that changed, if at all, the way that the management team has thought about shorting out in the next couple of years? Because, I mean, everyone says it's not distracting, but certainly what was happening with the stock price at some point had to be taken notice by folks who are trying to just kind of do their jobs and execute.
MARK RUSSELL: Well, I preach not to focus on the stock price day to day. And our focus is on our long term shareholders. We're really grateful to have a core base of long term shareholders that came in the transaction where we went public. People that are our long term holders. We have Norges, we have BlackRock, we have Fidelity. People like that, that are there looking at our business plan for the long term and investing for the long term.
We're focused on that long term. We're focused on the milestones that we have laid out there. Getting this trailer on the road. Getting it in customer hands next year. Following that up with the fuel cell truck in 2023 and the stations to fuel the fuel cell trucks by 2023, 2022. So we believe as we execute on those milestones that we're going to reward our shareholders, and particularly our long term shareholders, which we're very grateful for.
JULIE HYMAN: Mark, let's talk about another one of your potential long term shareholders. I'm talking, of course, about General Motors and the agreement that is still not closed, the partnership that's still not closed between your two companies. What does the closing of that hinge upon at this point?
MARK RUSSELL: Successful conclusion of those discussions, which are ongoing. And when we have something to report about the conclusion of those discussions, we'll let you know, for sure.
BRIAN SOZZI: Mark, on the earnings call it was mentioned that you ended the quarter with over $900 million in cash. But it sounded, at least to me, that you are exploring a capital raise next year. When do you think you might need more capital for markets, and would it be an equity raise?
MARK RUSSELL: So we have said in our investor materials for some time-- most of the year, actually-- that we would do one more capital raise that would involve an equity raise and that would be sometime in the next 12, 18 months timeframe, and that we would do that opportunistically based on market conditions. So we stand by that. That's going to be our plan. We will plan to go back to the market for one more tranche of equity and we'll do that when the conditions are best for that.
BRIAN SOZZI: And Mark, real quickly, before I let you go. Just back to what Julie mentioned on GM. Are you prepared to go it alone if GM doesn't go through with the deal?
MARK RUSSELL: Absolutely. That was our base plan before we had the GM discussions. We have a fuel cell program that we've been working on with Bosch for a number of years. We obviously have a battery program, that I've just described to you, that we're going into production with on our battery electric vehicles. That'll be our base plan. Would love to have access to GM's Ultium battery and their Hydrotech fuel cell systems, both of which are outstanding technology with a lot of potential and promise. But if we don't have those, we have a base plan and we can go to market on our own if we have to.