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Nikola's (NKLA) CEO Mark Russell Presents at Morgan Stanley 8th Annual Virtual Laguna Conference
Not Trevor, but still. For instance:
And then Tesla unveiled their Cybertruck. And a lot of people didn't like it, including me. I’m a pickup truck driver. I've been for 40 years. I didn't like it. And so Trevor says, let's put the design concept we have for a pickup truck. Let's throw it out there and say, Elon, if you want to build a real pickup truck, here it is. And we did that, as a fun thing. But the next thing, people are bombarding our website saying, will you really build that. If you will, I want – I may want to buy it. And so we put a form on our website saying, if you're interested in the Badger, fill out this form and we'll keep you in the loop. And we had, 80,000 plus people who signed up that and that caught the attention of a lot of OEMs who said, we'll build that with you.
and
We've got a battery, but we're getting single-source. So what we got out of GM there was a tremendous benefit to us in batteries because we got a second source for battery. And it's a different technology too, its pouch large format cells versus what we're doing as cylindrical very much like Tesla’s, ours are based on the same kind of base cells as Tesla’s batteries are.
He talks a lot about second sourcing, which is indeed an OEM thing to prevent issues with one supplier killing your whole project, but those two sources need to be producing the same component. Switching from cylindrical cells to a pouch battery pack results in all kinds of other changes, from packaging to BMS to software....
He then claims:
We're innovating batteries, we're innovating fuel cells, we're innovating the control systems and the integration of those things into a vehicle.
Question from Morgan Stanley:
One of the allegations of a recent short-seller report is that you claim to design your own components in-house and are actually buying them from third-parties. I think you've been pretty clear in your conversation today that you've been in development with partnerships, with different component makers like Bosch on your fuel-cell technology now on the hydrogen station components and the electrolyzers and then also with GM, with the DB and fuel-cell technology that they're bringing to the table. But can you just clarify for us, which of these partnerships are actually exclusive with Nikola and in which partnerships does Nikola jointly own the tech with those component makers? And then is there anything specifically that you own 100%?
Answer from Mark Russell:
100 years ago, somebody tried to build everything by themselves that was Henry Ford. He tried to backward integrate all the way to iron ore and to rubber, he was bringing an iron ore from Minnesota and rubber from Brazil to have it all come into. And he controlled the whole thing, built every single part of that car by himself. And everybody thought, realized in the end that was a disastrous way to try to do that because it's still complex. And today, they're even more – vehicles are more complex than they were back in the days of the Model T. And it's gotten to the point now where you have companies like Apple, who don't build anything, they completely outsource everything because all they want to do is design it and write the software. So that's similar, not like Apple, but that the current state-of-the-art in automotive and vehicle manufacturing worldwide, we are very much approaching it in that way.
Basically, this is Russell saying Vertical Integration is a bad thing. He needs to sync up with Trevor on that. Russell continues on to say that the only thing they own is software:
We are absolutely owning all of our software, everything that we've got on the software front is 100% ours, every line of code we wrote. And then everything that the software controls we're developing in collaboration with partners. For example, I just talked about the batteries. We're using the same base cells that virtually every vehicle manufacturer who uses cylindrical based battery uses, ours happen to come from Korea. Tesla started out coming from Japan and then they've domesticated that supply chain.
So we buy the base cells. Those are basically commodities. We've worked with a company on a module that we like, we like their module. And then we worked with them to put that into a battery pack. And we just released pictures in the last few days of those battery packs going on the prototypes in Germany right now. Our base version has nine of those packs for 720 kilowatts with the current cell, that'll go up to 750 with the next cell, those packs going on the truck, that's our pack.
The thermal system that keeps those batteries thermally controlled. That's developed by us in combination with a company called Mahle, the integration of that power through inverters to the motors. We've worked with Bosch extensively and all of that on inverters and the motor and what we call the eAxle. Bosch helped us develop eAxle, the eAxle design that we use that we help – that's our design used by – used for example, Bosch rotors, and stators.
But other components come from other companies and a company called FPT is actually going to – is manufacturing that for us, for the prototypes and is in a default position, become our production supplier. So if you understand how the industry works, every vehicle is a complex supply chain that involves dozens and sometimes hundreds of different partners and suppliers.
And Bosch being our partner is a great example of that. They are circa $100 billion company that supplies dozens with OEMs, dozens of – making dozens and hundreds of vehicles with hundreds of different parts. And we've been very pleased to collaborate with them on developing the unique parts that we're providing for our vehicles, which are those core parts, the software controls, the batteries, eAxles, inverters, infotainment systems. That's the way it works.
The analyst comes back with a question on what, if anything, might be exclusive to Nikola. Russell's response is, essentially, just the software:
generally, we have the right to buy components from other people over time if we find something that's better, and they generally also have the right to provide what we developed together to other people over time.
Russell claims they can get elecricity for $0.02/kwh:
So what we want to do is in the case of Los Angeles, she wanted to be an Interstate 10 as close to Los Angeles as you can get without crossing a border that has you paying a high price for electricity. So on Interstate 10, we get super cheap electricity by the way. And I can't comment on specific PPAs, because we have to keep those confidential, because there are lots of competition for that kind of thing and specific locations, but you can bet we're going to have a dispensing station somewhere on Interstate 10 and it's going to be as close to Los Angeles as we can get. And as you move away from Los Angeles, we get into the range of the cheapest electricity in some respects in the world, because that is the Saudi Arabia solar for North America is right in the Southwest here, so we got lots of solar options there.
And as you can see from solar PPAs that are being signed for large solar rays. People are – can profitably build those solar raisins tell the power on a fixed price for 20, 30 years for approaching $0.02. I can show you four big ones that have been signed just recently that are approaching $0.02 a kilowatt hour.
And then the Hindenburg allegations:
The allegations that were put out there about that very early stage prototype that's very early stage, we were still messing around with natural gas versus hydrogen in those days, this is years ago. And they want to poke holes in that early stage prototype.
Most people would have built a non-working prototype, we tried to build a prototype that would operate, it had all the equipment for it to be able to operate, it was capable of operating. We chose not to operate that truck because we – I mean, we were pivoting to hydrogen in the middle of all that. So they're pointing at that early stage prototype as somehow undermining our credibility, but we have a lot of evidence of the hydrogen fuel cell technology that we've got today.
He's apparently learning to lie from Trevor. The video of the truck does not predate Nikola's pivot to hydrogen fuel cell. The video is from Jan 2018!
But, worse for me that the only thing he responds to is that truck video when in fact there are dozens of points and 50-odd questions that need to be addressed.
Not Trevor, but still. For instance:
And then Tesla unveiled their Cybertruck. And a lot of people didn't like it, including me. I’m a pickup truck driver. I've been for 40 years. I didn't like it. And so Trevor says, let's put the design concept we have for a pickup truck. Let's throw it out there and say, Elon, if you want to build a real pickup truck, here it is. And we did that, as a fun thing. But the next thing, people are bombarding our website saying, will you really build that. If you will, I want – I may want to buy it. And so we put a form on our website saying, if you're interested in the Badger, fill out this form and we'll keep you in the loop. And we had, 80,000 plus people who signed up that and that caught the attention of a lot of OEMs who said, we'll build that with you.
and
We've got a battery, but we're getting single-source. So what we got out of GM there was a tremendous benefit to us in batteries because we got a second source for battery. And it's a different technology too, its pouch large format cells versus what we're doing as cylindrical very much like Tesla’s, ours are based on the same kind of base cells as Tesla’s batteries are.
He talks a lot about second sourcing, which is indeed an OEM thing to prevent issues with one supplier killing your whole project, but those two sources need to be producing the same component. Switching from cylindrical cells to a pouch battery pack results in all kinds of other changes, from packaging to BMS to software....
He then claims:
We're innovating batteries, we're innovating fuel cells, we're innovating the control systems and the integration of those things into a vehicle.
Question from Morgan Stanley:
One of the allegations of a recent short-seller report is that you claim to design your own components in-house and are actually buying them from third-parties. I think you've been pretty clear in your conversation today that you've been in development with partnerships, with different component makers like Bosch on your fuel-cell technology now on the hydrogen station components and the electrolyzers and then also with GM, with the DB and fuel-cell technology that they're bringing to the table. But can you just clarify for us, which of these partnerships are actually exclusive with Nikola and in which partnerships does Nikola jointly own the tech with those component makers? And then is there anything specifically that you own 100%?
Answer from Mark Russell:
100 years ago, somebody tried to build everything by themselves that was Henry Ford. He tried to backward integrate all the way to iron ore and to rubber, he was bringing an iron ore from Minnesota and rubber from Brazil to have it all come into. And he controlled the whole thing, built every single part of that car by himself. And everybody thought, realized in the end that was a disastrous way to try to do that because it's still complex. And today, they're even more – vehicles are more complex than they were back in the days of the Model T. And it's gotten to the point now where you have companies like Apple, who don't build anything, they completely outsource everything because all they want to do is design it and write the software. So that's similar, not like Apple, but that the current state-of-the-art in automotive and vehicle manufacturing worldwide, we are very much approaching it in that way.
Basically, this is Russell saying Vertical Integration is a bad thing. He needs to sync up with Trevor on that. Russell continues on to say that the only thing they own is software:
We are absolutely owning all of our software, everything that we've got on the software front is 100% ours, every line of code we wrote. And then everything that the software controls we're developing in collaboration with partners. For example, I just talked about the batteries. We're using the same base cells that virtually every vehicle manufacturer who uses cylindrical based battery uses, ours happen to come from Korea. Tesla started out coming from Japan and then they've domesticated that supply chain.
So we buy the base cells. Those are basically commodities. We've worked with a company on a module that we like, we like their module. And then we worked with them to put that into a battery pack. And we just released pictures in the last few days of those battery packs going on the prototypes in Germany right now. Our base version has nine of those packs for 720 kilowatts with the current cell, that'll go up to 750 with the next cell, those packs going on the truck, that's our pack.
The thermal system that keeps those batteries thermally controlled. That's developed by us in combination with a company called Mahle, the integration of that power through inverters to the motors. We've worked with Bosch extensively and all of that on inverters and the motor and what we call the eAxle. Bosch helped us develop eAxle, the eAxle design that we use that we help – that's our design used by – used for example, Bosch rotors, and stators.
But other components come from other companies and a company called FPT is actually going to – is manufacturing that for us, for the prototypes and is in a default position, become our production supplier. So if you understand how the industry works, every vehicle is a complex supply chain that involves dozens and sometimes hundreds of different partners and suppliers.
And Bosch being our partner is a great example of that. They are circa $100 billion company that supplies dozens with OEMs, dozens of – making dozens and hundreds of vehicles with hundreds of different parts. And we've been very pleased to collaborate with them on developing the unique parts that we're providing for our vehicles, which are those core parts, the software controls, the batteries, eAxles, inverters, infotainment systems. That's the way it works.
The analyst comes back with a question on what, if anything, might be exclusive to Nikola. Russell's response is, essentially, just the software:
generally, we have the right to buy components from other people over time if we find something that's better, and they generally also have the right to provide what we developed together to other people over time.
Russell claims they can get elecricity for $0.02/kwh:
So what we want to do is in the case of Los Angeles, she wanted to be an Interstate 10 as close to Los Angeles as you can get without crossing a border that has you paying a high price for electricity. So on Interstate 10, we get super cheap electricity by the way. And I can't comment on specific PPAs, because we have to keep those confidential, because there are lots of competition for that kind of thing and specific locations, but you can bet we're going to have a dispensing station somewhere on Interstate 10 and it's going to be as close to Los Angeles as we can get. And as you move away from Los Angeles, we get into the range of the cheapest electricity in some respects in the world, because that is the Saudi Arabia solar for North America is right in the Southwest here, so we got lots of solar options there.
And as you can see from solar PPAs that are being signed for large solar rays. People are – can profitably build those solar raisins tell the power on a fixed price for 20, 30 years for approaching $0.02. I can show you four big ones that have been signed just recently that are approaching $0.02 a kilowatt hour.
And then the Hindenburg allegations:
The allegations that were put out there about that very early stage prototype that's very early stage, we were still messing around with natural gas versus hydrogen in those days, this is years ago. And they want to poke holes in that early stage prototype.
Most people would have built a non-working prototype, we tried to build a prototype that would operate, it had all the equipment for it to be able to operate, it was capable of operating. We chose not to operate that truck because we – I mean, we were pivoting to hydrogen in the middle of all that. So they're pointing at that early stage prototype as somehow undermining our credibility, but we have a lot of evidence of the hydrogen fuel cell technology that we've got today.
He's apparently learning to lie from Trevor. The video of the truck does not predate Nikola's pivot to hydrogen fuel cell. The video is from Jan 2018!
But, worse for me that the only thing he responds to is that truck video when in fact there are dozens of points and 50-odd questions that need to be addressed.
