Nikola’s recall was costly in Q3, but does rising orders signal the worst is behind it?

After recalling all of its battery electric trucks that it had delivered, Nikola’s losses widened in the third quarter. However, with orders rising for its hydrogen fuel cell truck, is Nikola turning the page?

Nikola CEO Steve Girsky said the company is “capitalizing on our first-mover advantage with our hydrogen fuel cell electric truck.”

The company officially launched its 2024 model year hydrogen fuel cell electric truck on September 28, 2023.

Nikola has 277 non-binding orders to date for its fuel cell electric truck. The company says it remains “laser-focused” in go-to-market activities.

Customer demos also began in southern California using third-party infrastructure and mobile solutions. With over 6,000 miles accumulated during demos, Nikola says its hydrogen fuel cell trucks have 98% uptime.

Girsky believes the company has an advantage as it moves toward hydrogen fuel cell trucks. He explained there’s a market with “the introduction of the Advanced Clean Fleets Rule, and incentives like HVIP and ISEF.”

These incentives offer a massive break for the startup, providing $288,000 and $408,000, respectively, per hydrogen fuel cell electric truck in California.

As of October 27, Nikola accounted for around 96% of the hydrogen fuel cell truck HVIP voucher requests and 50% of the BEV requests.

Nikola BEV truck recall weighs on Q3 earnings

After recalling all 209 Tre BEV electric trucks sold this year in August, Nikola said repairs are expected to be roughly $61.8 million during its Q3 earnings.

Nikola has decided to replace the Romeo battery packs on existing BEV trucks with a different solution.

This includes the cost to re-engineer, validate, and retrofit the Tre BEV trucks that were sold to customers.

Nikola says cash payments will begin over the next nine months to a year. They will be partially offset by $13 million from remaining BEV truck sales and the $10.7 million in accounts receivable.

The company expects to begin battery electric truck deliveries again in the first quarter of 2024. Despite this, Nikola received an order for 47 BEV trucks from one dealer.

Nikola’s net losses soared in Q3 amid the recall. The company’s losses widened to $425.8 million, up from $236.2 million last year.

The company did raise its cash balance to $362.9 million, up from $225.9 million at the end of 2022.

Nikola’a stock is up 10% following its Q3 earnings announcement as investors hope the worst is behind it. Meanwhile, it’s still down over 65% over the past 12 months.