Please ensure Javascript is enabled for purposes of website accessibility

Why Nikola Stock Moved Higher Wednesday

By Howard Smith – Jun 23, 2021 at 10:54AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The electric vehicle maker took another step toward realizing its hydrogen fuel ambitions.

What happened

Electric vehicle start-up Nikola (NKLA 9.49%) has taken criticism over the last year for being all talk and hype, without hard evidence that its plans will pan out. Today, investors are giving the company credit after it announced an investment to help move its hydrogen fuel ambitions forward. Nikola shares were 8% higher early in Wednesday's session before paring those gains to 5% as of 10:45 a.m. EDT. 

So what

Yesterday, Nikola announced it is investing $50 million in Wabash Valley Resources, a clean hydrogen project under development in the Midwest. Nikola will gain a 20% equity interest in the Terre Haute, Indiana, project paid for with cash and stock. Once completed, the facility will produce hydrogen for transportation fuel, and will generate electricity using solid waste byproducts from oil refining and biomass fuel. The process will capture CO2 emissions making it a clean fuel generating process. Nikola plans to use the hydrogen fuel to support commercial trucking using its hydrogen fuel cell electric vehicles (FCEVs) in the region. 

Nikola Tre battery electric semi truck.

One of the initial Nikola Tre semi trucks. Image source: Nikola.

Now what

The company called the region with the facility "one of the most intensive commercial transportation corridors in the United States." Nikola plans to use it as a hydrogen hub that can supply about 50 tons per day to fueling stations it plans to locate within a 300-mile radius of the plant. 

Pablo Koziner, Nikola's president of energy and commercial, said in a statement that Nikola's investment is intended to supply clean, low-cost hydrogen in a desirable area for commercial trucking. He added the project "should provide the flexibility to support future truck sales and hydrogen station rollout in the region."

For investors this stock remains a "show-me" name. Previous promises and progress have been questioned, and until Nikola shows a promising product and a means for commercial success, news like this, while a positive development, is not yet overly meaningful.

Howard Smith owns shares of Nikola Corporation. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.