A developer and maker of hydrogen fuel cells and an emerging name in "clean energy" trucking, Hyzon Motors (HYZN -2.83%) recently saw some big stock market gains. Hydrogen's appeal is that it is able to be pumped into a fuel tank as fast as gasoline or diesel. With the technology potentially much better for commercial trucks than long recharging batteries, both American and Chinese trucking companies are among those interested in Hyzon Motors' products. Here are three reasons it could be as successful in hydrogen trucking as Tesla is among electric carmakers.
1. Hyzon is taking a flexible approach
Rather than developing a truck from the ground up -- the approach competitor Nikola Motors is taking with its Nikola One and Nikola Two vehicles -- Hyzon is simply building its hydrogen fuel cell technology into existing truck chassis. The company revealed some details in an Aug. 11 press release announcing a planned fourth-quarter U.S. customer trial of a Class 8 electric truck.
In the trial, California trucking company Total Transport Services will test the hydrogen truck for 30 days. According to the press release, the vehicle is built on a 2022 Freightliner Cascadia chassis and is expected to have 600 peak horsepower and a range of up to 400 miles, making it suitable for Total Transport's regional trucking focus.
This, even more than the possible test results, is a highly significant approach, since Hyzon is completely avoiding the time and massive expense of developing and producing its own truck models. Instead, it's free to use its resources to focus on bettering its hydrogen fuel cell tech, and developing "quick refueling and high performance."
2. The company has plenty of resources
Merging with the special purpose acquisition company Decarbonization Plus Acquisition Corporation on July 16 gave Hyzon a large amount of proceeds. The company currently has $517 million in cash on hand. At the current quarterly loss from operations of around $9.3 million, the manufacturer clearly isn't at risk of running out of capital anytime soon.
Hyzon also said it is in the process of launching two factories in the United States. One of these, in Chicago, is expected to start manufacturing Hyzon products as soon as the fourth quarter of 2021, though full production will presumably take longer as work ramps up. The other, to be opened in Rochester, New York, should begin operations in Q2 2022. Hyzon trucks are also expected to be displayed to the public at several trucking industry events this year.
3. It has gained some significant orders
Unlike many of its competitors in the electric vehicle sector, Hyzon actually has a few vehicles on the road, with several trucks currently operating in Europe. It also has orders from several customers, with "non-binding memoranda," which are declarations of intent to work together on a contract but not legally enforceable contracts themselves, and orders from European and Australian companies rising from $40 million to $83 million during Q2.
Its successes don't stop there, however. Chinese transport logistics company Shanghai Hydrogen Hongyun Automotive recently announced its plans to buy 500 zero-emissions trucks from Hyzon, sending the latter's share price soaring. At this point, the deal consists of a non-binding memorandum of understanding rather than a firm order. The press release provided some additional detail, however, noting "the initial order of 100 vehicles is expected before the end of 2021 while the other 400 vehicles will be ordered in 2022."
Breaking into the Chinese market, where hydrogen adoption is ahead of the rest of the world, could give Hyzon a critical first-mover advantage. Hyzon's hydrogen fuel cell technology may also be branching out from trucking into aviation. On Sept. 7, hydrogen-electric aircraft company ZeroAvia placed an order for a lightweight hydrogen fuel cell from Hyzon, intending to evaluate it in its airplanes. ZeroAvia chose Hyzon's cell because of its high power density, enabled by proprietary technology, according to a press release.
Could Hyzon be the hydrogen Tesla?
While it's very early in the game to tell whether Hyzon will be a massive winner in the hydrogen fuel cell world like Tesla has proven to be among electric car stocks, it has some strong positives investors interested in the sector shouldn't ignore.
Focusing on developing high-density, effective hydrogen fuel cells, rather than encumbering itself with producing the trucks that will use those fuel cells, is a major advantage for Hyzon. The strategy's flexibility is highlighted by the interest of both trucking companies and aircraft manufacturers in its product. Its current or upcoming orders should add significant revenue to its already ample cash resources. It's on the edge of gaining a solid foothold in the potentially colossal Chinese hydrogen vehicle market. All these factors look bullish for Hyzon, making it a company worth watching and perhaps investing in.