Shares of electric heavy-truck start-up Nikola (NKLA 1.77%) were trading higher on Tuesday, after the company announced that Covenant Logistics Group (CVLG 0.60%) has signed a letter of intent to buy 50 of Nikola's electric semi trucks, if a test program goes well.
As of 11:15 a.m. ET today, Nikola's shares were up about 5.1% from Monday's closing price.
Nikola said that Covenant Logistics, a long-haul trucking firm based in Chattanooga, Tennessee, has agreed to purchase 10 battery-electric (BEV) Tre semis, and 40 fuel-cell-powered (FCEV) Tres, once a demonstration program has been completed to both companies' satisfaction.
Nikola said that it will deliver a BEV Tre and a mobile charging trailer to Covenant for testing in the second quarter. A FCEV Tre will follow next year, once production of the hydrogen-powered variants begins.
That's a nice bit of news for Nikola, and it's likely why the stock is moving up today.
Nikola is positioning the BEV Tre as a short-haul truck for metro and regional routes, as limiting the truck's range allows it to keep battery weight and recharging times relatively low. The FCEV Tre will have a range of up to 500 miles, Nikola has said, making it suitable for long-haul freight routes.
The Covenant deal itself isn't a huge one. I think the way to view it is that a major trucking-fleet operator is kicking Nikola's tires, testing both the company and its products to see if there's a longer-term fit for Covenant's fleet.
What makes it interesting for Nikola investors is this: It's the fourth tire-kicking deal that Nikola has announced with major fleet operators since it made its first deliveries on Dec. 17.
The company's shares have had a brutal ride since its founder was ousted amid scandal in 2020. But I think it's time for electric-vehicle investors to take a second look at Nikola. It's becoming clear that there's considerable industry interest in the Nikola Tre, and that certainly seems bullish.