What happened
Shares of electric truck maker Nikola (NKLA +0.00%) jumped Friday morning, just a day after a big partnership announcement. After soaring nearly 14% in early trading, Nikola shares were holding on to a gain of 7.5% as of 11:20 a.m. ET. Investors in hydrogen production company Plug Power (PLUG 0.66%) are moving that stock in the other direction after the announcement, however, with shares down 4% at that time.
OTC: NKLA
Key Data Points
So what
Nikola and Plug Power said yesterday they were initiating a strategic partnership intended to expand the use of hydrogen fuel. The deal would seem to make sense since Nikola makes battery- and hydrogen-powered heavy-duty trucks, while Plug Power is a growing producer of hydrogen. But the companies are also competitors in some ways, which could explain why the stocks are moving in opposite directions today.
Now what
Nikola has begun selling its battery-electric semi trucks, and its hydrogen fuel cell trucks are nearing commercial production. The agreement calls for Plug Power to purchase 75 of Nikola's fuel cell electric vehicles (FCEVs) over the next three years. Nikola produced 75 of its Tre battery electric vehicles (BEVs) in the third quarter as it works to ramp up production.
A Nikola electric truck. Image source: Nikola.
Plug Power will use its FCEVs to deliver green hydrogen from its North American production facilities to customers. Plug will also provide liquefaction systems for Nikola's hydrogen hub in Arizona, and will supply Nikola with 100 metric tons of hydrogen per day to fueling stations in support of its FCEV fleet.
NASDAQ: PLUG
Key Data Points
But Plug also plans for dispensing stations, and Nikola's own hydrogen hub will be built to produce up to 150 metric tons of hydrogen per day. This deal probably means more for Nikola, especially since the company is much smaller. Its market cap is below $1 billion, while Plug Power is valued at $8.4 billion. A successful partnership would benefit both in the long run, however.
