Think about that stock in battery- and gasoline cell-powered heavy responsibility truck maker
Nikola
(ticker: NLKA) is now worth billions. The corporate needs to revolutionize heavy responsibility trucking with low cost hydrogen gasoline. Its stock exploded onto the scene in June, at one level eclipsing the value of
Ford Motor
(F). Nikola isn’t the one one keen on hydrogen. Conventional trucking corporations resembling
Cummins
(CMI) and
Paccar
(PCAR) are investing in hydrogen tech, too.
All of the spending, company objectives, and the next stock strikes imply traders must ramp up on hydrogen math—similar to they did when
Tesla
(TSLA) pioneered electrical automobiles. Again then, traders needed to be taught to transform kilowatts to horsepower and kilowatt-hours to miles per gallon.
(In case traders forgot: One kilowatt equals 1.34 horsepower. And the EPA designates 33.7 kilowatt-hours equal to 1 gallon of gasoline. So a Tesla automobile with an 85 kWh battery pack is identical as a 2.5 gallon tank that will get 100 miles per gallon. See, green-math may be enjoyable.)
Hydrogen Versus Gasoline
Now hydrogen—if traders can keep in mind highschool science—burns similar to pure fuel, besides the product of hydrogen combustion is simply water. The merchandise of burning any fossil gasoline are water and carbon dioxide, the fuel blamed for international warming. So that’s one level for hydrogen.
Hydrogen, proper now, is bought by the kilogram. A kilogram of hydrogen goes for about $16, in response to True Zero, a California-based operator of hydrogen filling stations. However one kilogram of hydrogen has about the identical vitality content material as a gallon of gasoline. So $16 for the equal of a gallon of gasoline—which matches for round $2 these days—isn’t nice.
Though, one driver of a
Hyundai Motor
(005380.Korea) Nexo—a gasoline cell automobile accessible in California—mentioned he can get about 350 miles on a $70 greenback hydrogen fill-up. An analogous-sized SUV may spend $25 to $35 for a similar mileage, so the gasoline penalty isn’t as giant because the $16 quantity may first seem.
Hydrogen, proper now, is costly, nevertheless it has another benefits to think about. A gallon of gasoline weighs about three kilograms. Hydrogen is definitely extra energy-dense than gasoline. The gasoline for the Nexo to go 350 miles weighs a lot lower than the gasoline for a similar-size gasoline-powered SUV to go the identical distance.
That’s one other verify mark within the column of hydrogen—together with its environmental advantages. Much less weight required to go the identical distance means extra room for revenue-yielding cargo—within the case of heavy responsibility vehicles.
Making Hydrogen Cheaper
In the end, hydrogen prices have to return down for it to be a viable gasoline supply within the heavy-duty trucking and auto markets. Nikola believes it might probably get the price of hydrogen all the way down to $2 to $three {dollars} per kilogram by standardizing gear and shopping for electrical energy responsibly. Hydrogen may be made by separating the factor from pure fuel or from water. Nikola is taking the water path.
To make hydrogen from water, Nikola wants electrical energy. It takes, maybe, 50 kWh of electrical energy to make a kilogram of hydrogen. (For comparability, this Barron’s family used about 900 kWh of electrical energy final month.) Nikola needs to pay low charges for electrical energy so the electrical energy feedstock may price as little as $2 per kilogram of hydrogen. This can be a tough approximation—Nikola didn’t touch upon its hydrogen price breakdown.
Making hydrogen from steam methane reforming, which is extra widespread, is even cheaper than electrical energy. The feedstock, pure fuel on this occasion, is about 50 cents to $1 per kilogram of hydrogen. The cash is within the storage and transportation of the hydrogen fuel.
Nikola may have the hydrogen fuel on web site at its services. Along with electrical energy, the corporate may have the capital, upkeep, compressor and storage prices to think about. Going from $16 to between $2 and $three is an enormous drop, however hydrogen for transportation remains to be new and never extensively accessible. Scale may drive down prices considerably.
Water, after all, is the opposite feedstock, nevertheless it’s comparatively low cost. Residential water costs in Connecticut, as an illustration, are roughly a penny per gallon. Water feedstock for hydrogen manufacturing by way of electrolysis, or methane reforming, works out to pennies per kilogram.
(The truth is, water is, usually instances, priced for farmers by the acre-foot. That’s an acre lined by a foot of water. It’s a variety of water—about 326,000 gallons.)
That is all a little bit of enjoyable with hydrogen numbers. However this math will matter for stock costs. If hydrogen costs get all the way down to $2 to $three a kilogram, they are going to be low sufficient to maintain the hydrogen trade trucking. Costs aren’t there but, however these numbers might help traders who’re questioning if it’s doable.
Since a particular goal acquisition firm, or SPAC, agreed to purchase Nikola in March—successfully making it a publicly traded stock—shares have risen about 160% The
Dow Jones Industrial Common
is up 2% and the
S&P 500
has risen 7% over the identical span.
Write to Al Root at [email protected]
