Hyliion Holdings: Leveraging Existing Alternative Fuel Infrastructure

Hyliion Holdings’ (NYSE: HYLN) debut as a public company in June of 2020 was mostly overshadowed by the contemporary offering of aspiring vertically-integrated truck maker Nikola Motors. As Nikola drew the attention of the auto and business press with brash plans to build full trucks along with a network of hydrogen fueling stations, Hyliion was the Soundgarden to its Nirvana; a quality concept that was well-known and generally respected among the heads, but mostly crowded out of the mainstream discourse.

How many alt-fuel truck startups do we have the patience for, anyhow?

The Trucks

While its pitch is every bit as polished and aggressive as its peers’, Hyliion’s core concept is downright humble, comparatively. The Cedar Park, Texas-based company is setting itself up to make electric and Renewable Natural Gas (RNG) hybrid drive-trains, suitable for fitting on to the frame and chassis of various tractor manufacturers’ base offerings.

RNG is an emerging fuel type being produced by biogas digesters and upgraders from farm waste. Deep Dive Market Mover subjects Xebec Adsorption (TSX.V:XBC) and Greenlane Renewables (TSX.V:GRN) have spent the past 10 months or so working robust organic growth stories on the strength of revenue earned building and installing RNG plants on farms, setting them up to turn their bio-waste into fuel they can sell.

Hyliion’s in-development tech uses a natural gas generator (engine) to change on-board batteries that power an electric motor, that sends power to the drive wheels through smart differentials that the company is developing in partnership with Dana Incorporated (NYSE:DAN). The differentials generate energy as the truck coasts downhill, feeding it back to the batteries to supplement power use on hill climbs. The systems can be fitted onto new trucks or retrofitted to existing trucks, giving Hylliion a theoretical time-to-market advantage over its competitors once they’re being manufactured, a process that Hyliion intends to outsource.

The Network

The only difference between renewable natural gas and carbon natural gas is its source. The prototype systems that Hyliion has out there in the wild have clocked more than 2 million miles, according to the company literature, ostensibly being re-fueled at any of 899 compressed natural gas fueling stations in North America.

For the Hyliion ERX system to operate at “negative emissions,” as it’s billed, the truck will have to run on 100% renewable natural gas, thus making use of green house gasses that would otherwise end up in the atmosphere having powered nothing. In that respect, Hyliion suffers from a supply deficiency like Nikola. The difference, of course, is that the supply infrastructure is already being built out, and the delivery infrastructure is already mostly in place.

The Bolt-ons

The Hyliion website is offering pre-orders of ERX, and also shows present availability of bolt-on hybrid systems that complement existing CNG and diesel systems with the differential and battery components of the system, enabling fuel savings from regenerative coasting and breaking.

Hyliion’s last quarterly (Q2) showed no revenue. The company plans to release its Q3 results November 12th, and those should give investors a look at early sales of the bolt-on hybrid systems, and pre-orders of the ERX units. The Hyliion website describes the hybrid systems as “ready today.”

The company is helmed by 28 year old Wunderkind Thomas Healy, who controls 23% of the outstanding common shares. An October 23 S-1 statement provides for Healy’s stock and other founders’ stock to be registered for sale at the same time the company issues another 19.1 million shares to warrant holders, adding another $220 million to Hyliion’s war chest. It had $231 million at the end of June, 2020.

Refreshingly little swagger

In his media hits, the young mechanical engineer comes off as knowledgeable, likable and positively boring. Healy gives us everything we need and nothing we don’t. This kid doesn’t seem capable of an Elon Musk-style splash-push that commands the media landscape and becomes its own frenzy, but don’t look for a Trevor Milton style meltdown, either.

The thing that excites Healy the most is very clearly his business; this single business that is built around his core competency. That bodes well for organizational focus.

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Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.