- A rental agreement is not a sale, we should all agree on that
- Still, market penetration is market penetration
- Hyzon Motors will ship 18 hydrogen tricks to Hylane in Germany
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Hyzon Motors (NASDAQ: HYZN) stock is often called the Tesla, TSLA, of hydrogen. This could be taken to be true in one aspect of the company’s vision and it’s absolutely not in another. It’s true, perhaps, in the ambition and approach to the market, it’s not true for a boring but interesting technical reason. It’s the reason that it’s not true which makes Hyzon’s ambition so interesting – but also high risk.
The news today is that Hyzon has been able to sell 18 trucks to Hylane in Germany. Except it’s not in fact a sale, Hyzon’s business model is to rent trucks, not sell them. More than that, the rental model is more like Rolls Royce and its engines than anything else. It’s miles driven (or hours in the air for RR) that drives the charging structure. That’s great for users, of course. But it also means that Hyzon is going to just eat capital as it expands. That makes it higher risk even than TSLA over time.
In the sense that Hyzon is following the Tesla business model, it is looking to produce the vehicles, and the fuels – or at least the charging stations – and the maintenance of the vehicles. This does make sense as there’s always that rather chicken and egg problem of who would buy a vehicle they couldn’t charge, but who would build charging stations if there were no vehicles to use them?
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But there’s also a sense in which Hyzon is not following Telsa, in that it’s not particularly interested in the building of trucks themselves. This is a result of that technical reason already mentioned.
To build an electric vehicle it’s really necessary to build the vehicle around the battery. That’s just the way it works out, trying to get hundreds of kgs of battery into a ton or two vehicle. The car has to be built around the battery in a useful sense.
The very fact that we can’t do this with a long-distance (note, long-distance, local delivery trucks are much easier) truck is the very reason that hydrogen fuel cells are an interesting technology here. To push a truck hundreds of miles would require batteries of such size there’d be no real room for the cargo. So, fuel cells as the alternative here.
But fuel cells don’t require that complete rebuild and design of the entire vehicle. It’s not quite true that they can just be put into the normal ICE engine bay because of the electric motors on the axles. But it’s very nearly true – the redesign just isn’t as necessarily large. Thus, as Hyzon is doing, it’s possible to concentrate on the power train only, the traditional manufacturers can be relied upon for the truck itself.
This then lowers capital consumption as it’s not necessary to actually be building all the trucks.
Hyzon is extremely ambitious here all the same. Especially with that intention to rent out, not sell, vehicles. But managing to get vehicles out there, onto the road, is that necessary first step and while 18 tricks doesn’t sound like all that much it is a start.