PGT Trucking Inc. is already well on its way toward human-guided autonomous truck convoying in its deal earlier this year with Pittsburgh-based Locomation. But a deal announced late last week with Nikola Corp., a Phoenix vehichle manufacturer, will make it among the first companies in the country to have a significant part of its fleet powered by hydrogen-electric engines.
The Aliquippa-based PGT has signed a letter of intent to lease 100 Nikola Tre heavy-duty fuel cell electric vehicles, which would be powered by hydrogen instead of diesel and haul PGT's freight hauling up to 500 miles. Financial terms of the deal weren't announced.
PGT, a privately held company with a little more than 1,000 vehicles and 1,500 employees, serves primarily the steel and building products industry. PGT President Gregg Troian said the company has been looking into ways to reduce carbon emissions, not only what PGT produces driving from point to point but also the tier-3 emissions that also being tallied by the steel and building products industries.
"We tie in with a lot of our customers' emissions commitments and mission statements in this regard," Troian said.
Unlike the traditional diesel-burning engines, Nikola's engines use hydrogen to power two electric motors, so there are no emissions coming from the truck, which is a sharp distinction between Nikola's technology and the diesel engines.
"These are not concept motors," said Troian. "They've been tested for many, many years and it's a proven product, very reliable. The motor on each wheel takes the place of a diesel engine."
That's great for carbon emissions. And it's great for PGT and trucking industry in general, which is under tight restrictions on emissions and the use of emissions monitoring equipment. Diesel equipment often breaks down, needs a lot of repair and a faulty sensor takes the truck off the road.
Troian wouldn't disclose how much PGT is paying for each truck, but said that it is more expensive in the short run compared to a diesel truck. But, he said, the Nikola truck amortized over three years or less.
"This is a magnitude of difference over the years," he said. "The return is much better because the maintenance costs are reduced significantly."
Troian expects the first trucks to be delivered by the end of 2022 and into early 2023 with between 20 and 30 delivered by the end of 2023, and the rest after that. It's not clear yet whether the Nikola vehicles would be replacing diesel trucks or work in addition.
A few things need to be worked out first, including the availability of hydrogen fueling stations. They aren't as prevalent as electric vehicle chargers, and nowhere near as ubiquitous as truck and car fueling stations. The Nikola engine has a range of about 400 miles, which is between the typical 300 miles to 500 miles trip for a PGT vehicle.
Troian said he expects to see hydrogen fueling stations to become more plentiful in the next few years, and PGT has talked to potential vendors. It's even considered using hydrogen that its customers, big steel and other manufacturers, use on their sites for production. But it may not be the same type for manufacturing and transportation use.
Initially at least, Troian said the trucks can carry their own mobile hydrogen supply until land-based stations gain traction.
Beyond maintenance, there's another big reason for PGT to get into hydrogen fuel: It's a lot cheaper than diesel. While there may be some exposure to oil and gas prices, with the use of plastics in the vehicle, PGT won't be spending as much as it does for diesel.
"Right now, we're very affected by the cost of a barrel," Troian said.
Troian said PGT Trucking is only the second large-scale customer of Nikola's hydrogen-electric trucks. The first was Anheuser-Busch, which in November 2019 ordered 800 of the trucks for its long-haul fleet. The trucks will be made at Nikola's factory in Coolidge, Arizona.
Nikola (Nasdaq: NKLA) ran into bumpy road earlier this year as its founder and chairman, Trevor Milton, was indicted on federal charges of making false statements about the company. Milton has pled innocent and the company said it has cooperated with the investigation, CNBC reported in July 2021. But the news of the PGT deal helped boost Nikola's stock price on the initial word of the deal on Friday. Nikola's stock price is up 8.2% in the last month, although it's still down from the 52-week high of $37.95.
Troian said he and PGT Trucking began looking into the Nikola vehicles about three years ago after the company announced them and has followed along with it. Troian was on an advisory board and said the Nikola current management team are people they've worked with in the past at other companies. He said he's not worried about Nikola being able to deliver.
"We have a comfort level in disclosures and the progress of the equipment," Troian said.
Meanwhile, PGT is also expecting to take its deal with Locomation to the next level. The vision is to have a total of 1,000 Locomation units, which would allow a convoy of trucks, all but one using autonomous technology, with the lead truck being operated by a human. Troian said the technology works and it is shooting to begin convoying sometime in the second quarter of 2022 on the Ohio and Indiana turnpikes where there are flat and straight roads.
The goal is to have the near-autonomous convoys serving the areas between Pittsburgh and Chicago. Troian said both Locomation and PGT have dedicated 20 employees each to the project.
