The Future of Trucking: Nikola vs. Hyliion

After hitting an all-time high in June, 2020 I think Tesla’s stock will get destroyed in July, 2020. This means its sympathy brethren such as Nikola, Nio, Ideanomics, Electrameccanica, and so forth. Optimism around TSLA has has been so good it’s gotten grossly over-heated.

However, I think with the rise the day trading bubble in 2020, the copycat SPAC could actually do well. It is of course Hyliion. What is a SPAC? A special purpose acquisition company (SPAC) is a company with no commercial operations that is formed strictly to raise capital through an initial public offering (IPO) for the purpose of acquiring an existing company.

Not so long ago Hyliion, which provides Class 8 trucks with hybrid diesel and fully electric drivetrain architecture, announced plans to merge with Tortoise Acquisition Corp., a publicly traded special purpose acquisition company. The ticker to watch is $SHLL. Keep in mind, Nikola’s stock has in recent memory reached $79 and is still somehow cruising in the $70s.

The move brings an additional $560 million in funding to Austin-based Hyliion, currently valued at about $1.1 billion with an IPO at $10. While Nikola is flashy, I think there’s significant doubt still about hydrogen tech. Hyliion is a startup maker of diesel-electric truck components. So this is a hybrid play.

Committed to developing electrified powertrain solutions for Class 8 commercial vehicles, Hyliion announced recently that it’s preparing to hit the public market toward the end of the third quarter of 2020. By the time it arrives we won’t be as crazy bullish on the EV sector.

Tesla has quality issues, it has battery issues and it likely has issues we don’t even know about. SPACs are dangerous, and I believe Nikola is highly speculative on its bullish view of hydrogen fuel cells.

Investing in Hyliion (HYLN) might turn out to be the safer play if you want to own a trucking EV stock. Hyliion’s solutions were specifically developed to utilize existing infrastructure in an effort to support rapid technology deployment. It’s a better ESV play. Either way the future of zero-emission semi-trucks is coming in the 2020s.

Austin is also the right place in the U.S. to have a stock like this. SPAC companies are more likely to be sketchy. Hyliion was founded in 2015 and offers hybrid and fully-electric powertrain solutions and the deal comes after Nikola is like a clone of a clone.

Thomas Healy, CEO and founder of Hyliion will continue to serve in the same position of the new holding company. While day traders like chasing ESV, their sentiment is skewing how valuable these companies really are and the reckoning is liable to be pretty extreme.

Hyliion is expected as of Q3 2020—the ticker symbol will change from SHLL to HYLN. In the meantime I think SHLL is risky if above $13, a better place to buy could be $11.50. Momentum trading isn’t real investing in ESV, but it has that added feel good to the story. NIO and IDEX in particular are overvalued, just as Tesla is bloated in the first half of 2020.

Nikola is going to be in a crowded market full of competitors. This winner this time is likely to come out of China. In one of the worst deception of the stock market in 2020, Nikola Motors, a supposed Tesla competitor with zero revenue, is worth $23 billion. Don’t bet on the hype, bet on the underdogs.

Hyliion is likely a more feasible scalable business model. Hyliion is working to enable their fleet customers to quickly realize lower carbon emissions and significantly lower cost of ownership benefits provided by their technology.

Rivian and BYD are likely going to be more impactful in the future of trucking than Nikola or Hyliion. While Tesla is a real pioneer in EVs, it’s unlikely Nikola will be a sole leader ahead of the pack in hydrogen fuel cell trucks.

Investing in SHLL is a bit like investing in SPCE, it’s a Millennial thing. Want to invest in space-tech, invest in BlueOrigin or SpaceX when you can. Tesla’s price will plummet 20-30% in July and before the Fall is my prediction. This means all EV related stocks will suffer.