Nikola Bankruptcy Just Part Of Crumbling Of Hydrogen For Transportation

Last Updated on: 19th February 2025, 06:29 pm

Nikola, with its hydrogen trucks, has finally left the building. The company gained widespread attention after going public via a SPAC merger in 2020, briefly reaching a market valuation of over $30 billion. However, founder Trevor Milton was complicit in the SPAC pump and dump, misleading investors about Nikola’s technological progress—most notably, a promotional video of a truck rolling down a hill presented as a working vehicle.

OpenAI Sora generated birds eye view of a dusty field full of abandoned hydrogen Class 8 trucks labeled “H2” covered in pigeon droppings as if it were 2030 with 2025 hydrogen semis

Milton resigned in September 2020 and was later convicted of fraud, while the company struggled onward. Not anymore. Bankruptcy and asset stripping for pennies on the dollar is the order of the day. This was entirely predictable and predicted, part of my projection of a blood bath in hydrogen for transportation in 2025.

To be clear, all of the hydrogen for transportation plays were effectively dead in 2022, 2023, and 2024 as well, but the thing about startups and subsidiaries that manage to get funding is that they persist as dwindling husks of themselves for years before collapsing entirely. The people still left in the building when the music stops have seriously bad career judgment, as getting out much earlier would have been wiser, while never walking through the doors of the thermodynamic and economic dead ends would have been wiser still.

At present, my hydrogen death watch list has 128 firms on it. Thirteen have already walked out the doors for the last time, while two firms have abandoned hydrogen. That’s going to save Airbus some money, but doesn’t guarantee Wright Electric’s success as they are a small aerospace startup, a notoriously difficult thing to succeed at.

Nikola wasn’t first to roll down the garage doors for the last time in heavy trucking. First Mode and Hyzon preceded them on the inglorious walk out the doors, box of personal effects in hands.

There is something specific to point out with Nikola’s fate, something shared by many entrants on this list and the larger list. That’s that they were trying to do both battery-electric vehicles and hydrogen vehicles, to the detriment of their battery-electric vehicles. Nikola’s BEV could have been a reasonable contender if it had abandoned hydrogen fuel cell powertrains, but instead it wasted time and optimization resources that could have delivered a much better battery-electric truck on much more expensive and challenging hydrogen.

As a result, its battery-electric trucks had inferior range and charging compared to Tesla’s or Windrose’s trucks, as leading examples of trucks built ground up for battery-electric drivetrains. That’s the same pattern that Quantron was trying, and with the same result. Its battery-electric vans had limited range, 250 km, while electric vans from competitors like Mercedes had 400 km ranges, and its 400 km offering was hydrogen-fueled. IKEA in Austria bought this bogus story and as a result is stuck with a fleet of unsupported inferior battery-electric vans and a bunch of unsupported hydrogen vans as well.

North America’s currently largest transit bus company, New Flyer, is driving into this cul de sac too. Its battery-electric buses have inferior range to BYD’s, don’t have decent insulation for northern states and Canada’s winters, and don’t come with heat pumps and radiative electric heaters, requiring diesel heaters. They are also much more expensive, with its hydrogen buses being even more expensive. That’s not going to end well for New Flyer. My assessment is that it will lose three electric bus orders for every hydrogen bus order it gets.

Further, it will lose hydrogen bus orders too. Winnipeg and Edmonton’s transit firms that were supposed to be buying fleets of hydrogen buses from the company canceled their orders because the hydrogen infrastructure, hydrogen, and buses were far too expensive, and bought diesel buses instead, not even New Flyer’s inferior and still expensive battery-electric buses. Expanding its delivered base of fossil fuel-powered buses doesn’t turn New Flyer into a leader in the buses of the future.

So far we’re at 12% of identified firms having gone bankrupt or exited hydrogen for energy. Most of the high risk firms will be defunct within the year or two at most as their money runs out and revenues remain non-existent.

Regarding the exiting energy, a contact forwarded me a table this morning with the status of 21 hydrogen for energy players, and a full 13 were restructuring, shelving major hydrogen projects, leaving Europe entirely, seeing 95% drops in electrolyzer orders, firing their CEO, laying off 70% of employees, or withdrawing from green hydrogen projects they had been committed to.

Perpetual money-loser Ballard — an average of $55 million losses per year since 2000 for a total of $1.3 billion of others people’s money — is 96% off its anemic 2021 peak and 99% off its 2020 stock spike, the same year when speculative fever around Plug Power and FuelCell Energy was at its peak as well.

It’s remarkable to me that investors, who all spend a lot of time looking at stock price charts, apparently don’t ever zoom out to maximum to see how well the investments have performed, or check actual profits and losses from annual reports.

On that note, Blackrock just announced a new exchange traded fund (ETF) which is going to do very poorly. The fund is called Shares Energy Storage & Hydrogen UCITS ETF (STOR) and features a bunch of battery industry firms, so a reasonably diversified set across that space led by CATL. That’s the good part of the collection.

The other big chunk are hydrogen and fuel cell manufacturers, including the three stocks above. The first 10 stocks in the fund represent 68% of total fund value and the hydrogen plays in that group represent 26% of total fund value. A 60:40 batteries to hydrogen split is far too heavily exposed to hydrogen, especially when so many of the stocks are obvious dogs like Ballard, Plug Power, and FuelCell Energy. Bloom Energy is in the fund as well, and it isn’t even a hydrogen or energy storage play as its solid oxide electrolyzers run on natural gas.

It’s a terrible fund, but it has an excuse, which is that it matches a terrible index, the STOXX Global Energy Storage and Hydrogen index. This is a standard strategy for ETFs, to match an index at least somewhat. As I pointed out a few years ago, a bunch of cleantech ETFs did quite a bit worse than the indices they were supposed to be matching, so there is a lot of room for better or worse decisions. A commenter regarding the Blackrock fund made an apropos comment: “not a lot of analytical input on the ETF assembly line. More a case of offering every conceivable flavour combo.”

While I’m not a professional investment advisor and this does not constitute professional and certified investment advice, I suspect everyone knows my opinion regarding hydrogen for transportation and energy stocks and will make their own decisions with that as input.

Many of the medium risk firms will be gone as well by end of 2025, and more in 2026. Some may survive. The low risk set, which include firms like STOR ETF-included Air Products and Linde, which have diversified chemical delivery portfolios, will simply lose a lot of money on their hydrogen for energy bets, something that will show up on the balance sheets and feature in earnings calls. Air Products just fired its CEO after a shareholder revolt over its green hydrogen failures, a consequence that should get the attention of other CEOs and Boards that thought this was a good idea.

It is worth mentioning that hydrogen for transportation isn’t a climate solution. Hydrogen has an indirect global warming potential 12 to 37 times that of carbon dioxide as it interferes with the breakdown of potent greenhouse gas methane in the atmosphere. And as it’s the smallest diatomic molecule in the universe, it has to be kept at incredible extremes of pressure, temperature, or both in order to have enough of it in one place to be useful, and it leaks 1%+ at every touch point. For transportation fuel supply chains, that turns into 5% to 10% leakage of hydrogen, a significant expense and one that even with low-carbon hydrogen eliminates most or all of the climate benefits.

And so, Nikola is gone, finally. It ran out of what money was left over from the SPAC when the Wall Street bros took their big cut of the pump and dump proceeds and didn’t have anything like a business model that made sense. I suspect this will be the final nail in the coffin for Fortescue’s $900 million green hydrogen manufacturing plant in Arizona, one they acquired from Nikola last year. They were already making it clear that the Trump Administration’s hostility to anything with even the remotest tinge of green had put the project in jeopardy, and now with a partner and customer out of business, the odds of them continuing approach zero. It was a terrible idea to build a green hydrogen facility in a desert with rapidly dwindling water supplies hundreds of miles from California’s dubious market in any event.

Nikola won’t be the last. Expect lots more bankruptcies, attempted pivots, exits from hydrogen for transportation, and plunging stock prices for the most exposed. Hopefully this year will make it clear to policymakers, strategists, and investors that hydrogen isn’t the ticket for climate action or profits.