| A prototype of the Nikola 2 truck / Courtesy of Nikola website |
By Kim Hyun-bin
Kim Dong-kwan, Hanwha Group's eldest heir and current vice president of Hanwha Solutions, seems to have made a great decision to invest $100 million into Nikola Corp. back in 2018 before the hydrogen electric vehicle manufacturer was listed on NASDAQ in June this year.
Hanwha's return on investment has increased over 10 fold, but if all the cards are played perfectly and Nikola becomes a striving and promising company in the hydro-electric vehicle market, the profit gained from the initial investments could well be a small portion of what to expect from the two companies' partnership in the future.
Hanwha saw Nikola not just as a stock investment but as a major growth opportunity for its hydrogen businesses, as global trends have been leaning heavily towards eco-friendly vehicles including both in the hydrogen and electric sector.
| Hanwha Solutions' Vice President Kim Dong-kwan |
Once Nikola progresses, Hanwha could well be tapped to establish hydrogen charging infrastructure and operations within North America for the U.S. truck company.
Nikola announced recently it would construct 1,200 hydrogen charging stations in the U.S. and Canada, which is nearly double the 700 stations the company initially announced it would build last year.
“As an early investor in Nikola, if the company does well and pushes for growth it could lead to many more business opportunities, which could lead to operating hydrogen charging stations and other aspects of the business Hanwha is well capable of,” a Hanwha official said.
Hanwha Energy and Hanwha General Chemical also separately invested $50 million each and the companies have reportedly put a provision in their partnership contract so that they will operate hydrogen charging stations in North America in exchange for their early investments into the company.
Another provision was to use electricity derived from Hanwha Solutions' solar panels to power the hydrogen charging stations.
Hanwha is expected to build solar panel generators near the hydrogen charging stations, with the solar cells, panels, modules and energy storage systems (ESS) to be supplied by Hanwha Solutions, the country's leading solar power manufacturer.
“We invested in Nikola for their vision just like other global conglomerates. There has been an increase in demand for hydrogen-derived products both locally and especially in Europe,” a Hanwha official said. “Nikola is just one of the investments in the sector we are making.”
Nikola came to prominence after it was listed on the NASDAQ in June and Hanwha acquired 6.13 percent of its shares.
The U.S. hydrogen truck company is a startup that has not yet produced any vehicles, but its market capitalization is worth $17.4 billion with global investors backing the companies' “vision” and “plans.”
Nikola has not specified the timing for constructing the stations but infrastructure investments are expected to grow continuously as the hydrogen truck market starts to gain momentum.
Hanwha will start from simply operating the hydrogen charging stations but aims to later produce “green hydrogen” that emits zero carbon, which could be supplied later to Nikola. Recently, Hanwha Solutions established a a hydro-electric technology development team to that end.
However, there are some controversies arising over the fairly new startup, with many criticizing their true intentions behind efforts to develop hydrogen electric vehicles.
On July 23, a groundbreaking ceremony took place to build Nikola's first manufacturing plant in a 430-acre parcel in Coolidge, Arizona, in which the company said it will invest some $600 million to produce approximately 35,000 vehicles of the Nikola Tre and Nikola Two models annually.
"This has been an incredible journey for Nikola Corporation. We started in our basement six years ago and now we are kicking off this 1 million-square-foot manufacturing facility," said Trevor Milton, Nikola founder and executive chairman.
There have been numerous critics calling the company a scam as scores of videos have gone viral showing Nikola's construction site, which seem to show there has been no progress at the site close to a month after the groundbreaking ceremony, nor are there any construction materials or heavy machinery deployed to build the production plant, which the company claims will be fully built by the end of 2021.
“Hanwha is not worried about Nikola, as if worse comes to worst they could sell its stocks as they acquired it cheaper in pre-IPO. But if Nikola really pulls it off it will become a great return on investment for the company as well as paving the way for new business opportunities,” an official familiar with the matter said.