Hyliion Holdings is spinning off its powertrain business to focus on power generator technology. (Photo: Alan Adler/FreightWaves)
Hyliion Holdings will cut 175 jobs, two-thirds of its workforce, as it abandons production of hybrid electric powertrains and focuses on developing its business around the fuel-agnostic generator technology it acquired from GE Aviation.
“Our focus on Carnot coincides with the growing demand for electricity,” Thomas Healy, founder and CEO of Hyliion, said in a press release. “With commercial deliveries planned for next year, the Carnot generator offers a more capital-efficient route to market.”
The expected turnaround came as part of the startup’s third-quarter earnings report after markets closed Wednesday in Austin, Texas. Hyliion’s board approved the moves on Tuesday.
After delays and cost overruns, the board in October launched a strategic review of Healy’s powertrain business, which it founded in 2015. Hyliion stopped taking orders for the powertrain on October 11th. The work stoppage is expected to end by the end of the first quarter of the year. 2024 and cost $18.4 million.
The strategic review announcement prompted shareholders to dump shares of Hyliion ( NYSE:HYLN ) . On October 11th, it lost almost half of its value. Shares closed Thursday at 59 cents. The New York Stock Exchange told Hyliion last Thursday that it did not meet its listing requirements because its shares had traded below $1 for 30 consecutive days. The stock exchange may move to initiate delisting procedures.
The rare startup with cash on its balance sheet
Hyliion acquired special-purpose acquisition company Tortoise Acquisition Corp. in 2020. is a rare transportation startup in that it retained most of the cash raised as a result of a reverse merger with Development of the Hypertruck ERX platform was fueled by certainty of market acceptance and cash with no strings attached. the idea of raising more money.
As fleets begin to replace diesel models with zero-emission battery electric trucks, the Hypertuck ERX solution fails due to complexity, cost, and missed opportunity to be a true zero-emission powertrain.
Hyliion received California Air Resources Board certification for the Cummins 12-liter natural gas engine for the Hypertruck. But CARB will not recertify it next year. This requires Hyliion to accept Cummins’ 15-liter replacement and go through the process again.
“The decision regarding our powertrain business was very difficult,” Healy said. “However, we believe this is a necessary step to maintain our financial stability, especially given the current economic environment.”
Hyliion said it would try to sell its powertrain assets, but could not predict whether that would happen. The job cuts are included in Hyliion’s 10-Q filing with the Securities and Exchange Commission.
Karno originally planned for the Hypertruck ERX
The company bought the Carnot generator in August 2022 from GE for $37 million in cash and Hyliion stock.
Originally designed as a second-generation powertrain for the ERX, the Karno is now Hyliion’s core business. It expects to begin shipping stationary generators to customers that run on natural gas, hydrogen, propane or up to 20 additional fuels.
Bringing Carnot generators for electric vehicle charging where utility-installed power is delayed could help meet regulatory demand for electric trucks.
“I see a lot of shippers and carriers trying temporary solutions until they find permanent solutions,” Salim Yusifzadeh, founder and CEO of Truck-as-a-Service startup WattEV, told FreightWaves.
“There are cases where some people can’t power their sites fast enough. Instead of putting in a diesel generator, they can look at putting in a linear generator that uses natural gas to generate power. This is something we have appreciated in some of our locations over the years in terms of gaining strength.
Hyliion has moved to a new research and development and low-volume Karno manufacturing facility near Cincinnati. Technology progress reported so far includes:
- Successfully delivering power to the grid as part of ongoing development and validation.
- Execution of customer showcases to increase future sales.
- Conducting simulations and laboratory tests showing achievable power, efficiency and emissions goals.
Hyliion has enough money to commercialize Karno, Healy said.
By the numbers
The company plans to end 2023 with approximately $285 million in available capital. It expects to burn about $40 million in cash in 2024.
Third quarter operating expenses were $33.3 million, compared to $62.9 million in the prior quarter, including $28.8 million for the Carnot acquisition.
Expenses in the previous period amounted to 103.7 million dollars compared to 120.8 million dollars. Hyliion ended the third quarter with $324 million in cash, short-term and long-term investments.
Hyliion expects full-year operating expenses of approximately $140 million, including costs of discontinuing powertrain operations. It does not expect additional revenue from power plant sales in 2023.
Editor’s note: Updates with dismissal, NYSE non-compliance letter and all edits.
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