Good morning, and welcome to Nikola Corporation's Third Quarter 2021 Earnings Call. [Operator Instructions]. We begin today's call with a short video presentation followed by management's prepared remarks. [Operator Instructions]. As a reminder, this conference is being recorded. We will now begin the video presentation. Thank you.

It is my pleasure to now introduce Nikola's Chief Legal Officer, Britton Morgan. Thank you, Britton. You may begin..

Thank you, and good morning everyone. Welcome to Nikola Corporation's third quarter 2021 earnings call. With me today is Mark Russell, Chief Executive Officer of Nikola; and Kim Brady, Chief Financial Officer.

During today's call, we will share our views on the business environment and our financial results for the September 2021 quarter and our outlook for the December 2021 quarter and full year 2021. The press release detailing our financial results was distributed a little after 6 a.m. Pacific Time earlier this morning.

The release can be found on the Investor Relations Section of the Company's website, along with presentation slides accompanying today's call. Today's presentation and Q&A includes certain forward-looking statements within the meaning of the Federal Securities laws.

Forward-looking statements are predictions, projections, and other statements about future events based on current expectations and assumptions and as a result are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this communication.

For more information about factors that may cause actual results to materially differ from forward-looking statements, please refer to the earnings press release we issued today, as well as the risk factors section of our annual report on Form 10-K and our quarterly report Form 10-Q filed with the Securities and Exchange Commission, in addition to the company's subsequent filings with the SEC.

Readers should be cautioned not to put undue reliance on forward-looking statements. With that, I will now hand the call over to Mark..

one, on-site gas base generation stations; two, centralized production hub-and-spoke dispensing locations; and three, hydrogen offtake agreements. Last quarter, we announced our investment in WVR, our first major offtake agreement.

The partnership with WVR allows us the option to offtake up to 50 tons of hydrogen per day in the Midwest, which is a critical trucking geography. With the TC Energy announcement, we have our first hydrogen production hub partnership.

We'll continue to update you on the development of our hydrogen refueling ecosystem and additional partnerships as we go forward. We also have some positive news on our supply chain in the form of a long-term supply agreement with LG Energy Solutions for battery cells.

This supply agreement will provide additional battery cell supply for our trucks from 2022 through 2029. Finally, to recap, in the quarter, we continued to meet our commitments and hit important milestones on our way to bringing our zero emissions products to the market. We're pleased with the results, and we're confident and excited about our future.

All right. Over to Kim to review the numbers..

Thanks, Mark, and good morning, everyone. Before going over our Q3 results, I would like to provide some color on the second purchase agreement executed with Tumim Stone Capital in September, which allows us to issue up to $300 million of Nikola common stock.

We view the equity line as a valuable addition to our capital markets toolkit to leverage the liquidity in our shares, while also giving us considerable flexibility around issuance timing.

We have no obligation to utilize the enlarged facility and continue to monitor the broader capital markets which we view as our principal source of financing for Nikola. To date, Nikola has issued 3 purchase notices to Tumim under the first purchase agreement, resulting in approximately $72.9 million in net proceeds. Moving on to our Q3 results.

In the third quarter, net loss was $267.6 million. And on a non-GAAP basis, adjusted EBITDA totaled negative $85 million.

Adjusted EBITDA excludes, among other items, one, $125 million in reserve loss contingency related to the potential SEC settlement, two $49 million in stock-based compensation, three $9.8 million for regulatory and legal matters, which include legal, advisory and other professional service fees incurred in connection with the short seller article from September 2020.

Four, $2.2 million in depreciation and amortization; and five, $4.8 million gain on the revaluation of the ones and derivative liabilities. Basic net loss per share for the third quarter was $0.67 and diluted net loss per share was $0.68. Basic and diluted non-GAAP net loss per share was $0.22.

Non-GAAP net loss per share excludes reserve loss contingency for the potential settlement to the SEC investigation, stock-based compensation, regulatory and legal matters and gain from the revaluation of private bonds and derivative liabilities.

The third quarter's research and development expenses were $78.9 million, including $6.4 million of stock-based compensation expense. R&D expenses consists mainly costs incurred in developing, building, testing and validating Nikola Tre BEV and fuel-cell trucks.

SG&A expenses were approximately $192.9 million, including $125 million in reserved loss contingency for the potential SEC settlement, $42.6 million in stock-based compensation expense and $9.8 million in legal and regulatory costs.

While the contemplated payment of $125 million is expected to be spread over 2 years, we accrued the entire $125 million as an SG&A expense this quarter. As a result, on a GAAP basis, we were unfavorable to the expense guidance for Q3.

However, excluding the $125 million loss contingency reserve for a potential settlement to the SEC investigation, we were within the GAAP expense guidance given for the quarter. Turning to the balance sheet. We ended the third quarter with $587 million of cash and cash equivalents.

In addition, we also have approximately $527.1 million of available liquidity through our 2 equity lines with Tumim, providing us with roughly $1.1 billion of total liquidity as of the quarter's end.

Our capital expenditures totaled $113.7 million year-to-date and are comprised of the construction of our Coolidge greenfield manufacturing facility, equipment purchases and supplier tooling related to Tre BEV production. We also invested an additional $25 million in WVR. We ended the quarter with approximately 404.3 million shares outstanding.

Weighted average shares both basic and diluted, for the third quarter were about 400.2 million. Moving on to our Q4 2021 guidance. We remain committed to our goal of delivering up to 25 pre-series Tre BEV trucks to dealers for demos and to customers for freight hauling on public roads.

However, as we have previously mentioned, Nikola is not insulated from the ongoing global supply chain constraints, impacting production-ready semiconductor components and subsequent validation testing that could impact completing Tre BEV trucks in Q4.

These pre-series vehicles that we are building in Q4 may not have 100% of the production parts and may not be considered salable. In that case, we plan to capitalize these trucks on our balance sheet.

Estimated R&D expense for the fourth quarter is in the range of $100 million to $105 million, which includes approximately $11.5 million of stock-based compensation, estimated SG&A expense ranges from $70 million to $75 million, which includes roughly $44.5 million of stock-based compensation. Now to fiscal year 2021 guidance.

Due to accruing the $125 million reserved loss contingency in Q3 for the potential SEC settlement, we are adjusting our full year total operating expense range to $695 million to $715 million. The change in GAAP operating expense range is solely due to the accrued $125 million loss contingency.

We have also reallocated some of the budgets from R&D to SG&A. Our updated R&D budget is now in the range of $300 million to $310 million, including $40 million of stock-based compensation.

Our updated SG&A budget is now in the range of $395 million to $405 million, including $169 million of stock-based compensation and a $125 million loss contingency reserved for potential SEC settlement. Our anticipated capital expenditures for the fiscal year 2021 remain unchanged in the range of $210 million to $230 million.

Our capital investment plans include Phase I Coolidge manufacturing plant and associated manufacturing equipment, supplier tooling, hydrogen infrastructure and fuel cell electric vehicle engineering equipment at the year-end.

If no additional capital is raised, and we do not issue additional purchase notices to Tumim, our anticipated cash balance will be approximately $340 million to $360 million. The total liquidity of the company is expected to be roughly $867 million to $887 million, including cash on hand plus the remaining $520 million equity line of credit.

We estimate total shares outstanding at the end of 2021 of about 418 million and weighted average shares for the full year ending December 31, 2021 of approximately 399.1 million. This includes estimated employee stock option exercises, restricted stock unit distributions and estimated purchase notices issued to Tumim Stone capital.

Our headcount, inclusive of accepted offers as of October 31 is 851 employees. By the end of 2021, we anticipate having approximately 900 to 1,000 employees, comprised of 160 to 180 manufacturing and operations employees and 740 to 820 corporate and engineering employees.

We are growing rapidly as we continue to build our engineering, manufacturing and energy teams. As previously mentioned, being a pre-revenue company, the best way for investors to monitor Nikola's progress is to hold us capable for achieving certain milestones. I want to recap the critical milestones we have achieved over the past 9 months.

Milestone one, regarding hydrogen refueling infrastructure, we have made several partnership announcements across the hydrogen value chains, including hydrogen production, distribution and dispensing.

We have secured an electricity rate schedule with APS in Arizona, which we anticipate will allow us to produce hydrogen fuel -- or below price 30 with diesel.

On April 22nd, we announced our partnership with Travel Center of America, where we will leverage existing TA infrastructure and plan to initially build hydrogen dispensing stations at existing TA locations in Southern California.

On July 22nd, we announced a strategic investment in Wabash Valley Resources allowing us the option to offtake up to 50 tons of clean hydrogen per day in the critical trucking geography. On September 30, we announced our partnership with OPAL to collaborate on the co-development and co-marketing of hydrogen refueling stations behind the fence.

And on October 7, we announced our collaboration with TC Energy to co-develop, construct, operate and own large-scale hydrogen production hubs and potentially leverage TC's existing pipelines, storage and power assets, which could lower the cost and increase the speed of delivery of hydrogen produced at the hydrogen production hubs.

Milestone 2, this additional customer announcement. On May 6th, we announced an LOI for 100 trucks with TTSI, which comprises 70 and 30 BEVs. On September 15, we signed an MOU with the Hamburg Port authority to deliver up to 25 Nikola Tre BEVs through 2022. On October 14, we announced an LOI with PGT Trucking for 100 Nikola Tre FCEVs.

And on October 27, we announced an order of 10 Nikola Tre BEVs from Tri-Eagle through Ring Power. Milestone 3 is capital raise. We have secured ample liquidity to fund our business through 2022 via our 2 equity purchase agreements entered into with Tumim. Milestone 4 is a resolution to the SEC investigation.

We have a potential settlement on the horizon, contingent on the SEC commissioner's approval. We believe the company is a better position to succeed than ever as we bring our zero-emission products to the market. We now have vehicles being tested on public roads and look forward to delivering Tre BEVs to dealers and customers in the coming months.

As you continue to monitor our progress in Q4, share other milestones, we believe investors should track.

One, deliver pre-series Nikola Tre BEVs for use on public roads all in customer freight; 2, announce additional fleet testing customers and dealers; 3, purchase land for first centralized hydrogen hub production facility and/or commercial on-site gases hydrogen station; and four, announce additional hydrogen infrastructure ecosystem partners.

Before we conclude, we would like to provide some high-level preliminary color on the potential impact of the $1.75 trillion reconciliation bill. The current draft includes language regarding H2 production tax credit. The ultimate question is whether the hydrogen production tax credit will remain in the reconciliation bill as drafted.

If pass, we believe this will significantly impact our energy business as we start producing hydrogen as centralized hubs and on-site gas generation stations. The proposed new tax credit anticipated to take effect in 2022 is for producing clean hydrogen at qualified clean hydrogen production facilities.

Facilities will be eligible to receive the tax credit for 10 years, beginning on the date, the facility is placed into service. The production tax credit calls for potentially up to $3 per kilogram base rate for hydrogen production, multiplied by the applicable percentage.

The applicable percentage is determined by the percentage reduction in life cycle greenhouse gas emissions compared to SMR produced H2. The H2 production tax credits could be substantial for Nikola. It would lower our cost of hydrogen production and we anticipate it could create significant shareholder value. This concludes our prepared remarks.

We will now open the line for questions.

Operator?.

[Operator Instructions]. Our first question is from Jeff Kaufman of Vertical Research Partners..

Thank you very much, good morning everybody. You guys have been busy.

Could you kind of tie together the dealership platform in terms of where it stands today, how many locations? And if we look at that geographic map relative to where your customers look to be, where do you still need to fill in at this point? And where do you want this to be, say, in the next 1 to 2 years in terms of size and coverage?.

Thanks, Jeff. Great question. We're really pleased with the dealers we've signed up so far in each of the geographies where we've established the dealership relationship. We think we're working with one of the premier folks in terms of their ability to support and service our customers in that area.

And as you heard, we just signed up our first customer through a dealer, Ring Power signed up Tri-Eagle, and we'll be providing Tri-Eagle sales and service support as well as charging infrastructure in that case. So we've got a pretty good coverage at this point in most of the critical geographies.

The gaps that we still have, we're working on actively. So in the timeframe you're talking about, the 2-year period, we expect we'll have coast-to-coast full geographic coverage of United States and into Canada. So we're looking to have no geography uncovered by a dealer. And we're certainly with inside of being able to do that.

And we're pretty confident that we'll be able to do that. You'll hear a few further announcements on additional dealers that will add into what we've already got in place, which does cover a good chunk of the Continental United States at this point..

Okay. And I know it's a little early. But if I ask the same question of the hydrogen production distribution. I guess, if I look at the map with your partners today, you would say, Midwest, Southwest.

Where are the critical areas you'll need to add for where you want to be when the fuel-cell trucks start coming out commercially?.

Again, we also have to have a coast-to-coast coverage for -- with hydrogen fuel and infrastructure as well. And you are correct that the first infrastructure is going in, in the Southwest and the Midwest with the hub that we'll be working on with TC Energy here in the Southwest near the California border.

And then, the WVR project, which will serve as a hub for us in the Midwest. And we'll add others into the other critical geographies. Again, we have to cover the whole space. But you'll see hubs along major transportation corridors across the continent. So Southeast, Northeast, Northwest and all through them in section..

Jeff, we have always stated that we will be quite targeted, especially for the first 3 to 4 years with respect to hydrogen ecosystem. And we believe, we are putting the puzzles together with respect to production and distribution and dispensing. And as Mark talked about, an ideal location will be in Arizona, California order as our first hub.

And we have already socialized this with TC Energy. But we will be very much focused on how we roll-out and to sequence of roll-out..

Okay, great..

Thanks, Jeff..

Our next question is from Jeff Osborne of Cowen..

Two questions on my end. One, I was wondering if you could put into perspective the scope of the LG Agreement. Is there anything you can share as it relates to gigawatt hours over time or on an annual basis, especially just given it starts next year? And then, I noticed you said it was for sales.

What's the strategy on pack production? So that was question one. And then, question 2 is just really around the homolgation process. Can you just walk through what's left? I know you said the 25 trucks might not be salable.

But do you anticipate that the testing and validation phase will be complete in calendar '21 or is some of that going to flip into next year as well?.

Great questions, Jeff. With respect to the sales from LG, we don't want to go into the details of the terms. As you know, just our confidential in some ways. However, what we have been able to lock-in is that is something that that will give us substantial product volume. We are making sure that we have in ourselves and that we are not single threaded.

So of course, we're looking at more than just one cell supplier as well as more than 1 pack suppliers. But we're trying to make sure that we have sufficient volume to address 2023 and 2024. As you know, the market is still very tight in 2023. We believe, we will have better idea in 2022 as to perhaps if there will be more cells available for 2023.

What we can tell you, though, is that we had LG Team come out from pre up or a signing ceremony at our Coolidge plant. We believe we are building a great relationship with them. And we have also requested additional cell allocation than what they have allocated to us for 2023.

And so, we are working very hard to ensure that we have sufficient battery cell volume locked in..

And my homologation question?.

With respect to Homologation, we are working hard, as you know, any time when there are any delays with respect to commissioning, validation testing gets delayed. We plan to accomplish substantial portion of validation in 2021. But it is quite possible that some of the validation could spill into beginning of 2023.

We talked about -- there are certain components such as display chip-sets, where we will not have the production sample that may not arrive until December. What that means is that some of the validation and testing will be in early January..

And Jeff, I think you -- this is Mark. I think you also asked a question about pack production, which we have more control over than we do the cell supply-chain. Although we feel we're in a much better position now with 2 sources of supply between the 2 major suppliers of cells that we now have agreements with.

So we do have more control over pack production. The pack design is ours and the module design that we're using at this point is from Romeo. And we have more control over that part of the supply chain and feel a little bit more comfortable about that. If we can get the cells, we're pretty confident that over time, we'll get the packs.

So turning to the homologation question. We are in the mode now of public road miles and hours for the Tre BEV. And that is a matter of miles and hours. And we are planning on having all of the test vehicles through their putting -- being put through their paces. Of course, we've been getting track hours pretty much the entire calendar year.

But we are getting now public road miles, which is essential part of the process. And it's a matter of getting to the required number of hours and miles. And as a function of how many trucks we're able to complete, which as Kim says, is a function of how many parts we can get in this supply chain short condition.

We're trying to get the bulk of this work done in this calendar year, but it will certainly spill into 2022. We -- at this point, we still think we'll be able to make the start of production for regular series production at the end of the first quarter..

Our next question comes from Mike Shlisky of D.A. Davidson..

I just want to follow-up on the last couple of questions there.

If you -- if your first 25 trucks produced this quarter are not really salable, do you have the ability -- is there a point where you've made all the non-salable trucks you can make? If you have to start making more non-salable trucks in the first quarter, is there a point where everyone's got their demo unit, everyone's got what they need for marketing purposes.

And you'll have to kind of stop, you kind of wait until you're able to get the full truck available for on-road use?.

Let me address the first part. When we say they are not salable, what we're suggesting is that they may not have all the final production components. They will be retrofitted to the extent they can be accomplished, and they can become salable in Q1 2022..

Okay. All right. I guess I can follow-up offline on that one. I also want to ask, it's been a very tight market to get a Class A truck in general, whether it's ICE or battery electric.

I'm curious whether you've gotten any additional inquiries from any customers that may have not heard from in the past, who are just trying to find any tools that they can get.

And can you kind of take us behind how you've been able to capitalize on any new customer inquiries, just trying to get themselves a truck or any type and how convince them that the Tre BEV is kind of going to be available in 2022 where other brands might not be available?.

Yes, Mike, that -- I think that is also related to your first question, which is would we make more than 25 trucks, if we could? And the answer is absolutely yes. We -- there -- I have not talked to any customer in recent months who does not want to at least get a test for trial vehicles.

Everybody wants trucks, as you said, trucks are short generally. And especially anybody who's looking for zero-emission trucks, it's very tight.

To the extent that if somebody calls us now out of the blue, then, who's not never contacted us before, that they're going to the back of the line, unless they can come in with something that makes it otherwise of interest in terms of volume or scope or assistance of partnership.

So we have a lot of conversations going on with a lot of customers around the world.

And that's why it's so imperative that we work the supply chain issue, which we're doing pretty much 24/7 at this point to make sure we get all the parts we need, to build the trucks that we need to go through the homologation, so that we can continue to get trucks into dealer and to launch customer hands.

We're getting some help in some respects in some geographies. For example, we have one customer in Europe so far, who's come up with a local geographic exception to European homologation, the Port of Hamburg, they're going to take up to 25 trucks on the U.S. spec, which we can get them faster because we're getting the U.S. spec first.

That's completed first, so that we can deliver those trucks to them more quickly, because they're getting a local geographic exception there in the Port of Hamburg. So we're going to go as fast as we can.

We're going to do as many trucks as we can and get them out as fast as we can because it's not just a market -- a temporary market shortage that we're trying to address. We're trying to get zero-emission trucks out there to make -- to change the world and make it more sustainable for commercial transportation forever..

And Michael, just a bit more insight in terms of demand side. When we think about sales funnel, we talk about LOI signed, which we already discussed. But there are final discussions with a number of parties as well as ongoing discussions.

And there's always timing in terms of given the LOI signed when we announce as well as final discussions that goes into LOI and then eventually announcements. So stay tuned..

Our next question is from Joseph Spak of RBC Capital Markets..

I had some questions on some of the capacity language in the release today. So the 2,400 on 2 shifts, that's unchanged. I just want to confirm that's a run-rate capacity by year-end, not what your actual sort of full year capacity will be. But then, also, you're talking about 20,000 by Phase II by early '23.

I think before that was 15K for Phase II, but it was also a little bit earlier by year-end '23 and then you had a Phase III, which was 35 by the year-end '23. So it seems like there's some moving pieces going on with the capacity expansion.

And I just was wondering if you could help us understand what's going on?.

Absolutely. So the important thing to remember is the number, it depends on where you're drawing the line. The ramp-up in total for that -- for the Coolidge facility is up to a nameplate of [Technical Difficulty]. And that's true, Joe, in both hemispheres. The facilities are ready to go and on schedule.

And they're in -- the limit is going to be spike supply chain. Ulm is -- Ulm, Germany is ready to go. We had the opening ceremony back in September. And they are doing what they can with what parts they can get. And then, Coolidge in the first phase is operational, and they're doing everything they can with as many parts as we can get them..

Okay. Maybe that's a good segue to my second question, which is you haven't touched the '22 or really the out of your target since April of 2020. And as we all know, a lot has changed since then. And now that we're approaching '22, and I'm sure you're planning for '22.

I was wondering if you could give us some guiderails just sort of how to think about that because like how realistic is that goal of 1.2 hundred trucks, given everything you just mentioned?.

And we will share more detail in the next earnings call. And at that point, I think we'll be able to give you much better visibility with respect to 2020 volume and our production ramp..

And the situation is very fluid and we're in the same situation, as pretty much every OEM out there, this affects everybody. And it's -- your guess is as good as ours in terms of when things will begin to abate. But we'll give you much more specificity in terms of what we've got going next quarter..

Our next question is from Douglas Dutton of Evercore ISI..

Just to sort of follow-up on Joseph's question there.

What are the factors, I guess, externally and internally outside of the supply chain issues that you are looking at that could allow for sort of a faster or slower production than the stated rates that we just talked about? I mean, is it really purely the supply chain or are there other internal factors? Just looking for some color on that..

Look, we've done a great job in terms of making sure that our capacity is available and our production lines are ready. And we have labor in place. And so, we feel confident about the production capacity for 2022 as well as 2023.

And right now, the element that we can control, and we're trying to influence as much as possible, and we're working with various self suppliers as well as pack suppliers to ensure that we have supply locked in with respect to battery packs as well as integrated circuits.

Those are 2 key components where we have the -- where we are working with our suppliers to ensure that we can lock in that supply. So that one will give you guidance for 2022, there we'll be in a much better position to have some certainty about how we think about our production ramp.

But the ability to produce trucks up to 2,400 units for next year, we have that capacity available. And we believe our manufacturing team is preferred to accelerate to the extent that the demand is greater than what we have stated previously in our guidance..

Our next question is from Bill Peterson of JP Morgan..

Yes. You've spoken a lot on this call about hydrogen infrastructure projects. But I'm also wondering about electrical charging infrastructure. And this assumes, of course, you get some relief on the supply of constraints you have for your vehicles. We've seen some announcements, for example, part of Los Angeles for some high-power charters.

But in the U.S., it's our impression that some of the infrastructure is harder to come by and maybe harder to permit, harder to install compared to lower power passenger vehicles. So in other words, it could take longer to install. So again, you mentioned earlier that a charging for Tri-Eagle.

But I guess the first question is, what is Nikola doing with other potential customers and partners in Europe and U.S. the surcharging capability for your electric truck? And I guess what is your role with working both utilities and I guess in the case of where build on and operate.

But is that the right way to think about the model? Just trying to understand how Nikola will enable the BEV ecosystem, at least making sure that ecosystem doesn't become a limiter, if you're able to start shipping trucks and volume?.

So, that's a great question because on the BEV side, we are increasingly finding ourselves talking about a solution like we have for hydrogen for several years now.

The only difference I would highlight between hydrogen infrastructure and charging infrastructure is that the charging infrastructure for commercial vehicles is pretty much exclusively behind the fence. These kind of vehicles are -- you won't see these kind of vehicles at public stations typically.

These customers all want to have charging in their terminal or on their property, what we call behind fence. And that's a big difference. And as you said, that it is not a simple prospect in every case to have the kind of charging capacity that you need for commercial vehicles.

Our vehicles will be capable of taking charges up to 350 kilowatts for fast charging purposes. And that's -- if you've got 10 of those, that's a lot of power. And so, you usually are talking about the power supply to the facility. And if that needs upgrading, that takes time. There are things that can be done to get started.

We have a temporary solution that we have been using for testing purposes in a lot of places. Most of the test tracks we use don't have the charging we need. So we have to put in temporary charging that which we're able to do. That's one of the neat things about our dealer network so far.

Most of these dealers at this point, I'd say the majority of our dealers at this point are also specialists in providing temporary power. Most of them are also dealers for Caterpillar. And they are really good at providing temporary power solutions and even long-term temporary power solutions. So that's what Green Power was able to do for Tri-Eagle.

And I can tell you, there's a lot of other discussions going on just like that, where we're going to work really hard to make sure that we can provide the solution in terms of the vehicle and the charging and in the case of the dealers, they're offering the whole bundle, just like we're on the hydrogen side.

If you get the truck, you get the service and the support, the maintenance and you get the charging or the energy that you need to get the truck to move. So that's a great question.

And I think you're going to see us do more on this front, and you're going to hear more from us about this going on in the future as well as some of the implications for the utilities, and the grid operators for 2 way power. I'll just give you a teaser on that front.

Two way power is going to be a big deal for commercial power, for commercial vehicles going forward. I'll make that prediction right here..

That makes a lot of sense. Thanks for that answer and update. I do want to come back to the hydrogen ecosystem and recognized that a lot of these were announced earlier this year. For example, the 5 electrolyzers, which I think we're targeting for 2022. The travel centers, I think you're going to update on locations.

This was mentioned during our first quarter earnings call. It might have obviously, the supply constraints and maybe some of the alpha fuel cell vehicles maybe not on the road as fast as you had thought it, I can see this pushing.

But I guess the question is, what are Nikola's specific commitments in terms of capital deployments as we think about hydrogen enable for 2022? And I'm envisioning you're assuming a lot of these are going to be in the Southwest of California, given the substance regime. But any color you can provide on that would be helpful..

All right. Let me see if I got all the parts of that down here, Bill. So let's start with TA, which is -- which will be dispensing locations at existing TA facilities. We do have the first 2 of those facilities identified -- hang on one second. All right, just checking to make sure we haven't announced that yet, which we have not announced.

But the 2 -- first 2 facilities have been identified. I will tell you they are in the Southwest, and you can guess which state they're in actually probably because that's where we're going to be starting. But so those locations are identified, we're going forward. Those are fairly straightforward because they are dispensing only.

So we just have to have storage and dispensing on location. And TA is such a great partner for us because their facilities in general are so large. In general, TA facilities tend to be bigger than the average truck stock and that gives us plenty of room to put the infrastructure in that we need to be able to fuel trucks.

Now of course, that means that they're dispensing, only we have to get the hydrogen there, which is why we're working on the Southwest Hub, which will be in the State of Arizona.

It will be -- that something that we have announced because we have an agreement with APS and the Corporation Commission here in Arizona for a 21-year rate for making hydrogen out of water using electricity and our choices, which also relates to the electrolyzer capacity that we put on order.

We have $30 million of electrolyzers on order and in-process with Mel, which you referenced. Those will be available for hub service to make large amounts of clean hydrogen from electricity at this hub. We may have other methods of making hydrogen of this hub that will be redundant and add to the capacity.

And as you asked, our commitment to our customers is that the hydrogen will be there in time for the truck to make its first run. So the hydrogen has to lead the trucks slightly. And so -- and you'll see that. We'll put in hydrogen capacity before the trucks need it. In some cases, where you've got a temporary need.

We have a mobile solution as well, just like we have mobile charging for battery trucks. We have mobile hydrogen fueling for hydrogen trucks.

And we can put that in temporarily, but you'll see the infrastructure going into place for the target geographies in advance of the trucks, starting with that Arizona Southwest Hub for hydrogen production and starting with those 2 first TA stations in our initial geography..

And Bill, we'll share a lot more detail beginning of next year when we host an Analyst Day. But here is something that we want you to think about. For example, assuming 40 kilograms per day for fuel for Tre fuel-cell and for Nikola to 65 kilograms of fuel per day by 2025, we need approximately 900 tons of 100 per day.

And assuming an on-site generation stations, 8 tons per day, that would represent approximately 110 stations. But that could also be addressed by, let's say, 6 major hydrogen house at 150 tons per day. And the hub and the TC Partnership that we have talked about, we have right to own equity up to 50%, but not the obligation.

So it is quite possible in many of those locations, TC Energy may potentially own substantial equity ownership, yet we control the molecules in terms of offtake agreements. And so, what we're suggesting is that we are going to be very creative. We are going to be capital efficient.

And we will be able to give you better insights in terms of how we're thinking about ultimately capital allocation. But we are very excited about what we have structured, and we have a pretty good insight in terms of how we may want to think about for the next 3 to 4 years..

Thanks for the color and best wishes to manage these acute supply constraints..

Thanks, Bill..

Our next question is from Jacob Green of BTIG..

Guys, quick one for me. You have this 2,000 truck capacity in all.

And I guess, first, you have received any orders in Europe or built out any of the dealer network out there or can you talk more broadly on your go-forward strategy overseas or should we more expect to own volumes to supplement Coolidge in say the near to midterm?.

That's a great question. So let me start first with European customers. Our launch customer for Europe will be the Port of Hamburg. They're going to take 25 trucks that are U.S. spec, because they can use them in a very expansive port there in Hamburg, and that allows them to use the U.S. spec truck. So that kicks us off there in the Port of Hamburg.

We are talking to a number of other customers in Europe. Our dealer network in Europe, we have the advantage of the existing IVECO dealer network in Europe, which has good coverage. We have the ability to use any of those dealers to support our customers and of course, IVECO's customers. IVECO is also going to be selling Tre BEVs as well.

Both of those will be Nikola branded, but IVECO will be selling their portion of the output of the own factory, which is 50%. So that partnership with IVECO is so valuable to us on a number of fronts, but especially on this front that we're talking about now with dealer service and support because they have great dealers in place.

These are dealers who are used to fueling alternative fuel heavy equipment. IVECO is the market leader for natural gas, fueled heavy trucks in Europe. And all of their dealers have the ability to service gaseous fuel heavy trucks. And of course, ours will be hydrogen fueled. And with some -- so there's a slight difference.

But generally, they have a lot of experience in dealing with alternative fuel vehicles already. And that dealership network is already in place for us there. So what we're building in the U.S. is already in place in Europe. Operator? Yes, we're still here. I think we might have lost Jacob though..

I think you might be right. Okay. One moment. And our next question is from Edison Yu of Deutsche Bank..

First question, I know you can't reveal too much about the agreement with LG. But directionally, are you finding that the costs are coming in higher, just given kind of everything that's going on in the industry? So that's first question. And then, second question, any updated thoughts on, I guess, capital raise.

I know, you obviously have Tumim, they are very supportive.

But I guess beyond that, can you maybe just go over the need and how the thought process goes about that?.

Edison, both great questions. When we went public last year, we assumed that ultimately battery sell price would decline in 2023 and 2024. At this point, we know what certainty that price will not be declining for 2023. We have a pretty good idea based on what we have signed.

When it comes to anything beyond 2023, we do believe there are significant capacities worldwide that will be online by sales suppliers. And we do believe that would be possible in 2024. However, when it comes to dropping overall bound cost, that's something that we're working on.

And as you know, battery represents approximately 50% of your bond costs for battery electric trucks. So we are looking at for the remaining components, if we can drop that quicker than we have anticipated.

And so, this is a lot of work that we are engaged in and we'll have a much better idea at the next quarter in terms of giving you some perspective in terms of how we think about the bound cost as well as gross profit margin. Going to your second question. We believe, right now, we have ample liquidity at the end of Q3.

We have $500 million, about $50 million of cash, and we have E-lock availability of $530 million. And so, we have approximately $1.1 billion in terms of liquidity. By the year-end, we will have approximately $850 million in terms of available liquidity.

We have always indicated that our preference would be that at all times, we have sufficient cash for the following 12 months. And so, of course, sometime next year, we are going to address in terms of additional capital and the potential final offering, but we want to be flexible.

And via Q2 market conditions and ultimately, when we go and we have a fair amount of flexibility based on our current liquidity..

Great. Thank you very much..

We have reached the end of the question-and-answer session. I will now turn the call back over to Mark Russell for closing remarks..

Thanks, everybody for joining in on our call. And we'll be looking forward to talking to you again in a quarter. Thanks..

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a great day..