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Courtesy of DAF TrucksThe heavy-duty trucking giant Paccar reported good earnings, but the call to discuss the results was noteworthy for another reason. Hydrogen—the new fuel with a long history—came up again and again.
Hydrogen is the new, new thing for a few reasons.
For starters, there is Nikola (ticker: NKLA), the alternative-fuel trucking startup. Its market value has rocketed from less than $1 billion at the start of the year to more than $14 billion. Nikola plans to power heavy-duty trucks with hydrogen-powered fuel cells.
Hydrogen can be burned just like diesel fuel or natural gas, but it doesn’t emit the greenhouse gas carbon dioxide in the process. That qualifies the fuel for environmental tax credits. It also helps transportation companies meet tightening environmental standards.
California recently passed a law requiring more zero-carbon-emission trucks. And part of the money included in the European Union’s coronavirus stimulus package, agreed to on Tuesday, is designated for technologies that will help fight climate change.
The confluence of green news has been noticed by the market. The stocks of hydrogen-rich companies: Ballard Power (BLDP), Plug Power (PLUG), Nikola, and even hydrogen-gas producer Air Products (APD) have taken off.
Traditional truck makers are taking note. The word hydrogen came up on Paccar’s (PCAR) earnings conference call 20 times Tuesday, more than on all the company’s other earnings calls combined. The traditional trucking industry wants some hydrogen-based love from investors.
“We’re excited about Kenworth, Peterbilt and DAF’s leadership in zero emissions powertrain programs. To date, we have deployed over 60 battery electric, hybrid and hydrogen powered trucks,” said CEO Preston Feight in his opening conference call remarks. “Paccar is simultaneously developing hydrogen fuel cell powered vehicles and has built 10 Kenworth T680s for customers in the Port of Los Angeles. In the longer term, hydrogen could be promising for long-haul applications due to its high energy density and its relatively fast refueling times.”
Paccar isn’t the only traditional trucking company making hydrogen investments. The engine maker Cummins ( CMI ) bought a fuel-cell technology company, Hydrogenics, in 2019.
Investors will have to wait for a hydrogen update from Cummins. It reports earnings July 28.
Paccar stock rose 5% Tuesday. The company reported better than expected earnings. J.P. Morgan analyst Ann Duignan raised her price target for Paccar shares from $80 to $92. She rates shares the equivalent of Buy.
Year to date, Paccar stock is up about 6%, a little better than comparable returns of the Dow Jones Industrial Average and S&P 500 over the same span.
Write to Al Root at allen.root@dowjones.com
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July 22, 2020 at 10:10PM
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Hydrogen Is the New Thing in Fuel. Look at Truck Makers’ Earnings. - Barron's
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