Electric vehicle maker Nikola Corporation (NASDAQ: NKLA) is exploring a cheaper source of power supply through an agreement with utility company Arizona Public Service Co.
If the agreement works out, Nikola plans to produce cheap hydrogen for its refueling station. The Bloomberg report is based on a regulatory filing with the Arizona Corporation Commission seeking approval for the project.
According to the estimates in April from a filing to the Securities and Exchange Commission, the EV maker stands to generate a contribution margin of 33%, excluding amortization of capital expenses incurred on the station.
The cost of producing hydrogen is estimated close to $2.5 per kilogram, according to Bloomberg. While the forecasts are made considering the electricity rate at 3.5 cents per kilowatt-hour, the Arizona Utility company has proposed a much lower special contract rate of 2.7 cents per kilowatt-hour.
"This rate schedule enables Nikola’s planned deployment of fueling facilities in Arizona in support of zero-emission hydrogen fuel-cell electric trucks," Nikola said in a statement.
The utility company remarked that it could be a success story both in Arizona’s economic and environmental front if the agreement follows through.
In September, Reuters reported that Nikola’s efforts to engage with an energy partner were stalled after the short-seller Hindenburg research flagged the company as a fraud and former CEO Trevor Milton resigned. At the time, CEO Mark Russell expressed confidence in his plans to finalize an alliance with an energy company and kick off the fuelling stations sometime in 2021.
NKLA shares eked nine cents to $17.09.
