What is Tortoise Acquisition?
Tortoise is a special-purpose acquisition business, or SPAC, a kind of business created specifically to obtain one or more other companies. Sometimes called a "shell business," SPACs normally have no continuous organisations of their own. In this case, Tortoise was developed by a group of veteran energy-industry executives and financiers with the objective of finding and investing in several good services connected to their shared area of interest, renewable natural gas.
That's where Hyliion is available in.
What is Hyliion?
Hyliion, founded a few years ago by Thomas Healy, is developing electric and hybrid powertrains for heavy trucks. CEO Healy, a previous vehicle racer and Carnegie-Mellon-trained engineer, saw a chance to apply hybrid-electric innovation to existing Class 8 (tractor-trailer) trucks in a cost-efficient way.The business has 2 line of product. One, which is shipping right now, is a system that turns an existing diesel-powered heavy truck into a hybrid, increasing its range and efficiency. It can be retrofitted to existing Class 8 trucks from any of the major producers.
Its 2nd product, called Hypertruck ERX, is a total electric drivetrain for Class 8 trucks, with a twist: It doesn't need a substantial battery pack. Instead, the Hypertruck system is designed to be recharged while the truck is under way, through a natural-gas-powered generator or a hydrogen fuel cell.
Remarkably, Hyliion isn't planning to manufacture either product itself. It has contracted with auto-industry supplier Dana (NYSE: DAN) to manufacture the items and ship them straight to installers or truck manufacturers. A white Freightliner semi with Hyliion and Penske logo designs.
This Freightliner semi, owned by Penske, is among numerous test trucks with Hyliion's battery-electric hybrid system set up. Image source: Hyliion.
Wait, so this resembles Nikola, right?
If you're familiar with electric-big-rig maker Nikola (NASDAQ: NKLA), you may recognize the lays out of this offer. Nikola, which plans to begin producing battery-electric and hydrogen fuel cell-powered Class 8 trucks over the next few years, went public previously this month by means of a reverse merger with another openly traded SPAC, VectoIQ Acquisition Corp
. Considered that VectoIQ's stock, which ended up being Nikola's on June 5, is up over 500% since that offer was revealed in March, it's easy hyliion stock merger to see why financiers have hurried to buy Tortoise's shares in the last week. Hyliion isn't exactly a direct rival to Nikola, however. While both are hoping to interfere with the heavy truck market with greener products, Hyliion-- unlike Nikola-- isn't preparing to build complete trucks. Rather, it's offering powertrain options to existing makers of big rigs-- and Hyliion's powertrains are hybrids.( We ought to keep in mind that offering powertrains to makers of Class 8 is absolutely nothing brand-new. Diesel-engine maker Cummins (NYSE: CMI) has actually been doing the same thing for years. By overcoming Dana, a recognized provider of axles and other parts for heavy trucks, Hyliion has actually currently inserted itself into an existing supply chain.).
For heavy trucks, Hyliion's items have a couple of advantages over both battery-electric and (for the minute, a minimum of) hydrogen fuel cell powertrains:.
Unlike the much-talked-about Tesla (NASDAQ: TSLA) Semi, Hyliion's Hypertruck system doesn't require a large and heavy battery pack that would minimize the truck's overall transporting capacity.
Unlike battery-electric trucks, trucks with the Hypertruck powertrain can "recharge" (through refueling) in a matter of minutes.
Unlike hydrogen, there's already a natural-gas refueling structure in place in the United States.
From the viewpoint of an operator of a fleet of heavy trucks, Hyliion has two more big advantages. First, since it's not making the trucks, simply the powertrain, fleet operators can buy most parts from the trck manufacturers with whom they already have relationships.
Second, and associated, Hyliion argues that a fleet of Hypertruck-equipped trucks will be substantially cheaper to run (and, it argues, cleaner) than a fleet composed of either Nikola's or Tesla's Class 8 trucks.What's the offer between Tortoise and Hyliion?
It resembles the Nkola-VectoIQ handle that it's a so-called "reverse merger": Tortoise will combine with Hyliion, the merged company will be named Hyliion, and the former Tortoise shares will trade under a new ticker, HYLN. In another function comparable to the Nikola deal, independent investors will put in cash ($ 325 million, in this case) through a private financial investment-- called a "PIPELINE," for "personal financial investment in public equity"-- as part of the deal.
In this case, however, there's no money coming out of the offer-- it's all going to money Hyliion. All existing investors in Hyliion will "roll over" their investments into the new company. Tortoise is adding another $235 million to the $325 million supplied by the PIPELINE, so the merged business will have a total of $560 million in money after the offer closes.
Healy stated that's sufficient to get to full production of the Hypertruck ERX, without any extra financial investments needed.