In a blow to New Zealand’s green transport ambitions, the deal between heavy commercial vehicle leasing company TR Group and US-based hydrogen truck startup Hyzon Motors has unravelled.
The agreement, which promised to deliver up to 20 hydrogen fuel cell trucks (FCEVs) into the country, now faces collapse as Hyzon Motors shifts its focus away from the Australian, New Zealand and European markets to focus on North America instead.
The demise of the deal followed an update from Hyzon Motors on July 8, announcing a strategic pivot away from its Australian operations, which were subsequently plunged into liquidation just days later.
In the statement, Nasdaq-listed Hyzon disclosed its ongoing efforts to secure capital and explore “strategic alternatives,” which include the potential sale of its European and Australia/New Zealand assets, further cost reductions, a reduction in workforce and even bankruptcy protection if necessary.
Hyzon’s Q1 2024 results reported in May revealed its losses had accumulated to $276.87m, and that its revenue for the quarter was only $10m — up from zero revenue in the same period a year earlier.
The impact of Hyzon’s abrupt exit means it’s back to the drawing board for TR Group. The company had only just revised its commercial agreement with Hyzon in October last year and was soon expecting the delivery of the first two trucks which were being assembled at the manufacturer’s Melbourne facility.
It follows years of delays, with the deal first announced in November 2021 while the first of the units were originally expected to be in the country by mid-2022 for performance testing.
However, it was reported delivery of the hydrogen trucks was slowed down due to the pandemic and supply chain disruption, while the embattled Hyzon also faced compliance issues with the US Securities and Exchange Commission (SEC) relating to its Nasdaq listing.
TR Group, meanwhile, had been working closely with the government and Taranaki-based green hydrogen refuelling partner Hiringa Energy in preparation for the vehicles.
It included significant investment with TR Group approved $4 million from the government’s Infrastructure Reference Group (IRG) COVID-19 Response and Recovery Fund, and an additional $2m from the Energy Efficiency and Conservation Authority (EECA) to co-fund the project, matched by more than $9m in recipient funding. In June 2023, the IRG approved a further $2m due to increased costs.
Other options considered
Speaking to TransportTalk, TR Group general manager Brendan King says Hyzon’s exit was “very frustrating”, noting that no prior warning was given.
TR Group heard of the news through the press release “just like [Hyzon’s] employees in Australia found out about it”.
No money has gone to Hyzon and the government co-funding will still be available for alternatives, King adds.
Hyzon is now looking for a buyer to take over its Australian operations, but King doubts they will find one. “I’d be very surprised if that was salvaged,” he says.
Despite the setback, options are available and other suppliers and manufacturers are being considered, including Christchurch-based Global Bus Ventures (GBV), Hyundai NZ, and Chinese truck manufacturer Qingling Motors Co which is a joint venture with Isuzu Japan.
“So we’ve got options and the worst thing is there will be a bit of a time delay rather than anything else.”
As one of the options, GBV is already experienced with hydrogen fuel cell technology and built New Zealand’s first hydrogen fuel cell bus which was launched by Auckland Transport in March 2021. The local manufacturer was also picked by Emirates Team New Zealand to be the system integrator for the team’s hydrogen-powered chase boats.
Furthermore, TR Group is currently partnering with GBV on a hydrogen truck which is almost complete.
Hyundai NZ is another possible option with the company introducing the country’s first hydrogen-powered truck which entered the NZ Post fleet in July 2022.
However, the Hyundai Xcient fuel cell heavy-duty truck has different configurations compared to the Hyzon models which would require changes from TR Group’s first hydrogen customers, King says.
King says he still has high hopes for hydrogen projects in New Zealand despite the disruptions.
“It’s been a long process and these things aren’t easy … the technology is still there, it’s new technology and [Hyzon] was a startup company. It’s not the product that’s the issue it’s the manufacturer.
“It doesn’t dent our confidence in the technology or the product at all, it’s just a hiccup that we have to work through.”
Express freight company PBT, Fulton Hogan, Golden Bay Cement and Move Logistics Group were among those named to be the first New Zealand customers to operate the Hyzon trucks and they will remain onboard for alternative options.
“We’re still talking with the same customers and we’ve kept them abreast of what’s happened and what we’re doing about it and as soon as we finalise what the steps are from here then we’ll go back to them,” King says.
Refuelling partner
Meanwhile, TR Group will be also supporting its refuelling partner Hiringa Energy which launched the country’s first green hydrogen refuelling network in April with sites in South Auckland, Hamilton and Palmerston North. A fourth site is also set to open in Tauranga as part of the new Tauriko SH29 roading infrastructure upgrade.
Hiringa’s refuelling network is positioned to service 95% of the heavy freight routes across the North Island and it was supported by a $16m loan from the government via the Covid-19 Recovery Fund.
The green hydrogen developer had been anticipating the arrival of the Hyzon trucks so delays mean it won’t be selling much hydrogen fuel for a bit longer yet.
King says TR Group is working through ideas to help Hiringa get some offtake in the meantime and this includes hydrogen options with its GBV-built truck on the road soon as well as another dual-fuel truck in partnership with HW Richardson Group.
EECA delivery and partnerships group manager Richard Briggs says the funding to TR Group is to provide hydrogen fuel cell heavy duty trucks and that money won’t be lost on the project as the other options are being investigated.
Briggs is confident more FCEV trucks will be on the road here by mid 2025.
“EECA has robust commercial contracts with all its funding recipients, to ensure pre-agreed project milestones must be met before any funds are paid out.
“We have long experience working together with organisations to deliver ‘firsts’ and technology demonstration projects.
“Demonstration projects can be inherently higher risk. Our role is not just co-funder, but also to see projects through, so we can learn from them and share what we’ve learnt with the market to enable more uptake of low emissions tech.”
Meanwhile, more grant funding for transitioning heavy duty trucks to cleaner fuel such as hydrogen is expected to be announced soon.
Briggs says EECA will use data from the FCEV trucks and hydrogen refuelling stations to provide data to the market to enable them to make business decisions on whether hydrogen stacks up against battery electric vehicles (BEVs) and other sustainable fuels.
He says the objective is to provide information to businesses seeking to transition heavy duty fleets to cleaner fuels and energy.
