Episode 010 - Hyliion Holdings (NYSE:HYLN); Conversation w/CEO Thomas Healy

Distilling Venture Capital

Introduction

• Welcome to Distilling Venture Capital. I am your host, Bill Griesinger

Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world. My mission is to cut through and go beyond the hype that tends to dominate the tech and VC landscape. And provide you with information you can use.

Episode Introduction:

• Welcome back everyone.
• In today’s Episode, I have the pleasure to be joined by Thomas Healy, Founder & CEO of Hyliion, creator and maker of high-tech drivetrain for traditional Class 8 long haul trucks powered by lithium-ion batteries and CNG
• Thank you Thomas for making the time to join me today…
• First, congratulations on your public launch via the SPAC – Special Purpose Acq. Corp. which was official as of Sept. 28th.
• It doesn’t seem all that long ago that we were getting introduced to Hyliion at the 2015 Rice Business Plan Competition – when you guys rolled into Houston – literally – from Carnegie Mellon with the big green Hyliion-branded truck…it was quite a prop!

In This Episode, Thomas Healy Covers Hyliion’s Journey to its Public Offering, Including:

• Background on the formation/launch of Hyliion
• • Development of the “e-axle” electrified axle design; Lithium-ion/CNG design
  • Went public couple of weeks ago –
  • Came to Rice Bus. Plan Competition in 2015 – presented to over 500 people
  • Brought prototype – goal of bringing electrification to the trucking space – virtually untapped market opportunity
  • Semi-truck traffic is the backbone for moving cargo around the US and the globe
  • Why did you choose a SPAC as avenue for going public? Advantages, etc…
  • Looked at all paths of private and going public
  • Chose the SPAC path – a reverse merger into being a public co.
  • Merged with Tortoise Acquisition Corp.
  • Capital we brought in – Little over $500M
  • Saw a great team in Tortoise in terms of similarities in outlook and key industry needs and characteristics
  • Tortoise raised $235M over year ago – they pitched to their investors that they would go find a co. like Hyliion.
  • Their group looked at 100s of companies before selecting Hyliion – Tortoise is a big energy expertise player and particularly sustainable/efficiency drive
  • Story behind the Hyliion name?

• Business Model & Business Model Characteristics
• • Producing a fully electric truck – using an onboard natural gas generator to produce electricity and charge the battery
  • Leverages Mega-trend toward renewable natural gas, as well
  • Created very capital efficient business model – Hyliion is a powertrain co. working with existing OEMs like Volvo, Freightliner, Kenworth
  • No need to reinvent the whole truck – solution and benefit is in the powertrain, leveraging great existing truck technology
  • Infrastructure to recharge vehicles is one of the biggest hurdles and uses of capital to enter the market
  • Our solution uses renewable and traditional natural gas to recharge the batteries
  • Existing grid there – but hardly any recharging stations for electric trucks – so have to create the infrastructure, requiring billions of investor capital – just to set up the charging stations
  • Two of the Tesla “Mega Chargers” actually uses massive amount of power to recharge trucks
  • Go-to-Market Strategy…Incorporated design into the drivetrain of existing Class 8, long-haul truck
  • Value of CNG and Lith.-ion combo
  • Advantage of existing CNG fueling infrastructure around the US – big competitive advantage
  • Discusses advantages over hydrogen as a fuel source
  • How Hyliion defines your Addressable Market?
  • Key Partner/Investor network (Sumitomo, Dana, Inc. – leading force in trucking industry – valuable partner on supply chain and also mfg.
  • Product is already shipped in low volume today: Selected use-case partner/pilot examples; (Penske, Ryder, Wegmann, other trucking industry pilots & partnerships)
  • Importance of your Partners and related network in delivering the offering;

• Capital Required to Grow? – It was announced you netted approx. > $500MM from the public offering via Tortoise Acq. Corp. –
• Fully-funded plan with that capital – Capital to move tech to commercialization, volume manufacturing and production and scale the business.
• Our capital efficient, capital light approach is leveraged via Dana, Inc. for our outsource manufacturer; we don’t have to find or build a facility – great mfg. partner
• Dana, Inc. already a leader in producing product for trucking industry
• Discuss how you execute and get to breakeven and profitable on this capital?
• Competitive differentiation – Fleets care about cost savings. Goal/bus. model is moving cargo from point A to B in most cost-effective manner possible to increase their margins.
• Hyliion is less expensive than diesel, certainly cheaper than hydrogen and significantly cheaper than building a completely new electric truck and the recharging infrastructure.
• So, Hyliion has a solution now that saves the trucking industry money and is environmentally friendly.

Competitive Advantages

• Discussion competitive landscape, relative cost/pricing structure and how you leverage your expertise to bring a compelling value proposition
• Other competitive advantages, differentiation…

View of Addressable Market

• Plans for International Expansion – Hyliion is a North American Co. for now right now with product already in Canada in addition to US traction.

Closing Remarks:Thomas, thank you very much for joining me today…

Contact Information, Hyliion

• Thomas, how can those seeking additional information and wishing to learn more about Hyliion contact you or the firm? [I guess referring listeners to the ticker, HYLN, would be best start, right?] I’m typically interviewing companies that have not gone public yet – so this is new
• Website: hyliion.com

Thank you for joining me for this edition of DVC. I hope you found today’s discussion with Thomas Healy and Hyliion interesting and it gave you some things to think about regarding developments in long-haul truck technologies. Stay tuned for my next Episode.