Freight Efficiency with Nacky's Mike Roofen friends. In episode 31, we're joined by Thomas Healy, CEO of Hyliion, where he shares the story of how the company got started and then pivoted from its original plan to electrify trailers to focus on a truck-based electric solution. We also talk about why passion and loving what you are doing are important when bringing a new idea to market and the value of making incremental steps toward your ultimate goals. And finally, we discuss the tailwind that is behind the electrification of commercial vehicles.
Today we have joining me Thomas Healey. He's the CEO at Hyliion. Hello Thomas and thanks for joining us today.
Mike, great to chat with you again. I appreciate you having us on. We go back a good ways and I'm pretty sure it was while you were still in Pittsburgh and I don't think you'd even named the company yet. And I always ask my guests, I mean this is named Freight Efficiency with Mike and Friends. So do you remember how we met and how we got to know one another?
So, I know a long time ago when I was just getting into this, I was trying to learn about the industry and your website was one of the first ones I came across as like what are people doing in this industry to improve efficiency. And so I know, you know, that was kind of our first stop of learning like what are the trends, right? There was a huge effort towards aerodynamic improvements, around low rolling resistance tires, and for us it was just kind of the start of the electrification era. So I think, you know, I probably knew about you before you knew anything about Hyliion or before it was even called Hyliion for that matter.
Yeah, yeah. And that's good because, you know, I remember when we started Knacky 11 years ago, I mean, nobody knew it, right? And there was little traffic on the web and then it started to grow. I'm glad we were that resource because that was probably, when would that have been? Maybe seven, eight years ago.
Yeah, probably was like 2014ish timeframe, somewhere in that ballpark would be my guess. And then it was, you know, 15 and 16 when we actually officially started Hyliion.
I think when we first met you were focused on electrifying the trailer axles, if I remember right, before even looking at tractors. And I know now, I guess I want to get into that as we get to talking here about trailers, tractors, what's all in your future. But let's just start at the beginning. Tell us how Hyliion got started and a little bit about your career. They're probably one and the same because this work has been pretty much your professional career, right?
Yeah, that is very true. So to take you through the whole journey, the focus right from day one of Hyliion was bringing electrification to the commercial vehicle space. It was pretty interesting when I was in college doing a grad program at Carnegie Mellon, you know, had this crazy idea of what if we kind of took this major trend going on in the passenger car space, you know, which was electrification. And at those days, you know, Tesla was not yet probably quite a household name. You kind of saw some of those early Model S's or the Roadsters out there, but it was nothing like what it is today. And you kind of looked at this industry and saw a really unique opportunity where if you can bring electric to trucks, electrification of trucks, not only can you have a massive impact on emissions reductions, but you also have this unique ability to actually save fleets money and reduce their operating costs. And, you know, in the long term, hopefully that ultimately stems down into reducing how much it costs to buy a good in a store because ultimately it costs less on a truck. And that's a very different equation than the passenger car space, as you know. I mean, going and buying an electric car, it's an emotional decision, versus for these fleets it's all about economics and what's going to make them a more profitable company and how do we reduce emissions.
Passenger cars, so, you know, a passenger car might cost you $25, $30,000. You know, very few will ever spend that amount of money in fuel over the lifetime of that car. But one of these trucks, three, $4 a gallon, pick a number, but a $125,000 tractor, at 100,000 miles and 8 miles per gallon, I mean, they can burn the $125,000 in fuel in two or three years. And so over the life of that trucking vehicle, just another way of saying the same thing you're saying, is there's a lot of cost in fuel over the life of that truck. Three, four times the original cost of the sleeper tractor.
I mean, most truckers in one year will put more miles on their truck than a person would put on the life of a whole car, right? I mean, trucks will go 100, 120,000 miles a year. So, yeah. No, it's fascinating. That makes the payback and ROI and impact that you can have really, really cool. So, to where you started, yeah, our initial idea was bringing an e-axle, putting it on a trailer, and trying to reduce fuel consumption that way. And, you know, we thought it was a pretty novel way to do it. But, you know, we ultimately learned that fleets end up owning a ton more trailers than they do trucks. The trailer-to-truck ratio is pretty high. So, what we found was if we put our technology on a trailer, a lot of its life, it was just going to sit dormant, you know, behind a warehouse or at a loading dock. And so, that's when we ultimately pivoted to having a truck-based solution. And really took that same hybrid concept and just pulled it forward to the truck and that's the product that we're shipping to fleets today. And then this past year, you know, one of the things that is a huge milestone for Hyliion is we announced the introduction of our HyperTruck ERX full powertrain. So the hybrid, the best way to think about it is kind of a way to take an existing truck and improve it. But you're still going to use a lot of the same powertrain that was there, versus when you move to the HyperTruck, now it's doing the full powertrain of the vehicle. And the way that system works is it's a fully electric drive truck, but as opposed to plugging into the grid to recharge the batteries, we actually use an onboard generator that can produce electricity as you're driving and charge the batteries up. So you eliminate a lot of the downsides that normally come with BEVs, which is huge battery packs and a lot of weight and then also the need for a bunch of charging infrastructure. With our solution, we've got a small battery and then we use the existing natural gas charging infrastructure that's already out there to charge the batteries as we're going. So that was a big announcement for us last year.
Yeah. And it's a very specific solution that I'm sure we'll get into here a little later. I mean, I think traditionally, weren't those called series hybrids? And it's kind of like a locomotive sort of, at least structure.
Yeah, it is the exact same structure as a locomotive, right? I mean, many people probably don't realize this, but trains, they're electric. And they've been electric for a long time, but they produce their electricity locally. The one difference that we have from a train is most trains they don't have that battery as the buffer in between the generator and the actual electric drive, versus we still do have a battery pack on board and that allows us to actually drive the vehicle with the generator turned off and then you're a true zero emissions vehicle. There's nothing coming out of the tailpipe. You're pure electric and that's going to be awesome for when you're in the ports, when you're in cities at a distribution center. No tailpipe emissions at all.
What segment of the market do you see as the that would take advantage of this HyperTruck product?
So we've kind of broken it down maybe into kind of two different sectors that we're looking at. I think there's kind of the local delivery, short haul, which we see that as going to be, I mean, it makes a lot of sense. You don't have a bunch of miles that you need to drive every day so the battery can be a pretty small size and it's not going to be a huge impact on the grid in order to recharge those. So, you know, kind of anything in cities, local delivery, final mile, we see going BEV. But then once you start getting over like having to drive 150, 200, 250 miles a day, BEVs, the weight and the cost of the batteries just start to not really make much sense. So, that's where we see this range extender, yeah, as you said, the correct technical term for it is a series hybrid vehicle where you have a full electric drive, but you produce the power or the electricity locally. And one of the other ways to think about this is it's the same exact concept or same exact structure as a hydrogen fuel cell truck, right? A hydrogen fuel cell is a series hybrid vehicle as well. The difference with our approach is we're going to start off by using natural gas to recharge the batteries and then we actually have a roadmap to get to hydrogen as our power source. But we see that as a little bit down the road as compared to where we are with natural gas today. So it's kind of that longer range, when you know the guys that are really hitting the road putting hundreds of miles a day on these trucks, that we think this is the right solution for them.
Yeah. Very good. And before we leave this, of course we'll probably come back, but why natural gas and not diesel or could they both work?
So, natural gas has a ton of benefits to it from an emissions standpoint. You know, natural gas alone has like, I think it's over a 90% reduction in NOx emissions that comes from it. There's also a whole mega trend going on that I, up until a couple years ago, I didn't even know this was a thing, but it's really fascinating where we're actually capturing methane coming off of like landfills and dairy farms, wastewater treatment plants, and we're actually able to pump that into the natural gas pipelines and use that as a fuel in a vehicle. And that fuel is called renewable natural gas. And so basically, the simplest way to think about it is you're basically capturing pollution and using that to drive a vehicle as opposed to just letting it gas off into the atmosphere. And so there's this whole industry of renewable natural gas that we can use. And it actually leverages the same exact station. So, you know, it's not like there's conventional natural gas and renewable natural gas stations. It's all the same. You use the same nozzle to fill up the truck. It's all a credits-based system that the natural gas industry has set up. So the coolest thing with it though is since you're basically using pollution to drive a truck, you can actually have a below zero or net carbon negative emissions profile for vehicles. So it's actually, the strange way to think about it, it's cleaner for the environment for you to actually go drive your truck in some instances on renewable natural gas than to not drive it. So that's where we saw a bunch of benefit with natural gas or RNG, renewable natural gas. The other thing which cannot be overlooked is infrastructure. Natural gas infrastructure, there's already over 700 stations out there. So while it doesn't rival diesel, you know, it is so far ahead of where we are with hydrogen today.
Yeah. And back to the battery pack. I mean, I'm assuming you could go bigger or smaller. So you don't need to have just one battery pack size. I mean, that could be different given different duty cycles of the truck or really just how the trucker might want to use it. And it could probably even have a plug-in capability if you wanted to leave with a full battery pack. But a lot of things here going on. Let me switch gears for a few minutes. It seems like, you know, there's a lot of startups and Hyliion would be a startup, right? Had an idea and, you know, you've morphed a couple of ideas around and now you're ready to go to production and be a real solution. But there's a lot of startups right now. You mentioned Tesla with their semi, you got automation, electricity, hydrogen. I mean, I've been in this 35 years, and, you know, it always seems like the now has the most new stuff going on, but man, it sure feels that way. What is it about trucking right now that is attracting so much investment money and new players?
