Troubled U.S.-based Zero emission truck start up and hydrogen fuel cell specialist, Hyzon Motors has announced it will shut its Australian and European operations to focus on the US market.
The company said in a statement, that after considering its options, as well as completing its assessment of the challenging market conditions across Europe and Australia, the company would halt its operations in both the Netherlands and Australia.
Hyzon also flagged some deep financial issues by stating, that it is ‘evaluating the need to pursue bankruptcy protection or other in-court relief if its financing efforts or other strategic alternatives are not successful’. The pullout from Europe and Australia may have been painted by the company as a strategic move in answer to a lack of government support and incentives, but this potentially masks dire financial circumstances.
The sentence on its potential need to seek bankruptcy protection in the US, was buried deep in the press statement it issued, which also outlined the company’s efforts to ‘seek extra working capital on the markets and through other avenues’.
Hyzon had announced a ‘partnership’ with the Victorian based auto club, the RACV, back in 2022, which included establishing its Australian HQ on the grounds of the RACV’s Noble Park campus, with the auto club giant also announcing that its towing arm, Nationwide Group was committed to buying Hyzon hydrogen fuel cell tilt tray trucks as part of its decarbonisation. At the time it was understood that the RACV had invested in Hyzon’s Australian operation, but it is not clear if the investment went ahead, and if so how much was outlaid.
The RACV was approached for comment but a reply was not forthcoming prior to publishing.
Hyzon said in its statement that by comparison with North American efforts to accelerate the hydrogen transition and adoption of zero-emission, fuel cell technology, it believes that government support for fuel cell-powered transportation in Europe and Australia has waned, citing the disbandment of hydrogen subsidies in many European countries and the perception that Australia had lost interest in hydrogen.
The company optimistically said in the statement, that it currently intends to maintain the potential to return to the European and Australian markets as a fuel cell system supplier to original equipment manufacturers.
“I would like to express my utmost gratitude to our dedicated European and Australian teams who have tirelessly worked toward advancing the hydrogen transition,” said Hyzon CEO, Parker Meeks.
“This was a complex and difficult decision. Given the challenges of bringing new technology to market in an emerging industry, we believe we need to focus our efforts on the North American market and refuse industry as well as overseeing our large fleet trial programs, which commence this summer,” said Meeks.
The company said that in connection with the planned exit from Europe and Australia it expects to incur costs of approximately $AUD25.2 million ($US17 million), of which approximately $AUD10.4 million ($US7 million) is expected to be in cash.
The costs are expected to include non-cash inventory write-downs of approximately $US7 million, employee-related costs of approximately $AUD4.5 million ($US3 million), as well as other exit related costs of approximately $AUD5.93 million ($US4 million) along with non-cash impairment charges of approximately $AUD 4.5 million ($US3 million).
Hyzon added that it expects to incur these costs in the second and third quarters of 2024 and make the related cash payments in the third and fourth quarters of 2024. The company also said it anticipates ‘de-recognition of certain liabilities’, which it said may result in ‘non-cash gains in the third and fourth quarters of 2024’. The company said it is unable to estimate these non-cash gains at the moment.
Hyzon went on to say that it is continuing to pursue its efforts to secure capital via the markets as well as exploring various other strategic alternatives. It said that these alternatives include a sale of all or a portion of the company, the now certain divestiture of its Europe and, or Australia and New Zealand businesses and subsidiaries, additional cost reductions, liquidity management, a reduction in workforce and other significant corporate transactions.
Back in 2022 Hyzon and the RACV revealed that Melbourne would be home to the Hyzon Motors Australian headquarters, under a partnership agreement between the two organisations.
Under the agreement, Hyzon in conjunction with the RACV would develop a purpose built facility, including corporate offices, a showroom, an assembly plant, warehousing and a workshop, which it said was expected to generate more than a 100 localised engineering and manufacturing jobs by 2025, claiming that hundreds more indirect jobs were expected through the supply chain.at their Noble Park location. That hope now seems to be dashed.
The two organisations also said in that 2022 statement that the partnership would include the first order of four hydrogen powered vehicles for RACV’s subsidiary Nationwide Group, saying that these trucks would be trialled on arrival, which was originally scheduled for the end 2022. It is understood this was bumped back to late 2023. However there is no indication as to whether the trials commenced or took place at all.
Hyzon said at the time it would deliver three locally manufactured Hyzon rigid tilt-tray trucks and one fully imported Hyzon prime movers to Nationwide.
Managing director for Hyzon in Australia and New Zealand , John Edgley, said at the time that the announcement was exciting news not just for ‘the local economy, but for Australia’s energy transition aspirations and the manufacturing jobs of the future’.
“We are focused on generating new jobs, new manufacturing and technology facilities, and a fundamentally new industry in Australia and New Zealand, that will underpin a sustainable future for the region,” Edgley said at the time.
“With governments across Australia and New Zealand shifting their focus towards hydrogen as a cost-competitive and zero-emission fuel source, Hyzon stands ready to support and partner on key projects and initiatives.” he said in 2022.
