In reaction to a short seller report published on Tuesday, September 28, 2021, Hyzon Motors Inc issued the following comment:
“The self-serving short seller report published by Blue Orca last week is inaccurate and misleading, and we believe it was intended solely to generate profits on Blue Orca’s short position at the expense of Hyzon’s long-term shareholders. Hyzon is enjoying market momentum across its business globally, and is focused on executing on the business plan it presented to investors. Hyzon has no record of this short seller ever meeting with Hyzon management, requesting any information or clarification from Hyzon, or otherwise seeking to verify any of its claims, which would have been expected given the inflammatory and grossly inaccurate statements made in the report. We stand by our public disclosures, and we expect Hyzon’s performance will speak for itself. Today, Hyzon operates from a position of strength with approximately $500 million of cash and cash-equivalents on its balance sheet to execute on our strategy, and we look forward to discussing a number of promising developments with our investors in our regularly scheduled earnings calls,” stated Craig Knight, Hyzon’s Chief Executive Officer.
Hyzon Response to Short Seller Report
Hyzon is excited about its partnership with Shanghai Hydrogen HongYun Automotive Co., Ltd. (“Shanghai HongYun”), which is a special purpose entity seeking to provide third-party clean energy logistics services to corporate customers. Shanghai HongYun was established in the wake of the Shanghai government’s August 26, 2021 announcement that Shanghai would be among the first participants in China’s national hydrogen fuel cell vehicle pilot program.
As Hyzon announced on September 9, 2021, Hyzon and Shanghai HongYun entered into a non-binding memorandum of understanding (“MoU”) under which the parties would negotiate definitive vehicle supply agreements pursuant to which Shanghai HongYun is expected to order 100 trucks in 2021 and an additional 400 trucks in 2022. Notwithstanding the short seller’s claims, however, Hyzon specifically disclosed in its September 9, 2021 announcement that Shanghai HongYun was not yet a customer of Hyzon. Consistent with the terms of the MoU, Hyzon expects that Shanghai HongYun will be able to leverage its existing relationships to enter into long-term logistics service agreements with end users for Hyzon’s hydrogen-powered vehicles. Hyzon expects to receive binding purchase orders from Shanghai HongYun for these vehicles, which Hyzon anticipates will include upfront deposits and installment payments.
Hyzon expects to provide additional updates on its work with Shanghai HongYun and the Chinese market in the near future.
Despite the short seller’s attacks on Hiringa Energy (“Hiringa”), a New Zealand hydrogen refueling infrastructure provider which recently announced a strategic investment from Mitsui & Co., Hyzon has never suggested that Hiringa is an end user of hydrogen trucks. Instead, as Hyzon explained in its February 17, 2021 press release, the partnership between the companies is intended to accelerate the decarbonization of heavy transport in New Zealand through the buildout of hydrogen infrastructure and the supply of fuel cell electric trucks and buses. Hyzon continues to see significant potential in the New Zealand market through its partnership with Hiringa, which already has resulted in a Vehicle Supply Agreement for 20 trucks to be delivered to TR Group Ltd., one of New Zealand’s largest truck and trailer leasing and rental companies. Hyzon plans to start supplying trucks to TR Group Ltd. in the first half of 2022, timed to coincide with the availability of hydrogen filling infrastructure in New Zealand.
The short seller report falsely claims that Hyzon overstated its relationship with certain customers in its investor presentations. Like any innovative company in a nascent industry, Hyzon continues to pursue a wide range of potential opportunities, any one of which may or may not ultimately result in a commitment to purchase vehicles from Hyzon. Contrary to the short seller’s claims, no customers or potential customers “disappeared” from any investor presentation; rather, Hyzon anonymized certain customer and potential customer names in its July 2021 investor presentation. Hyzon already has entered into signed agreements with certain entities identified as potential customers in its investor presentations, including the Southern California Gas Company, Ark Energy and the Municipality of Groningen. Hyzon continues to engage in active discussions with a majority of the companies that the short seller report misleadingly claims “disappeared” from its investor presentations, as well as with a large number of other prominent companies across the globe.
The short seller report made a number of claims regarding Hyzon’s largest shareholder and affiliated entities, which are misinformed and misleading. First, Horizon Fuel Cell Technologies Pte. Ltd. (“Horizon”) is the ultimate majority shareholder of Hyzon. The entity identified by the short seller as Hyzon’s corporate parent, Jiangsu Horizon New Energy (“Jiangsu Horizon”), is a subsidiary of Horizon. Hyzon’s filings with the Securities and Exchange Commission are clear on this point. Given that Jiangsu Horizon’s shares were not publicly traded, the short seller report’s speculation as to Jiangsu Horizon’s valuation is irrelevant. Although not relevant to Hyzon’s future business, Hyzon notes that the short seller’s allegations regarding Jiangsu Horizon’s fuel cell sales are also grossly inaccurate. Hyzon understands that Jiangsu Horizon shipped more than 26 megawatts of fuel cells in 2019 and more than 36 megawatts of fuel cells in 2020.
The short seller report makes a host of baseless claims around the basis for Hyzon’s financial projections and especially its future profitability. As previously disclosed, Hyzon is developing core fuel cell powertrain technologies which include fuel cell, hydrogen storage, battery, e-axle, and integrated controllers to electrify commercial vehicles, all of which Hyzon expects to justify attractive margins. Hyzon plans to manufacture those components in its Rochester and Bolingbrook facilities, and future facilities in key markets, and expects that the cost reductions associated with that process will allow Hyzon to achieve margins well in excess of those of traditional automotive manufacturers. Hyzon management has long articulated its view of being at the vanguard of an industry in its nascency that it believes will develop substantially beyond its current size, enabling Hyzon to capture a robust profitability profile on the back of its technology.
Hyzon has also been clear in its public disclosures that while it develops its own manufacturing capabilities, it is sourcing hydrogen fuel cells and fuel cell stacks and systems from Jiangsu Horizon, and may continue to do so after Hyzon’s manufacturing plants are operational where it is necessary or otherwise advantageous. In fact, Hyzon believes this flexible sourcing is a strategic asset relative to other fuel cell vehicle manufacturers, and intends to leverage it accordingly.
The short seller report also makes misleading claims regarding Hyzon’s management. Ian Thompson was never an employee of Hyzon and only served as an interim Chief Technology Officer in his capacity as a consultant to Hyzon’s then-parent company for several months. Gary Robb remains a valued member of the Hyzon team following his retirement through an ongoing consulting relationship with Hyzon, and he retains substantial holdings in Hyzon stock. Hyzon is confident in its current leadership team, including our Chief Technology Officer Shinichi Hirano, who has more than 25 years of experience in leading hydrogen and fuel cell development, including at Ford and Mazda.
In the end, the misleading and inaccurate claims in this short seller report are a harmful distraction for Hyzon and the global family of employees, customers, suppliers and investors, but not one that will deter Hyzon from fulfilling its commitments to these stakeholders. Hyzon is extraordinarily eager to continue the acceleration of the hydrogen economy in its primary use cases of heavy-duty, high utilization commercial vehicles, and expects its addressable markets to only grow over time. Although Hyzon does not intend to make any additional public comments on the short seller report at this time, Hyzon does intend to vigorously defend the Company and its shareholders.
To receive accurate information about the Company, all investors are encouraged to review materials filed by Hyzon with the SEC and available on its investor relations website.