- how the hydrogen truck rental system works at Hylane
- what benefits tenants derive from this model
- what plans the German start-up has to expand its fleet of hydrogen-powered vehicles
Michał Pakulniewicz, Trans.Info: During the Transport Logistic fairs in Munich Hylane received an agreement with the German government for a new round of financing. Can you tell us what are you going to use the funds for?
Sara Schiffer, Managing Director of Hylane: We received funding of euro 25 mln from the German Ministry of Transport and Digital Infrastructure and we will use the money to buy another 78 hydrogen trucks. The important thing is that we will use the whole funding to reduce the rental rates for our customers to make the usage and the rental of the vehicles as cheap as possible.
MP: You mentioned the plan to buy 78 trucks. Which producers are going to supply these vehicles?
SS: We are currently in the process of finalising the purchasing contracts. We are talking to the manufacturers that we have laredy bought vehicles from during our first funding round, so mainly Hyundai and Hyzon, but we are also considering new manufacturers. Yesterday [on May 9 during the fairs in Munich] we announced that we are entering a cooperation with Iveco and we are planning to purchase vehicles from that firm too.
MP: So will Iveco be your main supplier of vehicles now? How many vehicles do you plan to buy from them?
SS: Not yet, we are currently discussing that. But what we see is that there is a high demand for the puller so we will be happy to buy a significant number of puller.
MP: Last year Hylane announced that it plans to have 150 vehicles in your fleet by 2024. Is that feasible?
SS: Yes, that is feasible and we are holding on to that plan. With the new funding and our purchasing plans we will have 122 vehicles in our fleet. We plan to also apply for upcoming funding calls. We expect that the prices of the vehicles will drop in the future so we can purchase them without a funding.
MP: Do you have any further targets with regards to your fleet size?
SS: We are really cautious with making such prognosis because we are dependent on the funding and the price of the vehicles. We plan to apply for the upcoming funding calls organised by the German government, but we can never be sure whether we will be granted the funds. Our plan is it to grow in the future by expanding our fleet.
MP: Going back to the 78 vehicles what is the time span for buying the vehicles?
SS: After receiving the funding call we have 3 months to finalise the purchase agreements. And from that date we have nine months for the trucks to be delivered. So they need to be registered nine months after finalising the contract.
MP: You operate in Germany at the moment. Do you have plans to expand your offer to customers in other countries?
SS: Currently our focus is in Germany. We do have some customers in France, we also have some customers that are driving cross border between Germany and Belgium. Currently our focus is on Germany, but in the future it is also feasible for us to rent our vehicles to other European countires.
MP: One of the biggest challenges for the expansion of hydrogen truck fleets is the small number of H2 tanking stations. Even in Germany you can more or less count the number of stations on the fingers of two hands and the situation is worse in other European countries. How much of a challenge is that? Do you also support, or plan to support, the development of infrastructure?
SS: The infrastructure is definitely a ristricting factor. Currently in Germany there are 18 refuelling stations that are suitable for trucks. But we see that the network is fast growing with many new players entering the market. Ourselves we do not invest in the refuelling infrastructure, but we have partners who invest in the refuelling infrastructure. We are working closely with them to map the upcoming refuelling stations according to the needs of our customers.
MP: How is the refuelling infrastructure looking in the neighbouring countries that you could potentially expand your services into?
SS: We see the highest density of refuelling stations in Germany. But we see that in France or the Benelux countries they are starting to invest in the infrastructure as well.
MP: Hydrogen trucks are just one type of environment-friendly drive vehicles. Perhaps do you consider expanding your offer with other type trucks, like electric ones?
SS: We believe that there will be use cases for hydrogen electric and battery electric trucks. So we are open to other technologies as well, but as a start-up we believe it is important to have a strong focus at the beginning. But in the future we might also include battery electric vehicles in our offer, but we have no specific plans with regards to that. Our mission is to decarbonise transport and we see that the highest emissions are coming from the long-distance heavy duty trucks and we believe that for this particular case hydrogen trucks are most suitable. Electric vehicles for the time being have much shorter ranges and they need time to re-charge. We also believe that it will be a strain on the electric grid if we switched to battery-electric vehicles. Because of that we are currently focusing on hydrogen vehicles, as these have higher ranges and shorter refueling times.
MP: So how do you see the coexistance between H2 and electric trucks in the future? Can they complement each other or will they be competing technologies?
SS: We definitely see that they will go together. So it’s not either or, we believe it will be both. We also see that a number of our customers are experimenting with both. Overall we see that the battery electric vehicles are better suited for the shorter ranges, while longer ranges could be better served by hydrogen commercial vehicles. But we have some customers where this doesn’t apply. We have a customer in Germany and their fleet includes 300 trucks. If they wanted to replace them all with battery electric trucks the grid infrastructure would not allow them to provide them with enough energy. So they decided to go with the hydrogen trucks. Even though it is not heavy duty or long distance. Actually most of our clients use our vehicles for local cases but with the idea to go on long distance once we have a better refuelling infrastructure.
MP: What are the ranges of the vehicles in your offer? Can they easily go long distance?
SS: They can go 400-450 km andhave a refuelling time of 8-12 minutes. Which allows them to go on long-distances fairly quickly as they don’t need a few hours to recharge. But again it all comes down to infrastructure.
MP: How does your business scheme work? What is the lease period?
SS: We start with a rental period of 24 months, which is the shortest period, going up to even 6 years. On average I would say it is about 4 years. We have that funding guaranteed for long-term that is why most of our clients tend to opt for the longer term lease contracts. Also we have the pay-per-use model so our customers are only paying for the kilometers driven.
MP : What are the main benefits of cooperating with you for your clients?
SS: There are two main benefits. First, we are taking the financial risk away from them by buying the vehicles. The German government funding programme requires that you buy the vehicle first and then up to 3 years later you receive the funding. That funding covers 80 percent of the difference between the price of a diesel truck and a hydrogen truck.. And, for instance, one of our truck costs 600 000 euros. So we take that financial burden from the customers. Now we have to spend circa 40 mln euro on the 78 trucks that we haves secured government financing for. We get that financing from our parent company– the DEVK Insurance.
The second advantage for our clients is that since this is a pay-per-use model we also take the technology risk from them. Our customers only pay for the kilometers that they are actually driven. For instance if there is a malfunction in the vehicle they do not have to bear the costs.
MP: What is your client portfolio? And how would you describe your typical client?
SS: We have 15 customers using the first 44 vehicles. Our biggest customers have about 5 vehicles and then we have some customers with one. Our biggest customers are DB Cargo and DB Schenker, but also Sonepar and Spedition Amm from Nuernberg. We will announce a few more customers in the coming weeks including clients in France.
MP: Are you getting inquiries from clients in Poland or other CEE countries?
SS: We haven’t yet received any inquiries from Poland or other countries in that region. But in the future we definitely are considering entering other European markets. But for the time being it is crucial to have a strong focus on Germany.
MP: Are you interested in getting financial investment from venture capital funds or strategic investors?
SS: We are currently 100 % owned by DEVK Insurance. We believe that we have built a solid base for future growth – we have created an ecosystem of partners and gained some experience with the trucks. I can imagine that in the future we could be open to outside investors to scale faster.
MP: Is Hylane profitable?
SS: Currently we are not making profit. We have been in the market for just one year. We are currently focusing on market shares. This is one of the few investments from DEVK where they do not have a specific target. They believe it’s an investment in building up a new market and doing something for the environment.
MP: So you are the only company offering such a business model for hydrogen trucks?
SS: Currently we are the only company in Germany with such a model, but we see that there are new firms interested in entering the market. We can also see the manufacturers offering comparable offers. However, what differentiates us is that we offer vehicles from different producers. We currently have 44 trucks on the roads and from our research we believe that every third hydrogen truck is a Hylane vehicle.
MP: The recent bankruptcy of Clean Logistics shows that the hydrogen-drive business for commercial vehicles is still a risky one. How do you comment on that issue? And what is your recipe for success?
SS: We are doing pioneering work with our concept, we are creating a new market. And that pioneering work always means taking risks. What we are doing for our customers is taking that risk away from them and allowing them to gain experience with the vehicles.
And lastly, a non-operational question, you are a young woman in a very male-dominated business such as logistics. How challenging was it to make it to your position?
I never experienced this as an disadvantage being a young woman in this industry. Contrary to that I believe that my colleagues are doing a great job involving woman in general in the industry.