CNBC's Jim Cramer said Thursday that newly listed electric vehicle company Hyliion Holdings is pursuing a compelling business strategy but cautioned investors not to track the stock at current levels.
Hyliion, which completed its reverse merger with a special-purpose acquisition company earlier this month, fell 3.15% on Thursday to $ 28.27 per share.
"I kind of like the story, and I think it's worth buying when you can get the stock around $ 20, maybe less," the Mad Money host said. "Please be patient – let it come to you."
Cramer has been largely skeptical about the influx of electric vehicle makers who have partnered with blank check companies called SPACs, starting with Nikola in June. Other deals announced include the merger of Spartan Energy Acquisition with Fisker and the combination of DiamondPeak and Lordstown Motor.
"This is absolutely insane, and I say this as someone who is really a firm believer in electric vehicles," said Cramer, noting his support for industry leader Tesla. "I think fossil fuels are on the way out … but I also think you need to be careful when these relatively early startups are receiving large infusions of money from SPACs."
The Hyliion Hypertruck ERX
Source: Hyliion Inc.
For Hyliion in particular, Cramer believes there are many positive catalysts for the company developing powertrain systems for hybrid and all-electric trucks. He likes the fact that the hybrid solution, which can be retrofitted to existing trucks, is already on the market and uses the existing infrastructure for compressed natural gas. It also owns its battery technology, which is a plus, he said.
"On the other hand, Hyliion isn't doing anything revolutionary here because we already have trucks that run on natural gas," said Cramer. "Nobody really likes them except for some of these waste companies."
Ultimately, however, Cramer said that Hylion's strategy of focusing on powertrain systems is wise. The company, he said, "found that designing a new truck was a breeze."
"You already have truck manufacturers with lots of capacity and happy customers," he said. "They realized that they were better able to simply improve these trucks with a new and improved powertrain than they would be able to start from scratch. That makes sense."
The company also has plans for the Hypertruck ERX, which will replace the standard diesel engine with an army of batteries that can be charged on-board with tanks of compressed natural gas. Long-term, Cramer noted that Hyliion has shown an interest in hydrogen fuel cell technology, which the host is optimistic about even though it is still in its infancy.
According to Cramer, the company can sell 4,100 hybrid drives and 2,500 of the Hypertruck ERX systems in 2022 with total sales forecast of $ 344 million. "Very impressive considering they're only making $ 8 million next year," said Cramer. "These numbers seem optimistic to me, but if they get close it would be very positive."
Compared to other early-stage electric vehicle manufacturers, Hyliion "feels much closer to reality," said Cramer. However, he said investors should be wary of the stock price. It's his biggest concern right now, he said.
In late September, when the merger with Hyliion was approved by SPAC's board of directors, Tortoise Acquisition, the stock was trading in the low 50s. Now it's back below $ 30.
"The damn thing got way too hot for its own good," he said. "The bottom line? With how these SPAC deals go, I bet Hyliion will have more disadvantages before it hits rock bottom."