Cedar Park company cuts 150 jobs as it pivots in focus

Hyliion, an electric trucking company, is slashing two-thirds of its staff, including 150 jobs in Central Texas as the company pivots its focus to generators.

The Cedar Park-based company, which was founded in Pittsburgh in 2015 before it moved to Central Texas in 2018, is best known for making hybrid and fully electric power train suspensions for semitractor-trailers.

But now the company plans on scaling down its power train business to focus on an agnostic fuel generator technology called Karno, which it acquired in August 2022 from GE. At the time, Hyliion expected to integrate the technology into the company's powertrain platform.

CEO Thomas Healy first announced the company's change in focus during a Nov. 9 earnings call for the company, which followed a late October company announcement that Hyliion was considering strategic options for its power train business, including a possible sale or merger.

On the November call, Healy announced Hyliion had decided to instead wind down that business, while preserving the technology for future use or sale.

"We believe it is important to act now while we are in a position of financial strength to discontinue spending on the power train segments of our business," Healy said on the call.

Local layoffs

This week, Hyliion reported plans to cut 150 people in a a WARN letter, which stands for Worker Adjustment and Retraining Notification Act, a federally mandated rule requires employers to notify local governments of major layoffs.

The notice is likely part of the same layoff noted in a Nov. 8 Securities and Exchange Commission filing from the company, which said Hyliion was reducing its workforce by 67%, cutting about 175 people in total.

It's not clear how many people Hyliion currently has in Austin or how many it plans to keep. The company did not respond to a request for comment about the WARN notice or its current headcount.

As of 2020, the company had plans to grow to 100 people by the end of the year. In 2018, the company also detailed plans to create more than 200 new jobs in Central Texas around 2022.

Healy said Hyliion will maintain its operations at its Austin-area headquarters, which will focus on activities related to industrialization of the generator and software development. The company will also have a facility in Cincinnati, Ohio, which will focus on research and development.

In an SEC filing, Hyliion said it expects to pay about $1.4 million in employee severance and retention payments as well as an additional $900,000 in stock-based compensation expenses. The company also expects to pay about $13.9 million in contract terminations, a number which could increase by as much as $9 million depending on the outcome of supplier negotiations.

Why is Hyliion powering down its powertrain business?

On the November call, Healy said rising costs and an increasingly tough environment for the electric vehicle market have meant the company would need to raise more funding to continue its power train business, something outside advisers warned would be difficult in the current economic environment. The company stopped taking orders for powertrain products on Oct. 11, and it plans to fully close that portion of its business by the end of the first quarter of 2024.

"The environment for companies in the electrified commercial vehicle space has become challenging," Healy said. "Slower than initially expected fleet adoption of electrified vehicles, higher component costs and evolving regulatory frameworks have put significant pressure on companies like Hyliion."

Healy also said the company has seen an increase in prices for nearly all powertrain parts, which he said was driven by inflation and limited suppliers for needed parts, and at the same time, trucking fleets have been slow to move to electric vehicles, aiming to wait until it's mandated.

But the CEO said the company has seen early success with the generator product, and he said the product has interest from some customers already, with the first product deliveries expected in the second half of 2024.

Healy said Hyliion has showed the generator will be able to be used across a "broad range" of applications such as electric vehicle charging, renewables matching, supplementing grid power and acting as backup power. The stationary generators are able to be fueled by a number of fuel types such as natural gas, hydrogen, and propane.

Stock troubles

Hyliion went public in Oct 2020, after merging with Tortoise Acquisition, a special-purpose acquisition firm. At the time, Hyliion raised $560 million in proceeds, which the company planned to use to continue the development and commercialization of its powertrain equipment.

But the company's stock has taken a significant hit since. This year the company has been consistently trading below $3.75 a share, and below $1 since the company announced plans to consider strategic options for its powertrain business.

This article originally appeared on Austin American-Statesman: Hyliion slashes jobs