Hyliion strikes new deal with City of Cedar Park after layoffs bring it out of compliance

Cedar Park-based Hyliion, a company once focused on electrification of commercial vehicles before it pivoted last year to focus on generators, has struck a new deal with the City of Cedar Park, after layoffs brought it out of compliance with its original 2018 incentive agreement.

Cedar Park City Council voted to approve the new deal earlier this month, which requires the company to pay back some of its previously awarded incentive money but does allow Hyliion to gain further funds if it hits certain milestones by 2028.

The original agreement, which was for the company's 152,000 square-foot Cedar Park facility, had originally been set to expire in October 2022, but had been extended to October 2025. Under its original agreement with Cedar Park the company had plans to add more than 200 new jobs.

Fall brought layoffs, a shifted focus at Hyliion

The Cedar Park-based company, which was founded in Pittsburgh in 2015 moved its headquarters to Central Texas in 2018 after being lured by Cedar Park's incentive offerings.

The company was best known for making hybrid and fully electric power train suspensions for semi tractor-trailers, but last year pivoted its focus to agnostic fuel generator technology called Karno, which it had acquired from GE in August 2022. In November, the company scaled down its power train business to focus on the generators, less than a month after it had announced it was considering strategic options for its power train business, including a possible sale or merger.

At the time, CEO Thomas Healy, said the environment for commercial electric vehicles had become "challenging" and cited high component costs, an evolving regulatory framework and slower than expected fleet adoption.

In November the company also said it would cut 175 people, or 67% of its workforce, in a Securities and Exchange Commission filing. That same week, Hyliion reported plans to cut 150 people in Cedar Park in 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.

More: Cedar Park company cuts 150 jobs as it pivots in focus

As of October, the company had reported to the city of Cedar Park that it had 229 full time employees, which qualified it for a $250,000 incentive payment, bringing their total award up until that point to $1.5 million.

During a late February meeting of the city of Cedar Park's Type A Economic Development Corp., the city's assistant director of economic development, Scott Smith said the layoffs immediately brought Hyliion out of compliance with their existing incentive agreement, and the company began to work with the city to find a path forward to make the city whole. He said at the time the company's headcount was about 60 employees in Cedar Park.

Smith said the city had expressed desire to protect the remaining jobs, and if possible, grow jobs over time once the company "weathered (the) retooling" of their business model.

What is Hyliion's new deal with Cedar Park?

Under a new agreement, Hyliion will pay back the city $745,000, but it would be allowed to keep the $400,000 the company received to account for the benchmarks it hit prior to October. It also included a performance-based incentive of up to $1.1 million if the company adds 60 new jobs by 2028, with an average wage of $90,000 and puts $80 million towards capital investment over the same period, Smith said during the February meeting.

On Tuesday, Healy said in a statement that the new incentive deal, will help the company's future expansion and manufacturing growth.

"As we progress forward, we are excited to produce sustainable, electricity-producing technology in Cedar Park," Healy said.

Hyliion's pivot came as its stock took a significant hit since it first went public in 2020, when it merged with Tortoise Acquisition Corp., and the resulting company began trading on the New York Stock Exchange. At the time, the company's stock went public at about $40 a share and raised $560 million in proceeds, which Hyliion planned to use to continue the development and commercialization of its powertrain equipment.

But this year, the company has been consistently trading below $2 a share, and saw dips after announcing it would consider strategic options for its powertrain business. Tuesday evening, the stock closed at $1.45. The stock also lost compliance in February after trading for under a dollar for more than a 30-day period but regained it this month.

This article originally appeared on Austin American-Statesman: Hyliion, City of Cedar Park revise incentive agreement afterlayoffs