Hyzon is the most recent startup backed by SPAC to fail

Hyzon Motors, a hydrogen fuel cell developer, has shut down after struggling to sustain operations since going public during the 2020-2021 SPAC boom. Despite positive press, warning signs persisted, culminating in the company’s downfall.

A Rocky Start and SEC Troubles

Hyzon, a spinoff from Singapore’s Horizon Fuel Cell Technologies, raised $550 million in 2021 through a reverse merger with Decarbonization Plus Acquisition Corp. However, its operations were focused on Europe, Australia, and China, with no U.S. or North American business initially.

In 2021, short-seller Blue Orca Capital accused Hyzon of fabricating orders in China, leading to an SEC investigation. The company paid a $25 million fine, and CEO Craig Knight was replaced in 2022 by Parker Meeks, a former McKinsey & Co. partner.

Attempts to Revive the Business

Under Meeks, Hyzon closed its European and Australian operations and focused on specific markets like refuse trucks. The company also partnered with Fontaine Modification to retrofit Freightliner Cascadia trucks with 110-kilowatt fuel cell systems while developing a larger 200-kW system.

Despite technological progress, Hyzon struggled to generate sales. By the third quarter of 2023, it had only $100,000 in revenue. With just $14 million in cash, the board decided on December 19 to pay creditors and shut down operations. Remaining employees in Michigan and Illinois are set to lose their jobs by February 2024.

Optimism Faded

Until its third-quarter earnings call, Meeks expressed hope, citing potential fleet contracts and falling hydrogen prices, which were projected to drop to $10-$12 per kilogram by 2025. However, Hyzon’s high truck costs and inability to secure large orders sealed its fate.

Broader Industry Struggles

Hyzon’s collapse is part of a broader trend among hydrogen fuel cell and SPAC-funded startups. German company Quantron AG entered insolvency in late 2023, while Nikola Corporation faces funding challenges. Other SPAC-backed ventures like Lordstown Motors and Embark Trucks also failed due to financial difficulties.

Hyliion, however, has managed to thrive by pivoting to a fuel-agnostic stationary generator business, securing contracts, and achieving a significant stock price increase in 2023.