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By Jennifer Smith 

Anheuser-Busch is reserving up to 800 of Nikola Motor Co.'s hydrogen-electric trucks, one of the largest orders so far for alternative-fuel vehicles as the company races with Tesla Inc. and other manufacturers to move trucking away from diesel-guzzling big rigs.

The U.S. subsidiary of Anheuser-Busch InBev SA plans to use the vehicles for long-haul deliveries from breweries to its distributors starting in 2020. Nikola says it will build 28 hydrogen stations along the routes of the beer maker's so-called dedicated fleet, between 750 and 900 trucks that bear its branding but are generally owned and managed by outside carriers.

Truck operators are increasingly looking at alternative-fuel vehicles as the technology in the field improves and pressures grow to cut operating costs and reduce emissions. Companies have been testing trucks that run on electricity or fuels such as compressed natural gas, but commercial operations generally have been limited to short distances and smaller vehicles such as parcel delivery vans.

Heavy-duty trucks that can haul tens of thousands of pounds along long distances consume about 39 billion gallons of diesel fuel annually, according to the American Trucking Associations, offering potentially bigger savings, as well as a market that buys between 200,000 and 300,000 big rigs annually.

Nikola's hyrdrogen-electric semi can travel between 500 to 1,200 miles before needing to be refueled, the company says. The system provides power through hydrogen that passes through a fuel cell to produce electricity, which then goes to a battery that sends energy to the vehicle's wheels.

The all-electric Tesla Semi that the Silicon Valley auto maker unveiled last year is designed to travel as much as 500 miles on a single charge.

Orders for alternative-fuel vehicles account for a tiny share of the overall heavy-duty truck market, in large part because of concerns about how far they can travel and battery weight. The Tesla Semi won't be available until at least 2019. Nikola's hydrogen-electric truck is set for delivery in 2020.

Anheuser-Busch has reserved 40 of the Tesla trucks, which it plans to use for shipments to wholesalers within 150 to 200 miles of its brewery locations.

The Nikola order will allow the beer maker to convert all its long-haul dedicated fleet to renewable-powered trucks by 2025, said Ingrid De Ryck, Anheuser-Busch's vice president of sustainability and procurement. By then, the company aims to reduce carbon emissions across its supply chain by 25%.

"We see the Nikola and Tesla vehicles as complementary solutions," Ms. De Ryck said. "We have so many routes, so many different distances to cover."

The fierce competition between Nikola and Tesla for that market extends to the design of the trucks. On Tuesday, Nikola sued Tesla for $2 billion in federal court in Arizona, alleging the Tesla Semi infringed on several of the company's design patents, including Nikola's wrap-around windshield and overall design.

"It's patently obvious there is no merit to this lawsuit," Tesla said in a statement.

Nikola chief executive Trevor Milton said the lawsuit was aimed at protecting the company's intellectual property, and that there was room enough for both manufacturers in the alternative-energy truck market.

"We want Tesla to succeed," Mr. Milton said in an interview. "Tesla has really paved the way for people to know that electric vehicles can work... If they fail, it hurts us."

The Nikola truck's longer range may make it more appealing to truckload companies that haul goods over long distances.

U.S. Xpress Inc., a large carrier based in Chattanooga, Tenn., has reserved up to 1,000 of the company's hydrogen-electric trucks, Nikola said. The company says it is now refunding customer deposits on its trucks because it doesn't need the money to fund operations.

Delivery giants United Parcel Service Inc., FedEx Corp. and Deutsche Post AG's DHL have all preordered Tesla Semis, with orders ranging in size from 10 to 125 trucks. Retailer Walmart Inc., which has one of the largest private truck fleets in the U.S., has ordered 15 Tesla trucks.

Write to Jennifer Smith at jennifer.smith@wsj.com

(END) Dow Jones Newswires

May 03, 2018 09:14 ET (13:14 GMT)

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