Commercial Hydrogen Vehicle Co. Hyzon Motors Hit with Securities Class Action

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A proposed class action alleges Hyzon Motors and its top officers issued materially false and/or misleading statements with regard to the nature of the hydrogen fuel cell-powered commercial vehicle company’s “customer” contracts and its ability to deliver vehicles in 2021 on its stated timeline. 

The 29-page case also alleges Hyzon Motors and its execs “severely embellished” purported deals and partnerships with commercial customers, one of whom a Blue Orca Capital report at the center of the case described as a “[f]ake-looking Chinese shell entity” formed three days before the announcement of a purported 500-vehicle deal. 

The complaint says that upon the September 28, 2021 release of Blue Orca Capital’s report on Hyzon, which stressed, among other things, the suspected fakeness of the company’s supposedly biggest customer, Hyzon’s quiet dropping of blue-chip investors from investor disclosures, and the resignation of two chief technology officers in 15 months, Hyzon’s share price fell 28 percent, financially damaging investors. 

During the period at issue in the lawsuit, February 9 to September 27, 2021, Hyzon represented in press releases and financial disclosures that it had rapidly expanded its commercial reach via supply agreements with customers around the world and would deliver its fuel cell-powered heavy trucks to North American and European customers in 2021, the case relays. Moreover, Hyzon, according to the complaint, made statements with regard to Fortune 100 companies having “rapidly embrac[ed] hydrogen as the essential pathway to a net-zero economy,” and included in a February 2021 Form 8-K filing an investor presentation in which it touted Hyzon’s “top tier customers/end users/partners,” customer deployments and vehicle customers. 

Later in 2021, Hyzon, in an announcement of its Q2 financial results, represented to investors that it expected to fulfill its sales outlook for the year, including by shipping 85 vehicles worldwide, the suit continues. In September, Hyzon issued a press release in which it announced it would supply up to 500 hydrogen fuel cell electric vehicles to a Shanghai logistics company, a development that saw Hyzon’s stock price rise 29 percent, according to the filing. 

Blue Orca Capital’s September 28 report cast doubt on Hyzon’s representations, the case relays. In particular, the report spotlighted Hyzon’s largest customer as “a fake-looking Chinese shell entity” formed three days before the 500-vehicle deal, claiming “Chinese government records” showed that the company had paid Hyzon nothing in capital and had no WeChat account or website. Moreover, Blue Orca’s report stated Hyzon’s next-largest customer was “not really a customer” in that the entity, a New Zealand-based infrastructure startup, was more of a “channel partner” who helped Hyzon with marketing to real end customers in the country, the suit says. 

Further, the case states that Blue Orca’s report focused on so-called “phantom big-name customers” who Hyzon hyped in its investor presentation to generate buzz. According to the report, Hyzon “quietly dropped these household names, such as Coca-Cola, Heineken and Ikea, from investor decks” after other electric vehicle companies had gotten into trouble “fabricating customer contracts.” Blue Orca also noted that two of Hyzon’s chief technology officers had resigned in the past 15 months, despite the fact that the company was formed only 20 months prior to September 2021, over their reported discomfort with how Hyzon was presenting customer orders to investors, the lawsuit states. 

Lastly, Blue Orca’s report described Hyzon’s affirmation of its vehicle delivery and revenue guidance as “highly misleading,” as a customer of the company said it would not be taking any deliveries of Hyzon vehicles until March 2022 at the earliest, the lawsuit notes. 

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