GM has no investment in Nikola. Nikola would be basically nothing but a customer of GMs if they decide to sign the deal.That's an interesting question - whether or not GM will back out.
I don't think GM expected to gain much on the technology side. It likely saw Nikola as another brand in its portfolio and as another platform to use GM battery and fuel cell technologies. GM would get to leverage its know-how and capabilities over a wider scale and scope of products.
But Nikola's brand is damaged. How long will the damage last? That depends on what the SEC and law suits brought by private investors find. That could take months, even years.
My guess is GM will be able to back out of its investment in Nikola, if it wants to.
Again, we have a huge demand for hydrogen already, which dwarfs anything the transportation industry might need in the next decade, and it hasn't improved the method of production. Using hydrogen as storage for curtailment may be an eventual use, but that hydrogen should supplant "dirty" hydrogen being used in industry now. Once we start approaching hydrogen surplus, I'll be on board with fuel cell use for long haul trucking or other edge cases. Until then, I remain unconvinced personally.If H2 is a better option for longer range use then the methods of production will likely continues to improve also, meaning it now might become more attractive for other uses, such as storage of excess solar and wind power during the day for tapping at night, etc.
They didn't pay for with cash or cash equivalents. As of now, they can walk away from the deal with no direct consequences. They will receive the stock for providing engineering for design and manufacturing of the Badger.Gaining $2 billion in stock, whether paid for in cash or cash equivalents, is an investment (from GM's point of view).
GM is offering $2M of "services in kind" for manufacturing etc., not investing cash or a cash equivalent.Gaining $2 billion in stock, whether paid for in cash or cash equivalents, is an investment (from GM's point of view). GM gets 11% of Nikola's shares, a board seat, and GM controls all of the design, engineering and manufacturing decisions and capabilities.
Nikola's future is in GM's hands. From Nikola's perspective, you can call it a purchase agreement, if you want, but it's a purchase agreement that controls your destiny as a company, assuming GM goes through with it.
Possibly in the short term due to the use of traditional generation facilities, where there is normally surplus energy. However, I think this will change drastically within the next 10 years due to economics of renewables in combination with grid storage. It's the grid storage piece that will negate the issue with demand peaks & the need for surplus energy; right now, you have to keep generation producing more energy that needed to ensure you can meet peak demand, because it takes hours to bring additional generation online.Milton has calculated that if he can buy electricity for 4¢ a kW hour he can make a profit producing hydrogen. The question is, of course, whether the utilities will sell it to him at this price.
Yes there is. And how does a business such as this one make money? By selling electricity! Use the analogy of me and my back yard. If I can make a profit by selling electricity at 4¢/kWh (IOW if my operating expenses plus the amortization on the cells and inverters are less than 4¢ a kW hour) I can make a profit by installing more cells and perhaps storage knowing that I have a market for the extra that my additional cells collect with my neighbor even though I am selling at just above wholesale rates. I am sure this has been considered in forming Nikola's business plan. But please take note that I am not confident in Milton's analysis to the extent that I have bought any of his stock.There is already a business case for battery-based grid storage, look at the data from Tesla-powered Hornsdale Power Reserve. And those grid scale economics will only improve over time.