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Via Autonews

GM drops plans to build Nikola’s EV pickup

November 30, 2020

DETROIT -- General Motors and Nikola Corp. on Monday announced a reworked, smaller agreement that keeps the fuel-cell partnership intact but eliminates an equity stake in the startup for the Detroit automaker as well as plans for building Nikola's electric pickup truck.

In September, the companies announced a deal under which GM would supply batteries, a chassis architecture, fuel cell systems and a factory to build the startup's proposed Badger electric pickup in return for an 11 percent stake and $700 million. However, the deal came into question after a short seller attacked Nikola as a fraud, something the company denied.

The new deal, a non-binding memorandum of understanding, is subject to negotiation and a definitive deal, Nikola and GM said in separate statements.

Under the new agreement, GM will not take an equity stake in Nikola as originally planned. GM will supply its fuel-cell system for Nikola's Class 7 and Class 8 commercial semi-trucks, Nikola said. The companies are also discussing Nikola's potential use of GM's Ultium electric battery system in its commercial trailers.

Nikola's shares plunged 22 percent to $21.67 in early trading on Wall Street.

Short seller's doubts

The agreement comes ahead of a Dec. 3 deadline and ends months of speculation over GM’s commitment to the Phoenix-based company after a short seller report cast doubts on Nikola’s ability to deliver on promises and its transparency with investors. The allegations of deception hammered the once high-flying stock, prompted the resignation of founder Trevor Milton and forced GM to reconsider terms of the initial agreement.

The Badger pickup had been a centerpiece of the earlier proposed deal with GM and now is unlikely to be built. Nikola, which had said the vehicle depended on finding a manufacturing partner, said Monday it will refund all deposits taken for the truck.

Nikola had previously estimated production of the truck would start in 2022. Milton fast-tracked the Badger after taking notice of the fanfare around Tesla Inc.’s planned pickup, the futuristic-looking Cybertruck. But the company has never shown anything more than computer-generated images of the truck.

Nikola had promised it would unveil a prototype at a late 2020 product showcase called Nikola World. That event was postponed indefinitely after Milton stepped down, with the company citing COVID-19 concerns.

Nikola first publicly announced the truck in February, with Milton claiming the truck had been in development for years and would come with in-house battery technology. Mark Russell, who replaced Milton as CEO, later contested that idea. He told investors on an August earnings call it was “just a conceptual exercise” and said last month Nikola won’t build the truck without a partner to make it.

Other partners

The reworked agreement is more along the lines of a supply contract. In order to access GM’s hydrogen technology, Nikola will have to “pay upfront” for the investment required to produce the equipment, according to a statement from GM. It also raises the possibility that GM could supply its Ultium electric battery to Nikola, but provides no firm commitment.

Nikola expects to start producing a battery-electric semi truck by the end of 2021 in Ulm, Germany, part of a joint venture with CNH Industrial NV’s Iveco unit. Its longer-term focus is on fuel-cell powered vehicles that run on hydrogen and can allow fleet drivers to cover longer distances. Nikola has broken ground on its own factory in Coolidge, Ariz., expected to be completed by late next year and start production of a hydrogen-powered big rig by the end of 2023.

Nikola has had an agreement with Bosch since 2017 to “develop, build, test and support” various components for Nikola’s prototypes, including a fuel-cell system, according to a regulatory filing. Even if the GM deal were to go ahead, Nikola told Bloomberg in September that Bosch would continue to be the fuel-cell supplier for European built FCEVs.

GM’s fuel cell technology is viewed as more mature than Bosch’s but is some way from being adapted to use in a Class 7 and 8 semi truck, Bloomberg reported in September. In the meantime, Nikola planned on using a Bosch-developed fuel cell in its prototypes, a person familiar with the matter said.

The company also has plans to find a partner by year’s end to help it roll out an ambitious hydrogen-fueling network, Russell said in a November earnings call. Nikola aims to break ground on its first commercial hydrogen station in the second quarter of next year.

Reuters and Bloomberg contributed to this report.





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Canthoney

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Company was very shady from the start. Unfortunate that they suckered so many people. Hopefully this will teach the traditional auto makers not to jump in headfirst without proper due diligence.
 

ajdelange

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Perhaps they didn't "sucker" anyone. What they did do was put forward a guy that had "snake oil salesman" written all over him.
 

ElectricTrucking

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If GM didn't have to want control of Rivian they could have partnered up. I have a 2020 Bolt but I sure don't want GM any where near Rivian.
 

Canthoney

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Perhaps they didn't "sucker" anyone. What they did do was put forward a guy that had "snake oil salesman" written all over him.
The first investors certainly were. They could’ve suckered quite a few people because GM gave them an air of legitimacy when they had none before they announced their partnership. It certainly brings into question GM’s judgment.
 

ajdelange

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Oh, sorry. Didn't even realize that the SEC had completed its investigation let alone that the matter had been adjudicated.
 

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