By Timothy Geigner
The trouble for Nikola Motor Company began only in September, a couple of months ago. That’s when a hedge fund very publicly called out the company and its founder, Trevor Milton, for essentially fooling people with doctored video of its electric semi-truck product to get them to invest in the company. This led to rumors of federal investigations, the resignation of Milton, and the company idiotically trying to use copyright takedowns to silence its critics. All of this was likely in the service of trying to save a very public $2 billion deal with General Motors that was due to be closed upon in early December.
Well, what was Nikola’s bad month is turning into a very bad quarter, as the General Motors deal has gone fairly sideways.
Nikola (NKLA) won’t have General Motors (GM) as an investor, at least for right now.
The electric truck maker said on Monday it has revised the terms of a prior deal with GM, and that the auto giant won’t be taking a stake in Nikola. The two companies will not work together to produce Nikola’s pickup truck, the Badger. Nikola’s shares were down more than 21% in pre-market trading.
The Badger was supposed to be a consumer pickup truck made in partnership with GM, utilizing GM’s manufacturing and logistics operations alongside Nikola’s electric batteries and drivetrain. But now, the general consensus is that this deal going under with GM has rendered the Badger completely dead.
EV and hydrogen truck start-up Nikola’s deal with General Motors has fizzled, the EV startup revealed, after several weeks of speculation about a deal that would have seen the Michigan auto giant produce the Nikola Badger truck. Nikola indicated that it had reached a non-binding memorandum of understanding with GM regarding collaboration on GM’s hydrogen technology for large trucks, but that the pickup aimed at private consumers was not currently contemplated with GM backing. In fact, the Badger now appears entirely dead, with Nikola indicating that it will refund deposits for the EV truck.
For its part, Nikola is pointing to the deal with GM not being completely dead. Instead, the company is going to focus on producing semi-trucks that GM will make the fuel-cell technology for. The deal is now essentially a basic supply partnership, but the real impact of the change of deal terms is that GM has backed away from taking an ownership stake in Nikola.
But Dan Ives of Wedbush Securities writes in a new note that the “headline” from the new agreement is that GM won’t be taking a stake in Nikola — and that news “will be viewed as a clear negative.”
“This went from a game changer deal for Nikola to a good supply partnership but nothing to write home about and the Street will be disappointed accordingly along with lingering lockup worries,” Ives wrote.
All because the company’s founder wanted to pretend like it had a produced a product that did something that it absolutely did not. It sure seems like it would have been better for the company overall if it had just told the truth.