The Nikola Badger pickup was intended to use both hydrogen fuel cells and batteries for power. The project has been canceled.
Nikola Inc.General Motors and Nikola aren’t moving forward with plans for the automaker to take a stake in the hydrogen truck startup in exchange for building its Badger electric pickup as the model is being canceled. GM may still supply fuel cells and batteries for Nikola’s futuristic big rigs.
Under the terms of a potential alliance announced Sept. 8, GM was to take an equity stake in Nikola of about 11% in exchange for producing the hydrogen- and battery-powered pickups. That agreement had to be finalized by the start of December. Nikola isn’t moving forward with plans for the pickup to stay focused on heavy-duty trucks, CEO Mark Russell said. Customers who’d put down deposits for Badgers will be refunded, the company said.
“Heavy trucks remain our core business and we are 100% focused on hitting our development milestones to bring clean hydrogen and battery-electric commercial trucks to market,” Russell said in a statement. “We believe fuel-cells will become increasingly important to the semi-truck market, as they are more efficient than gas or diesel and are lightweight compared to batteries for long hauls. By working with GM, we are reinforcing our companies’ shared commitment to a zero-emission future.”
The inability of Nikola to bring GM on board as a major backer is a blow for the company as it works to regain stability following the September departure of founder and executive chairman Trevor Milton, who’d been accused of lying about the startup’s technological capabilities in a report by an analyst with a short position in Nikola shares. The Badger pickup was an unexpected addition to Nikola’s product line early this year, and its fate was always tied to securing an automotive partner to build it under contract.
Nikola shares plunged 24% to $22.12 at the start of Nasdaq trading on Monday.
The report by Hindenberg Research alleging fraud at Nikola hammered its share price and sparked reviews by the Securities and Exchange Commission and Department of Justice. Russell said in an earnings call this month the company was cooperating with investigators but provided no update on the status of their review. The company has incurred $5.2 million of legal expenses related to the report and regulatory reviews, CFO Kim Brady said in the results call.
Nikola’s plan to use GM’s Hydrotec fuel cells for its trucks remains intact, under the terms of a new tentative agreement unveiled on Monday. Still, that’s unlikely to satisfy investors, said Wedbush equity analyst Dan Ives.
“In a nutshell, the signing of GM as a partner is a positive but ultimately no ownership/equity stake in Nikola and the billions of R&D potentially now off the table is a major negative blow to the Nikola story,” Ives said in a research note. He has an Underperform rating on Nikola. “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.”
Currently, Nikola plans to use fuel cells supplied by Bosch and lithium-ion batteries made by startup Romeo Power for initial versions of its semi-trucks. Under the new tentative agreement between the companies, GM will modify its fuel cell system for use in big rigs, said Doug Parks, the automaker’s executive vice president of global product development, purchasing and supply chain.
“This supply agreement recognizes our leading fuel cell technology expertise and development,” Parks said. “Providing our Hydrotec fuel cell systems to the heavy-duty class of commercial vehicles is an important part of our growth strategy and reinforces our commitment toward an all-electric, zero-emissions future.”
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November 30, 2020 at 09:20PM
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GM Isn't Taking Stake In Nikola But May Still Supply Fuel Cells And Batteries For Its Trucks - Forbes
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