The Nikola Motor Company (NKLA) was founded in 2015 by Trevor Milton, raised over $2.5B from industry giants like General Motors, Bosch, and the US Department of Energy, and went public on the NASDAQ on June 4, 2020. Touted as the next Tesla, Nikola was created to “transform and disrupt the transportation industry globally” with new electric vehicles, energy storage systems, hydrogen vehicle systems, and electric vehicle drivetrain components. Sounds pretty good, right?
Nikola IPOd at $33.75 per share, quickly rocketing off to over $90 by June 9th. Today, the stock sits at $17.41 with no support in sight. Since going public, both the company and its founder Trevor Milton have been assaulted by hedge funds and the media for questionable business practices and shady product details. In fact, things got so bad that Trevor had to resign from his position and the company had to kill off their electric/fuel cell pickup truck the Badger. The SEC even got involved. It hasn’t been t a good look.
To make matters worse, GM has completely renegotiated the deal allegedly entered into between the parties back in September. While GM had previously intended to take an additional 11% stake in Nikola, to supply them with equipment for their hydrogen fuel cell trucks, and to help them build the Badger, the new deal amounts to nothing more than a small supplier relationship. It’s all been smoke and mirrors.
It’s a bit odd that a company allegedly working on next level hydrogen fuel cell and electric vehicle components would need to buy EV and fuel cell components from GM. The deal, even as it was written back in September, suggests that Nikola has never had the “special sauce” that led investors to think they could be the next Tesla. At this point, it’s starting to look like Nikola has more in common with Theranos than Elon’s brainchild.
So why did GM stay involved? I think we can sum this up in two words: lockup period. A lockup period is the predetermined amount of time following an IPO where large shareholders and company executives are restricted from selling shares. And remember, GM was one of Nikola’s lead early stage investors. GM has had a vested interest in keeping the Nikola narrative going, reducing negative press and helping bolster the company’s stock price until the lockup period expired on November 30th, 2020.
At this point, I fully expect Nikola to die a fiery death and burn like a combusted hydrogen fuel cell. But that’s just me. If you think Nikola is ready to rocket or if they’re bound for the scrap yard, let us know. We’d love to get your take.
Photo Source: Nikola Motor Company
JD, MBA, resident Petrol Head and Autoholic. Sebastian is dedicated to providing an uncompromising view into the auto industry and taking every chance he can to make sure rear wheel drive, manual transmission, ICE vehicles never disappear. He also has proximate knowledge of many things including blockchain, venture capital, and the importance of diversity in today’s startup ecosystem.