Nikola
- Nikola and General Motors on Monday announced a long-awaited deal, but on scaled-down terms.
- GM won’t take a stake in the embattled startup, but will sell its hydrogen fuel cells to Nikola to use in its trucks.
- Nikola’s planned consumer truck, the Badger, has been canceled.
- Shares of Nikola plunged as much as 21% following the announcement.
- Visit Business Insider’s homepage for more stories.
General Motors and Nikola on Monday announced an update to the deal that set in motion a tumultuous fall for the high-flying truck startup.
Under the new terms, the two companies will still work to integrate GM’s fuel cells into Nikola trucks. However, GM will no longer take a $2 billion stake in Nikola, and the startup’s planned “Badger pickup — a potential F-150 competitor — is now officially canceled, with planned refunds for those who preordered.
The announcement, which includes no financial details, comes just days before the Dec. 3 deadline the companies originally set for reaching a deal.
Shares of Nikola plunged as much as 21% in early trading after the announcement. More volatility is possible ahead, as shares owned by executives and other insiders before Nikola’s public debut become available to sell this week as a lockup rule expires.
In a separate filing Monday morning, Nikola said it plans to offer more than 50 million new shares for sale, further fueling the stock’s slide.
Nikola has had a wild ride since talks of a deal with GM were made public in September. Just days later, a short-selling investment firm published a scathing research report alleging intricate fraud at the company and numerous lies by its founder Trevor Milton, who has since relinquished his title as chief executive.
In response, Nikola denied most of Hindenburg Research's allegations. However, Nikola admitted to many of the report's most poignant examples, including an instance where it rolled an inoperable truck down a hill in order to film a video. Nikola said it never implied the truck could drive on its own.
JPMorgan, which remains bullish on the stock, said Monday's announcement is ultimately a positive move, even without a GM stake.
"We think this is a positive outcome for Nikola over the medium to longer term, since the company can now focus on the core Class 8 truck initiative and avoid the distraction and capex associated with the Badger pickup," the bank's analysts wrote. "But GM's commitment seems much more modest, which might weigh on investor sentiment regarding NKLA stock in the short term, just as we approach the 161 million lockup expiry tomorrow."
Read more about Nikola's tumultuous year:
- Nikola founder Trevor Milton's cousin alleges he sexually assaulted her when they were teenagers
- Nikola's founder Trevor Milton is now an official member of Forbes' 400 billionaires list with a net worth of more than $5 billion
- A leaked 2016 business plan reveals that Nikola is likely to fall $277 million short of the 2020 revenues it predicted four years ago