Nikola Teaches GM a Lesson -- Heard on the Street
November 30 2020 - 1:49PM
Dow Jones News
By Stephen Wilmot
Nikola Corp isn't turning out to be the next Tesla investors --
and General Motors -- were hoping for.
The electric-vehicle startup put its eye-catching "Badger"
pickup-truck project on ice Monday as part of a radically shrunken
version of its deal with GM. All that is left of the original
agreement signed in September is a plan for GM to supply Nikola
with fuel-cell technology for U.S. big rigs.
Detroit's biggest auto maker had planned to take an equity stake
in Nikola in exchange for building the Badger under contract. But
the deal has been in doubt almost from the start after a hedge-fund
report detailed the limitations of Nikola's technology, leading to
the resignation of founder Trevor Milton.
GM won't sell Nikola fuel cells soon. For all its fanfare about
hydrogen, the startup is currently focused on battery-powered
versions of its first electric truck, the "Tre." It hopes to start
full-scale production in the fourth quarter of next year in Germany
and in early 2022 in Coolidge, Ariz. Hydrogen trucks won't come
before 2023, and in Europe Nikola is using Bosch as its fuel-cell
supplier.
Nikola is still considering whether to use GM's battery
technology for the Tre rather than that of its existing partner,
California-based Romeo Systems. For GM, earning extra revenues from
its vast battery investments would be a more meaningful win,
building on its plan to supply Honda, but it is unclear how much
business is at stake. Nikola hasn't yet started taking orders for
the Tre.
Nikola stock fell by over a fifth Monday morning. The company
shot to attention in June when Mr. Milton tweeted about taking
orders for the Badger and a wild rally in the shares briefly put
its market value on a par with Ford's. The temporary closure of the
Badger chapter takes the company back to its original pledge to
reinvent long-distance trucking. This holds speculative promise
some years down the road, but it makes comparisons with Tesla
harder to justify. Nikola's market value is now less than a quarter
of Ford's. That is still high for a company that doesn't have
meaningful sales.
Daimler and Toyota took stakes in Tesla in its early years, but
sold out too early. GM's unusual equity deal with Nikola may have
been motivated by a desire not to miss out on another
electric-vehicle success story. But making cars is hard and Tesla
could well be the exception, not the rule, in the industry shift to
electric vehicles. The odd thing is that GM had to learn the
lesson, too.
Write to Stephen Wilmot at stephen.wilmot@wsj.com
(END) Dow Jones Newswires
November 30, 2020 13:34 ET (18:34 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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