General Motors Will No Longer Take a Stake in Nikola -- 2nd Update
By Mike Colias
General Motors Co. will no longer take an equity stake in
electric-truck maker Nikola Corp. under a stripped-down agreement
revealed Monday by the two companies.
GM still intends to provide Nikola with fuel-cell technology but
the Detroit auto maker has scrapped plans to build an electric
pickup truck named the Badger for the Phoenix-based startup -- a
key part of an earlier agreement outlined in September.
That deal got delayed after a negative short seller's report
raised questions about the readiness of some aspects of Nikola's
business, allegations the company has said were false and
Nikola shares were down about 21% in Monday morning trading
after releasing details about the nonbinding memorandum of
understanding with GM. GM shares were off about 0.1%.
Under their original deal, GM was to take an 11% equity stake in
the startup in exchange for supplying engineering work and other
services. GM also was to engineer and build the electric pickup
truck for retail customers, using the auto maker's proprietary
technology for battery-powered vehicles.
Nikola revealed the revised deal with GM a day ahead of a
closely watched lockup period expiring for some early investors who
got shares as part of the startup's June listing. Starting Tuesday,
those investors can start selling off approximately 161 million
shares -- the majority of which are owned by founder and recently
departed Executive Chairman Trevor Milton.
A spokesman for Mr. Milton didn't have an immediate comment.
Executives and board members recently extended the lockup for
another 136.5 million shares through April, company filings
The GM partnership was considered a major win for Nikola, a
relatively new transportation startup that had yet to make a single
vehicle but was exciting Wall Street with plans to revolutionize
the trucking industry.
In June, Nikola's market value briefly surpassed that of Ford
Motor Co., after Mr. Milton tweeted that the company would begin
taking reservations on the Badger pickup and show off a working
truck by the end of 2020.
Nikola had committed to pay GM up to $700 million to develop and
build the Badger in a deal valued at about $4 billion when it was
announced Sept. 3, including the equity stake.
For GM, the deal with Nikola was also seen as a validation of
the Detroit auto maker's technology in both hydrogen fuel cells and
electric-vehicle technology. If the agreement outlined Monday comes
to fruition, it would mark the first commercial use of GM's
hydrogen fuel cells, a technology it began developing in the
Nikola's shares jumped on the news of the GM partnership, but
were slammed days later in the wake of the report from short seller
Hindenburg Research, which claimed that Mr. Milton made exaggerated
claims about Nikola's technology. Mr. Milton, who said he would
defend himself against the report's allegations, stepped down later
The fallout from the short seller's report also forced GM
executives to field questions about whether they had done its
homework on Nikola ahead of the deal. GM Chief Executive Mary Barra
has said that GM conducted proper due diligence and that the
companies had been introduced by Nikola Chairman Steve Girsky, a
former GM executive.
Nikola executives have said that the Badger was backed mainly by
Mr. Milton and that have been seeking to refocus the business on
its commercial truck and hydrogen business since Mr. Milton's
"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," Nikola CEO Mark
The companies on Monday said they will explore the use of GM's
electric-vehicle battery technology, called Ultium, in future
Write to Mike Colias at Mike.Colias@wsj.com
(END) Dow Jones Newswires
November 30, 2020 10:11 ET (15:11 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.