General Motors has decided it will see through its recently announced partnership with Nikola even after the company’s embattled CEO, Trevor Milton, stepped down from his post amid allegations of fraud.
The Detroit-based automaker sent out a press release on September 8th, 2020, entitled ‘Nikola and General Motors Form Strategic Partnership; Nikola Badger to be Engineered and Manufactured by General Motors.’ Under the agreement outlined in the release, the electric commercial vehicle manufacturer consented to exchanging $2 billion in newly issued common stock for access to GM’s electric and hydrogen vehicle technology. GM will also build the Nikola Badger electric pickup truck on behalf of the company, with Nikola responsible for marketing and sales of the vehicle.
That deal was quickly called into question when a noted Nikola short-seller, Hindenberg Research, published a lengthy article highlighting the various ways that Nikola mislead investors and exaggerated the capabilities of its products. Milton resigned from Nikola this week due to the allegations in the report, saying he “made the difficult decision to approach the board and step aside,” as CEO to ensure the long-term health of the company. Both the Securities and Exchange Commission and the Department of Justice are now looking into the fraud claims made in Hindenberg Research’s report, as well.
Despite this, GM is eager to see the Nikola deal through to the end, with company spokesman Jim Cain telling Reuters that it plans to “work with Nikola to close the transaction we announced nearly two weeks ago.” This is unsurprising, as GM doesn’t stand to lose much from the Nikola deal either way. The automaker has been looking to achieve economies of scale with its electric/hydrogen vehicle tech and was thus already looking for outside partners to license it to. The $2 billion in Nikola stock it was given in exchange for access to the technology was seen by some investors as more of a bonus.
“I viewed the Nikola shares they were getting as a lottery ticket,” Scott Schermerhorn, a financial analyst, told Reuters this week.
The public image of linking up with an embattled company like Nikola could have an impact on GM’s image, however. In an email sent to Reuters this week, Hindenberg Research said that Milton stepping down was “only the beginning of Nikola’s unraveling,” and warned GM that it should “carefully evaluate the potential long-term damage to its 112 year brand by continuing to tie itself to Nikola.”
GM said previously that the stock exchange between it and Nikola is “subject to customary antitrust regulatory approval and closing conditions,” and that both parties “anticipate closing the transaction prior to Sept. 30, 2020.” The transaction may be affected by the active SEC and DoJ investigations into Nikola, however, so it remains to be seen whether the deal will go through this month.
Comments
Before engaging with GM, Nikola Motors had already entered a partnership with Iveco, the truck brand of CNH-I (Case New Holland – Industrial (or Iveco)).
I wrote a little more in an earler comment on one of the Nikola posts:
“Nikola Tre Semi Truck Prototype In The Works
by Jonathan Lopez
— Sep 17, 2020
”
Here is the online Iveco magazine featuring the plan to build the Nikola Tre semi-truck in the Ulm factory, where currently only fire fighting equipment is being produced:
magazin.iveco dot de/ivecoyou/1-2020/cnh-industrial-nikola-motor-ulm
in German language…
They say that the truck is being built on a new Iveco platform, S-WAYS and using Nikola technology for the drive train, controlling software and infotainment. Prototypes should have been shown at the “IAA Nutzfahrzeuge” (the sister fair to the bi-annual Frankfurt International Automobile salon, the Frankfurt passenger car fair taking place in odd years, the Hannover for commecial vehicles in even years). But the fair was cancelled due to the Corona crisis. It would be interesting to know if a prototype has actually been produced…
Bosch is to contributing parts from their product portfolio.
These heavy duty electric trucks may work in LTL (Less Than Truckload) freight in the Midwest where the land is flat. Once the landscape becomes hilly or mountainous they will use more battery power climbing hills than they can store. They’ll never be any good at nationwide Truckload freight because they’ll never be able to run 11 hrs the driver can drive before recharging, nor be able to drive the terrain encountered on a coast to coast run. It’s been proven using a Tesla car rated to pull a 5,000 trailer through the mountains of CO that the 250 mile rated car couldn’t go 100 miles before recharging. This is all a pipe dream of CA engineers who have never been out of Los Angeles co.
The idea is to begin with battery power and to replace that later with electricity from a fuel cell with Hydrogen (H2).
It is a pity that this years IAA Nutzfahrzeuge in Hannover has been cancelled, so that the Iveco/Nikola combine are relieved from their promise to show prototypes of the Nikola Tre there.
You forgot one thing, these trucks will be powered by fuel cells, therefore won’t have the problems you are concerned about.
Did you ever hear of fuel cells? Well that’s what would power those trailer trucks….not simply just batteries.
Perhaps GM can finally give these trucks the due respect and positive criticism that they deserve due to the failure of Mr. Milton’s ability to think beyond himself when looking for a shady deal in order to market these vehicles, I would love to see what those Ultium Batteries can do to propel the Class 8 Rigs, I personally Am hoping for a Long Term success!
GM must now use Steve Girsky to make Nikola an honest company totally in sync with GM’s agenda. Let the truth come out, Nikcola “unravel” and GM aquire the firm in order to enter the big rig business
I suspect GM could easily own Nikola with no problems in the near future. That would really add marketing value to GM’s electric vehicles.
With the news about Milton being accused of raping 2 minors how could GM put their reputation at risk? Being associated with a company who’s founder is an alleged child rapist isn’t on most marketing companies top 10 list of successful PR strategies.
With the news about Milton being accused of raping 2 minors how could GM possibly put their own reputation at risk? Being associated with an alleged child rapist isn’t on most marketing companies top 10 list of successful PR strategies.
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