The CEO of Nikola Motors, Trevor Milton, has stepped down from the company just as the Securities and Exchange Commission and U.S. Department of Justice begin their investigations into the embattled electric vehicle maker.
Milton was accused of operating an “intricate fraud,” by a financial research firm shortly after GM announced it had entered a technical and strategic partnership with the start-up earlier this month. The report accused Nikola of making false claims about and/or exaggerating the capabilities of its electric vehicle technology. Hindenberg Research, which authored the report, also said it had “recorded phone calls, text messages, private emails and behind-the-scenes photographs-detailing dozens of false statements by Nikola Founder Trevor Milton,” and added that it had “never seen this level of deception at a public company, especially of this size.”
Milton will be replaced by Nikola board member Steve Girsky, a former GM board member who is credited with helping lead the automaker out of bankruptcy. In a statement, Milton said he stepped down from Nikola to ensure the future success of the company.
“Nikola is truly in my blood and always will be, and the focus should be on the company and its world-changing mission, not me,” Milton said, as quoted by Bloomberg. “So, I made the difficult decision to approach the board and step aside.”
“On behalf of the Board, I want to thank Trevor for his visionary leadership and significant contributions to Nikola since its founding,” added Girsky. “Trevor saw the possibility of creating an end-to-end zero-emission transportation system when the industry was still in its nascent stages and took action to build the Nikola of today, with world-class partnerships, groundbreaking R&D, and a revolutionary business model. I know I speak for everyone at Nikola in our gratitude and in wishing him all the best.”
GM announced earlier this month that it would take a $2 billion stake in Nikola in exchange for giving the company access to its Ultium lithium-ion batteries, Hydrotec hydrogen fuel cells and other electric vehicle technology. GM will also build the Nikola Badger on behalf of the company, which is a battery-electric performance pickup designed to take on the Ford F-150 Raptor. Nikola shares rallied following GM’s announcement but subsequently crashed once the Hindenberg Research report hit the web.
GM remains confident that its partnership with Nikola is the right way forward for both companies, despite the active SEC and DoJ investigations into the Phoenix-based start-up.
“We are fully confident in the value we will create by working together,” GM said.
Comments
This should be interesting…… GM has abandon markets, platforms, powertrains and countless things they actually spent money on but seems to be willing to go down with the ship as far as public opinion for what’s being compared to as the next Enron.
How does any of this hurt GM? Yes, maybe less sales of their technology if Nikola doesnt survive but that’s it.
In this case, technology and design are the winners and with Girsky making lemonade with GM, both will end up making money. Who cares about the company name so long as they have a backer bank roll keeping the lights on and employees. I see Raptor in GM sites…
Going to interesting to see how GM works out with this deal. It seems that most deals that GM enter into leave them on the losing end.
This is exactly what I said here two weeks ago. All these idiots in these EV/Tesla forums, mocking GM after the fraud reports came out, “how could they be so STOOPID?” These people never got it…GM knew about this, and they knew a LOT about this. They made this deal because they KNEW Milton was a dead man. Now stock is tanking, and a former GM exec takes the helm. Coincidence? GM will eventually buy a majority of Nikola shares on the cheap, will continue to be paid for developing their vehicles, and they’ll continue to get the EV credits. Classic 4D chess at it’s most ruthless. They knew exactly what they were doing.
For once, it seems like GM actually thought this out fully. Nikola will soon be theirs, and the brand will provide GM with a “hype’ company to cash in on the Tesla “buzz to billions” strategy. Watch this play out…
This, this & this!
You just have to read between the lines.
You got it. Was never about getting their tech, GM knew full well they had no tech. They just needed a brand outside the GM umbrella to start moving some EV product. Looking well played so far. The poll question on this article is dumb, this doesn’t look great on GM at this moment but they also still have all the potential left that GM is after. It’s not an either/or
@Ryan
Exactly right. This is a move for the long game. Yeah, they’ll take some heat in the near term, but long term, this looks to be a terrific move. The amount they gave up (essentially nothing) for what they could get is incredible. The new EV market is a very strange place, and you NEED hype, just like in all emerging markets. Nikola provides that.
Branding is everything.
so you are saying nikola has no tech.
but unlike gm, they are eligible for federal EV tax subsidies. so they can sell what are basically gm products, claim it as their own, and customers are eligible for federal tax subsidies.
if that is true, what is to stop anybody from doing the same? it seems kind of easy.
Not just me saying it, it’s a fact that Nikola has no tech. If they did, Milton wouldn’t have stepped down from his own brainchild.
Yes, the federal tax credits are a big reason why GM made this deal. But beyond that, they get the product contracts to sell GM vehicles under the lucrative Nikola brand name, which brings billions in contract payments. Plus Nikola stock, an 11% stake. All for no true cost to GM.
What stopped everyone else from doing this deal with Nikola were two main things:
1) They didn’t have sufficient battery electric or hydrogen tech to actually supply Nikola for their vehicles (a testament to how far ahead of most of the competition GM is with their EV technology…ask Honda if you need more proof), and
2) They didn’t want to risk negative press being associated with Milton’s shaky (fraudulent) business practices.
The only real gamble here for GM is being associated with Milton, and getting hammered as stupid by journalists in the wake of the Nikola scandal. But that’s nothing compared to what they’re on track to gain.
I like the way you express your facts.
I’m not sure having the Nikola brand is such a desirable thing though. All they’ve done with it so far is tarnish it.
Who’s “they?” Nikola?
Yes Nikola. They created a brand name that’s an obvious copy of Tesla, made outrageous claims, and have managed to make themselves look like complete frauds.
I’m not sure how all this can benefit GM, beyond selling a few trucks that still qualify for federal tax credits. Assuming that’s still possible.
True. But let’s be real here…most people have no clue this is even going on.
All they see is hype, same for athletes, same for celebs. Hype sells. Tesla sells hype. Nikola is the only one that’s ever come close to replicating that.
Lest we forget, Tesla has had a number of supposedly high-profile run-ins with the SEC…and Elon is no stranger to making totally baseless outlandish claims. Yes, they have an actual, physical product to back some of it up, but now so does Nikola with GM tech.
The Badger honestly may be DOA, because it was never really about that. It was the Class 7/8 semi. THAT’S what GM wants. Hydrogen tech is the best clean alternative to diesel trucks, and GM wants to turn Nikola into a cool, profitable commercial hydro-electric brand. The market for that kind of thing is about to go through the roof this decade.
»take a $2 billion stake in Nikola« — but I understood from the earlier reports that GM does not psy a single cent for this 11% share. What’s the fact?
BTW, see my comment from earlier today on the Trevor Milton resignations and work on the Nikola Tre truck at the Iveco-Magirus fsctory in Ulm, Germany with inputs from Bosch at
https://gmauthority.com/blog/2020/09/nikola-tre-semi-truck-prototype-in-the-works/
»take a $2 billion stake in Nikola« — but I understood from the earlier reports that GM does not psy a single cent for this 11% share. What’s the fact?
BTW, see my comment from earlier today on the Trevor Milton resignations and work on the Nikola Tre truck at the Iveco-Magirus fsctory in Ulm, Germany with inputs from Bosch at
gmauthority dot om/blog/2020/09/nikola-tre-semi-truck-prototype-in-the-works/
Milton better hope that he doesn’t end up in Prison.
If I was GM I would work closely with the SEC and the DOJ and tell them that I will take over the Company as long as they promise not to shut Nikola down and get a whole new Board. If GM can pull this off they will get the coveted Name of Nikola for next to nothing and they can use that Stock to go after Tesla. That is my opinion.
@Momolos
It may not end up being as cut and dry of a takeover as that, but I really think you’re right on the outcome. GM still hasn’t paid Nikola a cent, don’t forget that. The NKLA stock they got was essentially a down payment, If the Board of Nikola is implicated in this mess, then they could be bounced…but who knows if that’ll happen. They’ve already gotten immense controls of Nikola and Nikola cash for next to nothing…if they have to buy majority stake at this point, it’ll still be more than worth it in the overall.
prison? more like white house. america is the land of suckers so he’d be perfect.
Pretty uncalled for with the attacks, steve. Not even remotely relevant to this topic.
It was all FAKE and General Motors CEO Mary Barra bought it (hook, line and sinker) as who knows what she signed GM into committing to doing.
You attacking Mary Barra…that’s strange, so not like you.
How did the WH get in this topic…dam, can’t keep red or blue out…just like them blue, can’t stop mouthing.
This is about corporate strategy.