A capital markets analyst says the situation surrounding Nikola Corporation and General Motors has been widely misunderstood and that there is still value in the deal for the American automaker.
Speaking on Bloomberg’s Wall Street This Week program, RBC Capital Markets analyst Joseph Spak said that many people do not fully realize that Nikola always had the intention of bringing multiple suppliers together to make electric and hydrogen-powered commercial vehicles a reality, rather than operating as a vertically integrated manufacturer like Tesla.
“When you look at the crux of what Nikola was trying to do, they were really trying to bring together a whole bunch of partners from the manufacturing side, from the fuel cell and battery side, and from the infrastructure side to be able to offer their customers a Point A to B route that they can take over for them and make green and efficient with hydrogen fueling technology and be able to offer a fuel cell lease,” Spak explained. “Now if you can build out a whole bunch of A to B back and forth routes, where you can get customers to sign up for that, slowly but surely you can build up hydrogen fueling infrastructure network and that solves the chicken and egg problem mt that exists with hydrogen.”
“But clearly some of the issues that have been brought up and now the cloud that surrounds the company I think is putting some of these partnerships and potentially customers at risk and it does mean the whole idea or concept can fall apart.”
So while it’s true that Nikola was not making its inverters or other components and did not have a working Nikola One prototype, the core business model of the company does not require these to be successful, as it always involved bringing in outside suppliers like GM to make it work. Nikola’s problem, Spak said, was its failure to communicate this and appearing more like a vertically integrated manufacturer like Tesla.
“That may not be the way they portrayed themselves always to investors which could be part of the problem here,” Spak said.
GM stands to lose very little no matter how the deal shakes out, it would seem. GM received about 11% ownership in Nikola in exchange for giving the company access to its Ultium batteries and Hydrotec hydrogen fuel cells and agreeing to engineer and build the Nikola Badger electric pickup, however it was looking for additional volume for this technology anyways in order to offset its investments in the pricy new powertrain tech. The value of GM’s stake in Nikola may have dipped since the Hindenberg Research short-seller report was published, but Nikola’s unique business model may help it weather the storm going forward if too much damage has not already been done.
Hear what else Spak has to say about the GM-Nikola situation in the video embedded below.
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Comments
It’s a unique and completely new business model, unlike how GM brings together suppliers and technology developers like Bosch, Dana, Continental, ZF, Denso, Delphi, Ford…
I just want to say that this is completely just my own personal opinion. I am not in any way shape or form an expert in Stocks or the Stock Market overall.
Boy oh boy does it really sound to me like some Big Time Firms have invested and invested pretty heavily in Nikola thinking that they were not about to lose out on the next Tesla. What other crazy explanation is there for the Media to not call Nikola out for the absolute Ponzi Scheme that they are. Some are about to lose some serious amount of cash….Like Billions upon Billions.
Having said all that. The Nikola Structure is absolutely not a unique way of doing Business as they are trying to Spin it. They spent years telling potential investors all this crazy leading technology that they have and as it turns out they have absolutely nothing. That is called Fraud. Plain and simple.
You do not have the SEC and the DOJ and maybe down the line even the FBI looking into your Company for simply being unique. There is already a Class action lawsuit from investors, Milton has left the Company and deleted all his Social Media accounts. He is nowhere to be found.
This is utter FUD and Spin to try and save as much money from the Stock before getting delisted most likely or if GM saves the Day and buys the Company for pennies to the Dollar. What a Joke.
I feel horrible and hope I am completely wrong about Nikola. I would hate to see hard working investors believe in a Scum Bag like Milton Trevor and lose all your money. The Big Firms I could care less about. They should have done their Due Diligence and don’t fall for a Ponzi Scheme.
Now as far as GM goes…I am floored they didn’t see any of this to be honest. I liked the deal for them as it cost them nothing and I thought GM was going to play the long game and try to get the name Nikola for next to nothing. I have been calling Nikola a scam here for as long as I can remember. Not sure what GM’s end game will be but man they do not look great right now. If the SEC deems them corrupt they can and most likely will delist the Stock. Some from Nikola might even do Prison time. This was a completely fabricated Company to simply raise capital and to stay afloat enough to cash out beginning of 2023, All they had to do (it is in their contracts) was still be on the board. Zero profits were needed hence why they kept punting the dates on all of their Products. The first Semi truck they showed allegedly ran on CNG and they stated then that they were at least 5 year ahead of anyone else. Oh and reports just surfaced that the Semi Truck Design was done by a Designer with Rimac.
They were and still are vaporware in my Humble opinion.
And a GM fan I hope it works out the way GM hopes that it will.
Maybe Nikola Motors has more than just vaporware, they have software to manage a truck driven by electrical motors, kinda Operating System for an automobile, and the concept of deploying a network of overland Hâ‚‚ fueling stations.
To remind you, it is not only GM to agree to be the hardware developer and manufacturer for Nikala, but also Iveco, the truck branch of CNH-I (Case New Holland Iveco trucks and industrials, controlled by EXOR, the investment company controlled by the Agnelli family. Sergio Marchionne was President of CNH-I when he was CEO of FCA and President of Ferrari).
In a September 13, 2020 Interview of the German Craig-Publication “Automobilwoche” with Iveco-Chef Gerrit Marx said that in October of this year the first prototypes of the Nikola Tre should start testing. The truck is supposed to be built from 2021 on in the Iveco factory in Ulm, Germany.
Misunderstood or flat out lie as Nikola founder Trevor Milton was bragging on FOX Business of how his company had developed a new chemical formula which would give them an advantage over Tesla and why they could challenge Tesla in the EV market.
Trevor (who’s 15 year old cousin has accused him of groping her) and Nikola certainly have a shady past yet GM still has gotten a great deal which is why I’m sure they’re overlooking their shady past…Here’s what they get and it cost them nothing:
$2 billion in newly issued Nikola stock.
The right to nominate one director to Nikola’s board.
Contract-manufacturing fees for the Badger, plus “cost-plus” (meaning, profitable) contracts to supply batteries and fuel cells to Nikola.
80% of the electric-vehicle tax credits generated by the production of the Badger (a valuable commodity for GM), plus first right of refusal to buy the remaining 20% from Nikola.
A high-profile client for its fuel cells.