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.