Nikola: Will zero-emissions claims go up in smoke?
Electric-truck maker Nikola is battling fraud accusations that have “drawn comparisons with Theranos,” said Peter Campbell in the Financial Times. Both the Securities and Exchange Commission and the Department of Justice have begun looking at allegations that the technologies hyped by the zero-emissions truck maker simply don’t exist. Lofty visions of Nikola’s semis powered by electric batteries and hydrogen fuel cells have made Nikola the “stock market sensation of the summer”—surpassing Ford in market value “without having sold a single vehicle.” But many of the claims pressed by Trevor Milton, the founder of Nikola—named, like Tesla, after 19th- and early-20th-century electrical pioneer Nikola Tesla—have evaporated. General Motors just signed a deal to make fuel-cell Nikola pickups by 2022, but it will use its “own hydrogen system” rather than Nikola’s. Milton abruptly resigned from the company this week.
The doubts about Nikola were set off by a report from Hindenburg Research that blew up “a massive pillar Nikola has been banking on,” said Sean Szymkowski in CNET.com: Hindenburg, a short seller that looks for corporate fraud, says the company simply “stenciled hydrogen decals” onto the body of its first prototype truck, Nikola One, which actually held natural-gas turbines. Nikola still “does not operate a hydrogen production facility,” despite Milton’s claims about producing hydrogen at an “incredible” $3 a kilogram. And the company’s director of hydrogen production is Milton’s younger brother, Travis, whose previous work experience was in “driveway pouring.”
The one bright spot for Nikola, said Chris Bryant in Bloomberg.com, is that so far its partners have tolerated its exaggerations. German auto-parts supplier Bosch has stuck by it, and GM isn’t running away yet, either, possibly because it was only hoping that “hitching a ride on Nikola’s coattails” would generate enthusiasm among investors. Just don’t count on GM to rescue Nikola, said Timothy Lee in ArsTechnica.com: It has a “one-sided” deal that “poses very little risk” for the automaker. Essentially, GM is having Nikola build its Badger pickup truck—and pay for the privilege. “GM isn’t investing a dime in Nikola; instead, all the money will flow the other way.” Nikola will pay GM $700 million to create the production line for the Badger. Then it will pay more to GM to build each vehicle.
The battery-powered version will be based on GM’s batteries, “which GM will presumably sell to Nikola at a profit.” And the hydrogen-powered version will be based on GM’s fuel-cell technology. “These are technologies that GM was planning to develop anyway,” and if Nikola’s few remaining “true believers” are willing to subsidize that, GM is happy to take the money.