GM, Bosch stick with Nikola alliances

• General Motors Co and germany’s Bosch said monday they were sticking to their alliances with Nikola Corp after the executive chairman of the electric and fuel cell truck startup stepped down amid allegations of fraud.

nikola founder Trevor milton, whose company become a darling of the stock market over the summer, resigned as executive chairman monday following accusations by short-seller Hindenburg research he made false claims about nikola’s technology.

milton has fought back, even after the u.s. securities and exchange Commission and the department of Justice said they were looking into the company.

nikola shares were down 20 per cent in trading monday, and have lost more than 45 per cent of their value since sept. 8, when it announced an alliance to build electric and fuel cell trucks with gm.

nikola’s alliance with gm, and earlier partnerships to develop fuel cell and electric commercial trucks with Bosch and CNH industrial’s iveco unit are critical to the startup’s effort to regain traction. nikola said board member steve girsky, a former gm vice chairman, would take over as chairman.

last week, girsky defended the due diligence his firm, Vectoiq, did before it purchased nikola in a reverse merger that took the startup public.

gm has agreed to build an electric pickup for nikola and supply batteries and hydrogen fuel cells for commercial trucks. in return, gm was supposed to receive an 11 per cent stake in nikola and payments of up to us$700 million for assembling the nikola Badger pickup.

“We will work with nikola to close the transaction we announced nearly two weeks ago,” gm spokesman Jim Cain said in a monday email.

gm shares were down 6 per cent monday amid a broad market sell-off.

“gm put no money into this thing so i’m not sure why gm is selling off today,” said scott schermerhorn, managing principal with granite investment advisors. “i viewed the nikola shares they were getting as a lottery ticket.”

gm chief executive mary Barra and company executives have stressed the alliance with nikola — which has acknowledged that a prototype truck shown moving in a 2017 video was not moving under its own power — made sense strategically.

“given that gm is now trading below where it was when the deal was announced, we would view it as a positive if gm and nikola can still make this partnership work, and effectively a non-event for gm shareholders if the deal falls through,” said Tim Piechowski, portfolio manager with acr alpine Capital research.

However, Hindenburg research founder nathan anderson said in an email monday that milton’s exit was “only the beginning of nikola’s unravelling.”