GM cancels $2B stake in Phoenix-based Nikola Motors
General Motors has canceled a planned $2 billion investment in Phoenix-based Nikola Motors and the Detroit car giant won’t help develop the electric-vehicle company’s Badger pickup truck as planned, Nikola said Monday.
Instead, the two companies signed a new memorandum of understanding that calls for the use of GM hydrogen fuel-cell technology in in Nikola’s medium- and long-haul big rigs, according to the companies.
The new arrangement significantly scales back an earlier, more expansive relationship between the companies announced earlier this year that included the direct GM investment in Nikola.
Nikola said it will “refund all previously submitted order deposits for the Badger,” which amounted to $6.9 million, according to Nikola’s latest quarterly financial filing.
Nikola added that the Badger program was dependent on the company cementing a partnership with an original equipment manufacturer such as GM. A Nikola spokeswoman said the Badger program is “on pause for now.”
Nikola’s stock price on Monday dropped more than 25% on news of the revised agreement with GM, closing at $20.41 a share, down $7.52 for the day.
In September, GM announced its intention to engineer and build the Badger while taking an 11%, or $2 billion, stake in the Phoenix company, which is currently building a factory to make large trucks in Coolidge in Pinal County.
The new memorandum “does not include the previously contemplated GM equity stake in Nikola or development of the Nikola Badger,” Nikola said in a short press release.
Nikola’s stock price has dropped by half since briefing pushing above $50 a share on the original GM announcement Sept. 8, as investors have questioned the company’s progress as it strives to bring vehicles to market.
Those questions also drove out the company’s founder and executive chairman, Trevor Milton, who abruptly resigned in September.
Focus on large commercial trucks
Under the new deal, Nikola agreed to integrate GM’s Hydrotec fuel-cell system into Nikola’s commercial semitrucks. Nikola expects to begin testing prototypes of its hydrogen fuel-cell powered trucks in late 2021 and early 2022.
Nikola remains “100% focused on hitting our development milestones to bring clean hydrogen and batteryelectric commercial trucks to market,” said Nikola CEO Mark Russell, in a prepared statement.
“We believe fuel-cells will become increasingly important to the semitruck market, as they are more efficient than gas or diesel and are lightweight compared to batteries for long hauls,” he added. “By working with GM, we are reinforcing our companies’ shared commitment to a zero-emission future.”
The latest agreement between Nikola and GM is subject to further negotiation.
Nikola, which was founded in 2015 and is headquartered just south of Phoenix Sky Harbor International Airport, is designing zero-emission battery-electric and hydrogen-electric vehicles as well as vehicle components. In addition, the company is developing a network of hydrogen fueling stations.