GM pushes back contract deal with Nikola, likely renegotiating

DETROIT >> General Motors has pushed back the closing date on its pending partnership with Nikola Corp., most likely to renegotiate the terms after Nikola’s stock price has plummeted.

The Phoenix-based electric-truck company faces allegations of fraud, but GM has said it intends to complete the deal with the company.

On Tuesday GM issued a statement that read: “Our transaction with Nikola has not closed. We are continuing our discussions with Nikola and will provide further updates when appropriate or required.”

GM was tentatively due to close on a 10-year deal Wednesday. The deal would allow GM to share technology and parts with Nikola in exchange for stock and achieving other cost savings.

But that Sept. 30 closing date was always just an “anticipated” date, according to Nikola’s U. S. Securities and Exchange filing. The filing also said: “The subscription agreement may be terminated by either the company or GM Holdings if the closing has not occurred by December 3, 2020.”

Some analysts have questioned whether GM should do a deal, or at least renegotiate its original deal with Nikola, after a short seller’s report alleged Nikola had committed “intricate fraud” in the past.

Even before that report, Bloomberg had reported that when Nikola showed its Nikola One semi-truck in 2016, Nikola falsely said that it was a working prototype even though it was non-running and missing essential parts.

To add to that, recent published repor ts say Nikola founder Trevor Milton, who resigned Sept. 21, is accused by two woman of allegedly sexually assaulting them when they were under the age of 18. He has denied both allegations.

“Given how far Nikola’s equity has fallen, Milton leaving, and a fraud investigation, I can’t imagine GM is fine with the original terms of the deal anymore and I suspect they are looking for a lot more Nikola equity,” Morningstar’s David Whiston said.

“They may get it too because if GM walks away, then I believe that news would likely cause further mass selling off of Nikola’s stock.”

A GM spokesman declined to comment beyond the statement the company put out Tuesday and GM is providing no new target date for closure beyond the stated SEC filing that provides the Dec. 3 deadline.

Another industry observer agreed with Whiston.

“When GM originally negotiated the deal with Nikola it received stock worth $2 billion. Now, because of improprieties of Nikola’s exchairman, the value of that stock has dropped in half,” said John McElroy, host of Autoline.tv. “No doubt GM is renegotiating the deal to make up for that loss. Nikola will likely accede to GM’s demands because to lose it as a partner would be devastating for the startup.”

On Wednesday, Nikola’s stock price was trading at $17.85 at 10:23 A.M. That’s down from $37.57 Sept. 10.

GM leaders have held steadfast to the partnership, announced Sept. 8, with Nikola.