In September, General Motors and Nikola announced a strategic partnership that would see GM engineer and build the Nikola Badger pickup as well as provide fuel cell technology for Class 7/8 semi-trucks in exchange for $2 (£1.5 / €1.7) billion in newly issued Nikola stock.
Shortly after the deal was announced, Hindenburg Research released a lengthy report which claimed Nikola was an “intricate fraud” which parlayed an “ocean of lies into a partnership with the largest auto OEM in America.”
Nikola denied most of the allegations, but the damage was done. Less than two weeks later, CEO Trevor Milton “voluntarily” stepped aside and this raised even more questions about the beleaguered startup.
GM Hydrotec fuel cell system
Fast forward to today and the two companies have signed a non-binding memorandum of understanding, which is a shell of the former proposal as it no longer includes an equity stake or production of the Badger pickup. Instead, it calls for GM to supply Nikola with Hydrotec fuel cell systems for Class 7/8 semi-trucks.
Under this “potential agreement,” GM would engineer a Hydrotec fuel cell system to meet mutually agreed upon specifications. Nikola would pay upfront and the two would also discuss the potential of using GM’s Ultium batteries in Class 7/8 semis.
That’s a significant change, but GM’s executive vice president of Global Product Development, Purchasing and Supply Chain said “This supply agreement recognizes our leading fuel cell technology expertise and development.” Doug Parks added, “Providing our Hydrotec fuel cell systems to the heavy-duty class of commercial vehicles is an important part of our growth strategy and reinforces our commitment toward an all-electric, zero-emissions future.”
Nikola CEO Mark Russell was also upbeat as he said “Heavy trucks remain our core business and we are 100% focused on hitting our development milestones to bring clean hydrogen and battery-electric commercial trucks to market.”
Nikola also confirmed the Badger is effectively dead as the truck was “dependent on an OEM partnership.” As a result, the company will be refunding customer deposits.
The latest agreement is “subject to negotiation and [the] execution of definitive documentation acceptable to both parties.” This means the deal could still go sideways, much like the original proposal.
Investors weren’t happy with the changes as Nikola’s stock plummeted by more than 25% as of this writing. It currently sits at little over $21 (£15.74 / €17.58) which is well off their peak of nearly $80 (£59.94 / €66.95) on June 9th. It’s also worth mentioning Nikola’s stock never fully recovered after the publication of Hindenburg Research’s report, but prices were climbing for the better part of November.