The electric truck maker said on Monday it has revised the terms of a prior deal with GM, and that the auto giant won’t be taking a stake in Nikola. The two companies will not work together to produce Nikola’s pickup truck, the Badger. Nikola’s shares were down more than 21% in pre-market trading.
On September 8, Nikola said it selected GM to be its manufacturing parter for its electric pickup truck, dubbed the Badger. The Badger was expected to use GM’s widely acclaimed Ultium battery technology. Additionally, Nikola was slated to hand over $2 billion in stock to GM and also tap its battery-making prowess to develop semi-trucks.
But highly publicized deal — which was slated to close this week — was thrust into tumult this fall. Under fire from an early September report from short-seller Hindenburg Research, which questioned Nikola’s technology and overall potential, founder Trevor Milton resigned as executive chairman on September 21. Mark Russell — who arrived at Nikola in 2019 after a stint as COO of Worthington Industries — took over as Nikola CEO soon after Milton’s exit.
“Absolutely,” Russell told Yahoo Finance Live when asked if he is prepared with a plan to move forward that doesn’t include GM. Now Russell will be put to that test.
‘A clear negative’
Under the revised terms of the new non-binding agreement, GM will supply its Hydrotec fuel-cell system for Nikola’s commercial semi-trucks.
But Dan Ives of Wedbush Securities writes in a new note that the “headline” from the new agreement is that GM won’t be taking a stake in Nikola — and that news “will be viewed as a clear negative.”
“This went from a game changer deal for Nikola to a good supply partnership but nothing to write home about and the Street will be disappointed accordingly along with lingering lockup worries,” Ives wrote.
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