Nicola, a start-up electric truck company that made a big splash on Wall Street, announced a broad alliance with General Motors in September that promised to give the company significant technology, financial support and credibility with investors.
But the claim quickly dissipated that Nicola had overstated his abilities and the company’s founder quickly resigned from the company. Investors were left wondering if Nicola was indeed an automotive innovator and whether GM had made an embarrassing mistake in joining up with the start-up.
After weeks of negotiations, the two companies announced that they still intended to work together, but on a more limited basis than what they had proposed in September.
GM still intends to supply hydrogen fuel cells for use in heavily fueled trucks, which are developing start-ups, but have yet to mass-produce. But GM will no longer build electric pickup trucks for Nikola or take an 11 percent stake in the company – once valued at $ 2 billion.
The news of a scale-down partnership led to a sell-off in Nikola’s stock. By noon, it had fallen by about $ 7 a share, or more than 24 percent, to $ 21.15.
The decline lowered Nicola’s market value to nearly $ 8 billion – about a quarter of the value it had since its market debut in June. At one time, stock market investors valued Nikola more than Ford Motor, one of the world’s largest automakers.
The new agreement gives Nikola access to fuel-cell technology that GM has developed but has never commercialized. Cells use hydrogen to produce electricity and some experts consider it a better way to eliminate greenhouse gas emissions from heavy-duty trucks than batteries that weigh a lot and can take hours to recharge Huh.
Morningstar analyst David Wiston said, “I doubt Nicola needed more deal from GM.” “Nicola needs fuel cells for its core business. For GM, a supply deal is not a big deal either. “
GM plans to manufacture its own electric pickup truck, sport-utility vehicle and car. Earlier in November, the company said it intends to spend $ 27 billion on electric vehicles over the next five years.
September announcement Widely interpreted as a seal of approval from GM, it helped raise Nicola’s stock and investor confidence in ambitious plans to develop a national network of heavy trucks and fuel stations powered by hydrogen fuel cells .
But just a few days after the September 8 partnership announcement, Hindenburg Research, a small investment firm, put out a report saying that Nicola and its founder and executive chairman, Trevor Milton, changed the technology developed by the company drastically. Had given. The report stated that the company produced a video showing a truck rolling downstream to show that the company had developed a working prototype. Later that month, Mr. Milton resigned.
Following the Hindenburg report, GM said it had not closed its deal with Nicola as planned and the companies continued negotiations. The deal he announced on Monday was described as a “non-binding memorandum of understanding”. GM also said that Nikola would “have to pay” for it to expand its capacity to produce hydrogen fuel cells.
“Heavy trucks remain our core business,” Nicola CEO Mark Russell said in a statement. “By working with GM, we are strengthening our companies’ shared commitment to a zero-emission future.”
GM and Nicola also said that they would discuss the use of Nicola’s GM battery system, called Ultium, for fully electric versions of heavy-duty trucks from start-ups.