Embattled electric truck startup Nikola Corp. managed to salvage a deal with General Motors, the two companies confirmed Monday morning, though it has been scaled back substantially from the agreement they initially announced in September.
The original plan was a broad one. Among other things, GM was to produce a new pickup for Nikola, and the Detroit giant would have taken an 11% equity stake in the Phoenix-based company. The new deal is far more limited, GM simply agreeing to provide fuel-cell technology for Nikola’s hydrogen-powered Class 7 and Class 8 semis. They both plan to continue discussing the possible use of GM’s new Ultium battery technology, as well.
“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,” said Nikola Chief Executive Officer Mark Russell in a statement released Monday morning. The deal, he added, will “leverage the resources, strengths and talent of both companies.”
As the long-haul freight industry comes under increasing pressure to reduce emissions, hydrogen fuel-cell technology is seen as one of the more attractive ways to power heavy-duty trucks. At an estimated 1,000 miles on a tank, a truck like the Nikola One is expected to go twice as far as the all-electric Tesla Semi. And a refill will take minutes, rather than the hours needed to recharge a large battery pack, proponents note.
“This supply agreement recognizes our leading fuel cell technology expertise and development,” said Doug Parks, GM executive vice president of product development and purchasing. “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.”
Although the two companies will continue discussing the use of GM’s new Ultium battery technology key aspects of the deal Nikola and General Motors announced Sept. 8 are no longer on the table, they confirmed. For one thing, there will no longer be an equity swap. GM was expected to get a $2 billion stake in the nascent EV maker, about 11% of its shares at the time of the original announcement.
Another key part of the deal, the production of the Nikola Badger, also has been scrapped. The full-sized pickup was to have been offered in two versions, one running entirely on Ultium batteries, the other on a hybrid hydrogen-battery drive system. The truck would have used the same underlying platform as the GMC Hummer General Motors was set to launch next year, both trucks rolling off the same assembly line.
Nikola is hinting it may yet find another partner willing to work on a version of the pickup. For now, it is refunding the deposits of potential Badger buyers.
The early optimism surrounding the original GM-Nikola deal began to crack just two days after it was announced. Short-seller Hindenburg Research released a study claiming Nikola’s business was based on an “intricate fraud built on dozen of lies” perpetrated by the company’s founder and Chairman Trevor Milton. That quickly triggered an SEC probe and led to Milton’s resignation on Sept. 21.
The two companies missed an original target date for formalizing their agreement and faced a firm deadline of Dec. 3. But the situation quickly grew worse, Nikola earlier this month revealing it was facing a federal grand jury subpoena, along with former chairman Milton.
Nikola has continued to deny the allegations raised by Hindenburg Research but the damage has been severe, especially on Wall Street. Its stock price peaked earlier this year at $93.99 a share, closed last Friday at $27.93. The announcement of the scaled-back deal with GM set it sliding again on Monday.