Nikola says fraud allegations will not slow deployment of battery and hydrogen trucks
Nikola’s management team say the hydrogen and battery-powered trucks start-up remains on track with plans to sell zero-emission heavy-duty vehicles from the end of 2021 and has enough money to fund them. operations for at least a year after being hammered by the founder’s allegations Trevor Milton lied about its technology and deceived investors.
“We are currently in a strong position after the last fundraising. This puts us in a well capitalized position to perform going forward, ”said CEO Mark Russell. Forbes. These funds will be used to build the Nikola’s Coolidge, Arizona plant, the first full-scale hydrogen gas stations, and bring the battery-powered Tre trucks into production by the end of 2021. “We are sufficiently capitalized until the end of next year and even beyond if we need it.
The Phoenix-based company, which will not generate significant revenue until 2022, reported around $ 699 million in cash at the end of the second quarter and total assets of $ 925 million in its 10-Q deposit with the Securities and Exchange Commission. Nikola said in June SEC filing when he listed stocks he planned to raise $ 700 million “between late 2021 and early 2022”. That plan is unchanged, Russell says.
Nikola’s circumstances were clouded by a sensational report by Hindenburg Research, a financial research firm run by analyst Nate Anderson, who accused Milton and the company of fraud and misrepresentation. Among his allegations, the “breakthroughThe Milton battery system said Nikola was working last year does not exist and he claimed to have designed the technology and vehicle components purchased from other manufacturers as his own. Anderson is short in Nikola shares and took advantage of the drop in the share price triggered by the report. Nikola fell 64% from $ 50.05 on September 8, the day the company announced a major potential alliance with General Motors, to $ 17.88 on September 29.
Nikola has positioned itself as the fastest engine in the field of hydrogen vehicles, a technology that has been around for decades but has not been widely adopted by the market due to the lack of gas stations and expensive components. necessary for the zero-emission powertrain. The costs of hydrogen fuel cells, batteries, and high pressure fuel tanks have fallen dramatically over the past decade, and new options for making hydrogen from wind or solar electricity have made it a priority. more interesting option in recent years, especially for heavy goods vehicles. trucks. Toyota, Hyundai Motor, Daimler, Cummins and other global automakers are also gearing up hydrogen-powered trucks and powertrains, though none have moved as aggressively as Nikola.
Shares rebounded on the Nasdaq on Wednesday, up 14.5% to close at $ 20.48.
With General Motors, Nikola has industrial partnerships with Bosch and CNH Industrial / IVECO, a European manufacturer of commercial vehicles, who are also investors, and works with companies such as Nel Hydrogen, Meritor and South Korean Hanwha Solar.
Milton stepped down as executive chairman on September 20 and was replaced by Steve Girsky, the Nikola board member who helped orchestrate the company’s listing and introduced it to GM. Girsky was vice president of GM after its bankruptcy and also worked as a financial analyst for decades.
Although Milton has often claimed that Nikola has cutting edge fuel cell and battery technology, the company appears to have positioned itself as a platform to bring commercial hydrogen vehicles into service as quickly as possible. Rather than having cutting edge technology, his most unique aspects seem to be his business plan based on a network of hydrogen and battery charging stations to support the fleets of commercial vehicles that he leases to companies. customers, such as brewer Anheuser-Busch.
In terms of proprietary technology, Russell referred to software developed in-house for Nikola’s electric trucks. “What is 100% ours is the software. For an electric vehicle, software is the key, ”he says. “The vehicle software and the infotainment system are 100% ours. “
The Hindenburg report also sparked a review of Nikola by the SEC and the Justice Department, neither of which will comment on the matter. Nikola said he alerted the securities regulator to review the Hindenburg report. Russell and Nikola chairmen Steve Girsky declined to discuss potential SEC or DOJ investigations.
The turmoil complicated the completion of Nikola’s partnership with GM that would supply the Detroit-based automaker an 11% stake in Nikola. Under a 10-year contract, Nikola would use GM’s new Ultium lithium-ion battery system and Hydrotec fuel cells, their first commercial application. GM would also “design, certify, validate and manufacture” the Badger pickup truck designed by Nikola and powered by batteries and fuel cells.
“Our deal with Nikola has not been completed,” GM spokeswoman Julie Huston-Rough said on Tuesday. “We are in discussions with the current management of Nikola and will provide further updates as necessary or necessary.”
Nikola predicted that the deal would be finalized by September 30, according to a SEC filing. The deal can be terminated by GM or Nikola if there is no deal before December 3.
GM’s cooperation is crucial for Nikola’s Badger pickup project as it relies on a chassis, powertrain components and production supplied by the automaker. Russell declined to say whether Badger will still be produced if GM pulls out of the partnership agreement. He also wouldn’t say how many orders for the truck have been refunded in the past few weeks. Paid reservations for Badger, ranging from $ 250 to $ 5,000, opened on June 29. If the deal with GM goes ahead, production is due to start in 2022.
Testing of prototype versions of Nikola’s large hydrogen fuel cell platforms with customers is due to begin in 2022, followed by commercial production from the Coolidge plant in 2023. This plant is also to manufacture Tre trucks. in 2022, after initial production in Ulm. , in Germany, at a factory operated by IVECO at the end of next year.
In addition to its product targets, the company said it was canceling an in-person “Nikola World” event at the end of this year due to the ongoing Covid-19 pandemic. The event is a large-scale public demonstration of its vehicles, partnerships and plans for the future.
Hindenburg’s allegations focused heavily on Milton’s comments and called the company a “complex fraud based on dozens of lies,” he said.
Russell and Girsky have both defended the accuracy of the documents Nikola filed with the SEC with Forbes. Girsky also said he supported the due diligence carried out by his company, VectoIQ, which merged with Nikola in June to help make it public.
“I was an analyst for almost 20 years and dug holes in business models like this for 20 years,” Girsky says. “We brought in a group of experts to punch holes in the model, we talked to partners, we were diligent in the business, we were diligent with partners, and our diligence was very prospective, not retrospective. “
Nikola has also been in talks with energy companies, including BP, to partner with hydrogen refueling stations, although those talks were put on hold following Hindenburg’s allegations.
Russell did not identify specific companies Nikola speaks with and said building his hydrogen stations is not based on a potential partnership.
The “milestones in the business don’t depend on a partner and the fundraising plan was that we can move forward without a partner,” he says. “We plan to go do it ourselves if we have to, but a partner helps us go faster and reduces the risk.”