Electric truck deal between GM & Nikola still open

The strategic e-mobility and manufacturing partnership between General Motors and Nikola still awaits finalisation. The deal for electric trucks was supposed to be signed and sealed tomorrow, but according to GM, this is not yet the case.

“Our transaction with Nikola has not closed,” GM spokeswoman Juli Huston-Rough said in a statement. “We are continuing our discussions with Nikola and will provide further updates when appropriate or required.”

A statement by Nikola matched GM’s. Both companies declined to make any further comment when asked if terms of the deal were being renegotiated.

What makes the discussion difficult is likely that Nikola’s share price has recently fallen sharply after allegations of fraud had been brought forward by a short-seller. Nikola had pressed for the charges to be taken up by the SEC and the authorities, at least formally, leading Nikola CEO Trevor Milton to resign as a result. He made way for former GM Vice Chairman, Stephen Girsky, as Nikola’s new Executive Chairman.

At the same time, the allegations by short-seller Hindenburg Research had followed the initial announcement of the alliance between Nikola and GM on 8 September. It had first sent shares in the battery-electric and hydrogen truckmaker soaring.

The announcement included plans for GM to acquire an 11% stake in Nikola then worth about $2 billion and payments up to $700 million for building the startup’s Badger pickup. This would, in turn, also help GM offset their carbon emissions across the fleet as they were to keep all EV credits being brought in through Badger sales.

With Nikola shares now trading below $18 a share, GM’s potential stake is worth less than half the initial value as Reuters summarises.

As part of the agreement, Nikola would also use General Motors’ Ultium battery system and Hydrotec fuel cell technology. In total, the agreed contributions in kind comprise around two billion dollars, which Nikola was to pay with its own shares, which should now have become difficult.

The envisioned agreement had also included GM to become Nikola’s exclusive fuel cell supplier not only for the Badger but also for the Class 7 and 8 trucks. Nikola had expected to save around four billion dollars on the powertrain and over one billion dollars in engineering and validation costs over ten years.

Both parties had for the SEC beheld the right to terminate the agreement should no deal be reached until 3 December. While GM could step away entirely, the circumstances, i.e. share values, appear to point to new conditions under negotiation.

A note on Europe – the agreement with GM would not include the market over here. Nikola has already reached an agreement with Bosch that the German supplier will supply Nikola not only with the E-axles but with the entire fuel cell system. This should then probably only concern the fuel cell version of the Nikola Tre, which is to be built in Ulm from 2023. Bosch also has a stake in Nikola Motor but has shown no inclination so far, to change the agreements in place.

Nikola also issued a statement today confirming the plans for the European battery-electric truck model to be on track as planned. Reads the statement: “Nikola expects the first batch of five prototypes of the Nikola Tre, a 100% battery-electric truck, will be substantially completed at our JV facility in Ulm, Germany in the next few weeks. The Nikola Tre prototypes will be subsequently bench tested as well as road-tested in Germany. We remain confident in our ability to begin production of the Tre and make it available to customers starting in the fourth quarter of 2021.”

reuters.com, freep.com, nikolamotor.com (statement Tre)


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