The comprehensive strategic eMobility partnership between General Motors and Nikola announced at the beginning of September has now been replaced by a non-binding letter of intent with a greatly reduced scope. Financial participation of GM in the startup is off the table, the e-pickup Badger has been dropped.
Cooperation between GM and Nikola on the electric pickup Badger announced in September has now been cancelled. This follows the trouble at Nikola and allegations of fraud leading to the resignation of Trevor Milton, the founder of the startup. Before this kerfuffle, GM had been considering not only becoming the production partner for the Badger but also to supply important components. What remains is a new letter of intent: This only states that GM would supply fuel cells for Nikola’s planned trucks but only if both parties could agree on the conditions.
Thus, the fully announced strategic partnership has become a possibility, but not yet secure supplier relationship. In the memorandum itself, General Motors remains very matter-of-fact in tone (“The memorandum of understanding replaces the previous transaction announced on September 8, 2020”), but tough: “It is expected that the potential arrangement would be cost plus, and that Nikola would pay upfront for the capital investment for the capacity.” In short, GM wants to see the money before anything is delivered to Nikola.
While the original agreement from September stabilised the share price of Nikola, which has been listed on the stock exchange since June, at least in the short term, Nikola’s share price fell sharply after allegations of fraud had been brought forward by a short-seller, 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. With all of these developments, General Motors hesitated, and the announced agreement was never signed. Now, the agreement between the US carmaking giant and the fuel cell truck startup has been replaced by a greatly slimmed-down version. Nikola’s share price fell 20 per cent in pre-market trading after the current announcement.
Nikola now says that the pickup program will even be discontinued completely: “The MOU does not include the previously contemplated GM equity stake in Nikola or development of the Nikola Badger. As previously announced, the Nikola Badger program was dependent on an OEM partnership. Nikola will refund all previously submitted order deposits for the Nikola Badger.” The pickup was to be launched on the market first with battery-electric drive, later also with fuel cell.
The still existing declaration of intent for the Class 7 and 8 tractor units is currently only about the supply of fuel cells. According to Nikola, tests with the beta prototypes are now to begin in the second half of 2022. In addition, the company wants to discuss the use of General Motors’ Ultium batteries in Nikola’s Class 7 and 8 vehicles, according to the startup. GM confirms that they will discuss “the potential of a supply contract” for the Ultium batteries.
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