Troubled zero emission truck start up, Nikola. has revealed further pain, announcing it will lay almost a quarter of its personnel, letting go of 270 employees, or around 23 percent of its workforce.
The company also underlined that it would be restricting its electric truck efforts to North America as it seeks to preserve cash. this news was actually revealed recently be one time partner and collaborator, Iveco. In fact at last September’s IAA Show in Hannover , Nikola prime movers sat alongside Iveco trucks with adjoining displays.
However the European operations ave been taken over by Iveco who will build its own BEV and FCEV vehicles at the plant the pair jointly held in Germany and that while it had granted Nikola licence to use its S Way truck chassis and cabin in the USA, the marriage was basically over. Iveco had invested $US250 million in Nikola.
Nikola announced it will lay off 150 workers who were supporting its European programs while an additional 120 employees based at its Phoenix and Coolidge, operations in Arizona will also lose their jobs. Despite this around 900 Nikola employees will remain on the payroll.
Nikola said the cuts are expected to decrease personnel-related cash spend by more than $50 million annually. As a result of the cuts, the company’s annual cash spend is expected to decrease to under $US400 million by 2024.
Nikola’s shares dropped around 15 per cent late last week but rose about 1.7 per cent in after-market trading following the announcement.
“Nikola has initiated a more focused business plan this quarter, concentrating on North America, zero-emission truck production, and our HYLA hydrogen business,” CEO Michael Lohscheller said in a statement.
“Our battery-electric truck is in the marketplace and performing well for our customers, and the hydrogen fuel cell electric truck will go into production in a matter of weeks. We are proactively managing costs and reducing expenses. We are streamlining operations, including our organizational structure, to efficiently execute our objectives,” Lohscheller added.
Nikola has been struggling to overcome the travails surrounding its disgraced founder and former chairman Trevor Milton, who has been indicted for federal securities fraud. The company’s new leadership team has been trying to turn the company around since Milton was indicted and although it has made some progress, including installing a new CEO and preparing for commercial production. Along with these issues it has also encountered numerous speed bumps including the split with Iveco and an earlier split with automotive giant General Motors.
Nikola said it received a delisting notice from the public exchange last month, because its share price has been below $US1 for the past month. The NASDAQ has given Nikola until 20 November to comply with the minimum price rule, which requires the share price to be above $1 for 10 consecutive business days. During 2020 Nikola’s share price was as high as $US65.90 in 2020 before Milton was benched for the fraud charges. it has been a long drop for the EV truck maker from those dizzying heights to its current share price of around one dollar
The cash strapped company has also been pushing to issue more shares, but has struggled to get enough investors to vote on the proposal. In June, Nikola adjourned its annual meeting of shareholders until 6 July, in an attempt to secure the requisite number of votes needed to add shares to the marketplace.
Nikola needs to secure more than 50 per cent of all outstanding shares to vote in favor of the proposal, which is a higher bar than other proposals would need to reach. Without the approval of this proposal, production could be delayed or scrapped, the company said in a statement.