Hydrogen truck start up Nikola appears to be lurching from one crisis to the next.
After founder and chairman Trevor Milton was forced to stand aside mid-year following allegations of falsifying test videos and company statements, the company saw GM drop plans to work with it on hydrogen fuel cell pick ups and now has seen its plans to build 2,500 zero-emissions hydrogen powered garbage trucks in a joint venture with with Republic Services scrapped.
The cancelled partnership is the latest the challenges Nikola faced in the past year, following the failed $US 2 billion deal with General Motors and Milton’s departure as executive chairman and the investigation by the SEC and the Justice Department that ensued.
“Given the tidal wave of bad news for Nikola over the last few months, this was not the news that investors wanted to see under their Christmas tree,” said in said one prominent Wall St analyst.
“The company still has a Kilimanjaro-like uphill climb to gain back Street credibility heading into 2021,” the analyst added.
Nikola has said that the Republic deal fell through because the refuse trucks could not be made on the same chassis as its Tre model, and the order was $200 million over budget.
“This was the right decision for both companies given the resources and investments required,” said Nikola CEO Mark Russell a statement.
Last year was supposed to be a landmark one for the Arizona-based startup founded six years ago. In June, the company went public through a reverse merger with VectoIQ, a public led by former vice chairman of General Motors, Stephen Girsky.
However, the deal with Republic was the second failed deal in recent months, after the agreement with GM unraveled in late November. Instead of a more comprehensive original deal announced in September in which GM would have provided battery and fuel-cell technology to Nikola, manufactured Nikola’s planned Badger electric pickup, and taken an 11 per cent stake in Nikola, GM essentially just agreed to becoming a supplier to Nikola.
Both deals were spearheaded by company founder Trevor Milton, who left the company in September after Hindenburg Research published a report alleging “an intricate fraud built on dozens of lies over the course of its founder and executive chairman Trevor Milton’s career.”
The US Securities and Exchange Commission as well as the Justice Department are investigating these claims, according to reports by Bloombergl. Even if these investigations don’t produce anything, the specter of regulatory inquiry is certainly not helping in regaining investors’ confidence.
Meanwhile, the company is focused on its $US 600 million “pilot” manufacturing plant in Coolidge, Arizona, according to Nikola’s head of manufacturing Mark Dushesne.
“We’re going to build the pilot line with a capability of up to 10 trucks a month. And those will be mostly done by hand,” Duchesne said. “Part of the reason for that is it gives all these new people that we’re bringing on board a chance to understand how the vehicle is built before we are under the pressure of production volume.”
Some analyst firms like find the change in Nikola’s leadership and broader prospects for the future of the electric trucking industry encouraging, calling the next year and a half “vital” for the company.
Whether Nikola can regain the confidence of the market, of investors and ultimately truck buyers longest term, is yet to be seen. In the end Nikola’s fate will likely be determined more by the ability for large established auto makers, such as Daimler, Volvo, GM, Hyundai and Volkswagen to bring zero emission hydrogen fuel cell and battery electric trucks to market, economically, reliably and on time. Given the track records and long term confidence in those established companies our money would be on them, rather than throwing the dice and taking a chance with the likes of Nikola.