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Nikola Aims To Close GM Deal But Has Backup Battery, Fuel Cell Suppliers

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Electric truckmaker Nikola is still in talks with General Motors to complete a planned alliance in the coming weeks but has supply deals with Bosch and startup battery maker Romeo Power for its futuristic big rigs in case a partnership with the automaker doesn’t happen. 

Plans for GM
to supply Nikola with both its new Ultium lithium-ion battery and Hydrotec fuel cells for the startup’s semi-trucks stalled in September, after a report by an analyst with a short position in Nikola shares accused the company’s founder, Trevor Milton, of lying about its technology and accomplishments. Milton resigned as executive chairman but remains its largest shareholder. 

“The contemplated agreement, which would give GM an equity stake and Nikola in exchange for various in-kind services is not yet closed but discussions do continue,” CEO Mark Russell said in a quarterly results call Monday. For the time being, Nikola is moving ahead with previously arranged plans to get batteries for Tre trucks from Los Angeles-based Romeo Power and fuel cells for hydrogen-powered Nikola Two trucks that it’s been developing with key partner Bosch. “Our base plan is to go into production with a fuel cell that we have developed in collaboration with Bosch over a number of years that’s been specially engineered and designed to be used in a heavy-duty truck.”

The September report by Hindenberg Research alleging fraud at Nikola hammered the company’s share price and sparked reviews by the Securities and Exchange Commission and Department of Justice. Russell said the company is cooperating with investigators but provided no update on the status of their review. The company has incurred $5.2 million of legal expenses related to the report and regulatory reviews, CFO Kim Brady said in the results call.

GM has said it remains interested in moving forward with plans to work with Nikola, but hasn’t specified why it’s delayed closing the 10-year deal. Should plans move forward, Nikola would use GM’s lower-cost battery system and fuel cells in future versions of its trucks. The automaker would also engineer and build Nikola’s electric Badger pickup truck. In exchange, GM would receive new Nikola stock worth $2 billion at the time the deal was announced and be able to appoint one member to Nikola’s board.

If Nikola can execute its plans over the next year or so, even without GM’s aid, the company may be among the early beneficiaries of a change in U.S. federal policies with the election of Joe Biden to replace President Donald Trump. Biden is prioritizing policies that cut carbon emissions and promoting far greater use of electric vehicles in as part of efforts to tackle climate change. By comparison, Trump has made carbon energy production a top U.S. policy and eliminated tough fuel economy rules that encouraged automakers to produce more electric vehicles. 

“We expect the Biden Administration to be more aggressive than the Trump Administration on these matters,” Russell said. If Democrats also gain control of the Senate, U.S. environmental policy will “look much more like California” and “all these things will be positive for our business model.”  

Nikola is ramping up to build Tre electric trucks in Ulm, Germany, with Iveco next year and battery and fuel cell trucks in Arizona in 2023, so the company isn’t yet generating revenue. Its net loss for the third quarter was $117.5 million, though it has about $908 million to help build its U.S. factory and continue R&D work. 

The company has built and is testing prototype versions of its Tre truck and expects to begin deliveries to European customers in late 2021. Those vehicles will use 800-volt batteries from Romeo that provide range of between 250 and 300 miles per charge. 

Additionally, Nikola is in talks with energy and electric power-generation companies to partner with it on hydrogen fuel stations. An announcement of its first partnership may come by the end of this year, Russell said, without elaborating. 

Nikola shares rose 2.4% in after-hours Nasdaq
trading to $19.07, after closing down almost 5%.

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