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EV Truck Startup Nikola Files for Bankruptcy
Nikola, the Arizona-based company that hoped to become the Tesla of the trucking industry, has filed for bankruptcy. It managed to develop, build, and deliver vehicles, which is a Herculean task for a start-up, but factors such as high operating costs and a lack of demand for EVs pushed it into dire financial straits.
“Like other companies in the electric vehicle industry, we have faced various market and macroeconomic factors that have impacted our ability to operate,” company CEO and president Steve Girsky explained in a statement published online. “In recent months, we have taken numerous actions to raise capital, reduce our liabilities, clean up our balance sheet, and preserve cash to sustain our operations. Unfortunately, our very best efforts have not been enough to overcome these significant challenges,” he added.
Nikola revealed that it’s entering bankruptcy with about $47 million in cash, which should be enough to get it through the next couple of weeks. It plans to continue providing service and support through the end of March 2025 for the trucks it already delivered, but it will need to find “one or more partners” to carry on beyond that. There’s no word yet on whether anyone is interested in helping out.
The brand hopes to sell its assets to the highest bidders to wind down its business, though the court overseeing the bankruptcy process still needs to approve this strategy. Its assets are worth between $500 million and $1 billion, according to Reuters, but its liabilities amount to anywhere between $1 billion and $10 billion. Nikola no longer owns the Coolidge, Arizona, plant in which it built trucks. The company was already facing financial headwinds in 2023, so it sold the facility to a group of investors and signed a 99-year lease.
Nikola joins Lordstown Motors, Canoo, and Fisker, among several others, on the list automotive start-ups that have folded in recent years. Like many of its peers, it was once celebrated as a cutting-edge company with a bright future. Its market cap peaked at $27 billion in 2020, a figure that made it more valuable than Ford, and it nearly landed a $2 billion investment from General Motors in September 2020. The deal fell through several months later following a series of fraud allegations that culminated in Nikola’s founder and then-CEO, Trevor Milton, getting ousted from his position. It turns out the much-hyped concept truck that the company paraded at various events wasn’t moving under its own power. Milton was sentenced to four years in prison in December 2023 for “making false and misleading statements to retail investors.”
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Despite these not-insignificant setbacks, Nikola launched production of an electric semi called Tre and delivered the first example in December 2021. In August 2023, it recalled every electric semi it had built to date (a total of 209 vehicles) and issued a stop-sale order after it discovered that a coolant leak in the battery pack could cause a fire.
Nikola later turned its attention to hydrogen technology, it notably started delivering a hydrogen-powered semi in 2024 and began mapping out an innovative refueling network called HYLA, but these efforts weren’t enough to keep it afloat.
It doesn’t make economic sense for most shipping companies to take a chance on this kind of vehicle with a small startup. I wish small companies success but the auto industry is a very hard market to crack. No one wants to be a beta tester on an expensive vehicle.
It is becoming increasingly clear that these startups are nothing more than a sophisticated money laundering operation.
The PE ratio of Tesla alone, compared against GM or Toyota, is absurd and in any other investment vehicle (pun intended) it would be a terrible risk.
Yet Tesla is proven to be viable and likely sustainable. The other BEV manufacturers are far from the Tesla market share and in audition growth seems virtually stagnant.
It would seem that in this arena, Lutz was wrong.
I think of anything that is “Electric” as having a cord that you plug in the outlet. These are “battery” vehicles. The evil thing about battery vehicles is that their range will get less and less with each charging cycle. And if that charging cycle is the quick charge variety, it will lessen the range life at an even greater rate.
All that battery capacity also adds tremendous weight, which in turn, contributes to greater wear and tear on our roads and like a sledge hammer, causes more destructive force in an accident.