[DETROIT] General Motors is moving ahead in its talks with startup Nikola Corp over a proposed partnership to make electric and fuel-cell-powered trucks, a senior executive at the Detroit automaker said.
GM and Nikola announced a tentative agreement last month but have yet to come to final terms. Nikola's stock price has plunged in the wake of allegations of deception by a short seller, raising questions from investors about GM's due diligence and commitment to a deal.
"Right now we are going forward," Mark Reuss, GM's president, said in a Bloomberg TV interview taped Oct 16. In what he called "the exciting piece" of those discussions, Mr Reuss said GM plans to share hydrogen-fuel-cell technology developed with Honda Motor with Nikola for use in both a pickup and big-rig trucks.[DETROIT] General Motors is moving ahead in its talks with startup Nikola Corp over a proposed partnership to make electric and fuel-cell-powered trucks, a senior executive at the Detroit automaker said.
GM and Nikola announced a tentative agreement last month but have yet to come to final terms. Nikola's stock price has plunged in the wake of allegations of deception by a short seller, raising questions from investors about GM's due diligence and commitment to a deal.
They are taking what I believe is the best fuel cell in the world - with our fuel cell that is made in our joint venture with Honda right here in Michigan - and taking that fuel cell and looking at deploying it in the heavy-duty transport market with the large trucks - the Class 7 and 8s - and also in the light-duty Badger truck," he said.
The proposed deal would give GM an 11 per cent stake in Nikola and allow the startup to use its hydrogen-fuel-cell technology. GM also said it plans to manufacture the Badger pickup truck for Nikola, which initially would be battery-electric and eventually fuel-cell powered.
Just last week we wrote about General Motors Company (NYSE:GM) announcing a strategic partnership with Nikola (NASDAQ:NKLA), giving it an 11% stake in the company. As part of the deal, GM will produce the Nikola Badger by the end of 2022 while Nikola also gains access to GM’s Ultium battery system and Hydrotec fuel cell technology.
"Nikola is one of the most innovative companies in the world. General Motors is one of the top engineering and manufacturing companies in the world. You couldn’t dream of a better partnership than this," Nikola founder Trevor Milton said of the announcement.
Shares of both companies jumped on the news, with shares of Nikola gaining more than 40%. For Nikola, however, the enthusiasm was short-lived as the company faced pressure for the rest of the week after being accused of being a fraud.
"Nikola is an intricate fraud built on dozens of lies over the course of its Founder and Executive Chairman Trevor Milton’s career," Hindenburg Research wrote.
"We have gathered extensive evidence—including recorded phone calls, text messages, private emails and behind-the-scenes photographs—detailing dozens of false statements by Nikola Founder Trevor Milton."
The extremely detailed report has 53 questions for Milton to answer before coming to the conclusion that "Nikola is a massive fraud constructed on dozens of lies."
"We have nothing to hide and we will refute these allegations. They have already taken up more time and attention than they deserve," Nikola said in response.
"We have retained leading law firm Kirkland & Ellis LLP to evaluate potential legal recourse, including with respect to the activist short seller and any others acting in concert."
Shares of Nikola obviously didn't react well to the company being accused of fraud. Shares gave up all of their gains from the GM news and then some, ending the week more than 40% below the highs following the GM news on Tuesday. Shares of Nikola are now down nearly 70% from their high in June.
Well-known short-seller Citron Research agreed with Hindenburg Research's assessment of Nikola, tweeting "Congrats to Hindenburg for exposing what appears to be a total fraud." Citron also said it would cover half of all legal expenses Hindenburg Research may accumulate.
GM is standing by Nikola despite the allegations of fraud.
"We are fully confident in the value we will create by working together," GM said.
"We stand by the statements we made in announcing the relationship."
It appears Nikola will have a legion of detractors that believe the company is a fraud to deal with just like it's larger rival Tesla (NASDAQ:TSLA) has had to for years.
Nikola Corporation and General Motors Co. have announced a strategic partnership that begins with the Nikola Badger and carries cost reductions through Nikola’s programmes, including: Nikola Badger, Nikola Tre, Nikola One, Nikola Two and NZT. As part of the agreement, Nikola will utilize General Motors’ Ultium battery system and Hydrotec fuel cell technology, representing a key commercialization milestone for General Motors.
Nikola will exchange $2 billion in newly issued common stock for the in-kind services and access to General Motors’ global safety-tested and validated parts and components. General Motors will be subject to a staged lock-up provision beginning in one year and ending in June 2025. General Motors will engineer, homologate, validate and manufacture the Nikola Badger battery electric and fuel cell versions.
Trevor Milton, founder and executive chairman, Nikola, said: “You couldn’t dream of a better partnership than this. By joining together, we get access to their validated parts for all of our programs, General Motors’ Ultium battery technology and a multi-billion-dollar fuel cell programme ready for production. Nikola immediately gets decades of supplier and manufacturing knowledge, validated and tested production-ready EV propulsion, world-class engineering and investor confidence. Most importantly, General Motors has a vested interest to see Nikola succeed. We made three promises to our stakeholders and have now fulfilled two out of three promises ahead of schedule. What an exciting announcement.”
Mary Barra, chairman and CEO, General Motors, said: “This strategic partnership with Nikola continues the broader deployment of General Motors’ all-new Ultium battery and Hydrotec fuel cell systems. We are growing our presence in multiple high-volume EV segments while building scale to lower battery and fuel cell costs and increase profitability. In addition, applying General Motors’ electrified technology solutions to the heavy-duty class of commercial vehicles is another important step in fulfilling our vision of a zero-emissions future.”
The agreement with Nikola extends General Motors’ utilization of its fuel cell technology to the Class 7/8 semi-truck market and represents a high-volume commercialization of its leading Hydrotec fuel cell system and complements the company’s battery-electric propulsion. Fuel cells will become increasingly important to the semi-truck market because they are more efficient than gas or diesel. General Motors sees additional growth opportunities in multiple transportation, stationary and mobile-power end markets.
General Motors’ battery development work is ongoing. Its Ultium battery technology roadmap includes silicon anodes and lithium metal anodes, which will improve vehicle range, affordability, and reduced dependence on rare and costly metals. It is already demonstrating automotive-grade durability and significantly higher energy density.
Nikola will be responsible for the sales and marketing for the Badger and will retain the Nikola Badger brand. The Badger was first announced in Februay 2020 and will make its public debut in December 2020 at Nikola World 2020 in Arizona. Badger production is expected to start in late 2022 at a location to be announced at a later date.
After the all-electric Model S sedan paved the way for battery-powered SUVs and crossovers, it was only a matter of time before pickup trucks would come along to share the spotlight. Rivian’s R1T hit the ground running for a while, but Tesla’s Cybertruck unveil officially started the race for worksite hauling and adventure with zero emissions. Nikola Motors later followed up with its own truck – the Badger – powered with hydrogen fuel cells.
How all of these vehicles will do with consumers is the question on everyone’s mind now, and the team at PartCatalog.com has put together some Twitter data to help predict the answer.
Using Twitter’s geospatial metadata made available to developers and Google’s Trends software, PartCatalog created a color-coded map showing the most anticipated electric truck in the US in a state-by-state breakdown. Over 90,000 tweets were tracked for the project, using hashtags and models mentioned as data drivers. Specifically, tagged location, mentioned location, and profile location formed the basis of the state determinations.
The results were quite interesting.
Altogether, Rivian’s R1T was the top-mentioned zero-emissions pickup in 17 states, Tesla’s Cybertruck in 15 states, and Nikola’s Badger in 13 states. Bollinger’s B2 made a splash with 4 states, and Lordstown’s Endeavor picked off 1 state. The results look to be a bit regionalized with Rivian drawing chatter in the north-central and northeastern parts of the US, Nikola in the south and southwest, and Tesla making headway right through the middle on a diagonal course.
These results could be based on a variety of reasons aside from consumer preferences for vehicle styling and capabilities. Company location is another factor to consider. For instance, the Lordstown Endurance was most mentioned in Ohio only, which is also the state where the company is headquartered. Tesla’s popularity in California comes as no surprise given it’s the auto maker’s home state and has become a world leader in all-electric vehicles. However, it’s interesting that Nikola’s Badger is most discussed in Texas, given Tesla’s recent Cybertruck factory competition, which ended in a win for the Lone Star state.
Nikola’s home base is now in Arizona, likely playing a role in its data findings there, but its popularity has also reached upwards to Massachusetts and Pennsylvania. The oil industry in Pennsylvania could play a role here, being that Nikola’s primary customer focus is the trucking industry and converting its diesel-focused world to cleaner fuel cells. Massachusetts, though, doesn’t have the same expectation given its environmental efforts overall.
The conversation surrounding electric pickup trucks is likely to become even more diverse as more prominent players get into the game. As more details about Ford’s battery-powered F-150 are revealed, some, if not all, of the other truck makers may see their popularity have more competition. The connection between Rivian and Ford, namely the $500 million investment made into the nascent manufacturer that was recently semi-canceled, may also have some interesting playout.
Of course, having at least one electric truck delivered to customers will be the most relevant measure of their opinions, and next year looks to be the earliest we’ll see that happen.
