Nikola: amidst controversy, Tesla competitor enters historic industry alliance
On Tuesday, car company Nikola signed a deal with General Motors, securing a strong future. But will it be enough to secure the startup's hydrogen fuel cell tech's future?
Nikola Motor Company, a startup car company working with hydrogen-fuel cell technology, has announced a partnership with General Motors.
The multi-billion dollar deal could radically change the future of Nikola, allowing the smaller company access to GM’s considerable infrastructure and resources. It could also pose Nikola as the foil to Telsa, the high-flying electrical car company run by CEO Elon Musk.
But Nikola may have a long way to go towards fulfilling its potential yet, a new report released Thursday suggests.
Announced on September 8th, the deal sees GM taking an 11 percent stake in Nikola through stock, which is estimated to be worth around $11 billion. In return, GM is giving the car company batteries, chassis architecture, fuel-cell systems, and even a factory in support of its proposed truck, the Nikola Badger.
Nikola Founder and Executive Chairman Trevor Milton was exuberant about the deal, proclaiming in a press statement that “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 program ready for production.”
The Ultium battery is crucial to the deal, as noted by General Motors Chairman and CEO Mary Barra in her statement on the alliance, too. Unveiled back in March, GM is promoting the Ultium as having a groundbreaking 200.0 kWh capacity. Kilowatt-hours in these vehicles are somewhat comparable to the capacity of gas tanks in "traditional" cars.
While it’s an imperfect measurement of an electric vehicle's true capabilities (the capacity can never be fully reached by drivers), GM also says the Ultimum will be able to provide drivers with a 400-mile range on a single charge. And 200 kWh is beyond what competitors like Rivian or Tesla have offered so far. For perspective, Tesla’s biggest battery, located within the Model X and Model S, offers 100 kWh.
The chance to double Tesla’s kWh capacity is likely too good for Nikola’s Milton to pass up. Nikola and the far more commercially successful Tesla have been in conflict for years, with the former suing the latter in 2018 over the design of Tesla’s Semi electric truck. That lawsuit has been winding its way through the courts since, with Nikola winning some minor concessions from the U.S. Patent and Trademark Office.
Tesla CEO Elon Musk has also repeatedly mocked the company and its technology, referring to its fuel cells as “fool sells” and “staggeringly dumb.”
But despite Musk's misgivings, the Nikola Badger is expected to be on sale in 2021. Equally important to its technology will be its reputation as a new car company on the market. That’s another area in which the GM partnership could play a crucial role.
“Most importantly, General Motors has a vested interest to see Nikola succeed,” Milton said in his press statement.
Street cred — While Nikola will be in charge of marketing the Badger, being able to tell perspective buyers that they are investing in GM-branded technology, as opposed to a startup mired in lawsuits, could provide a major advantage.
Credibility is a tough thing to earn, and an easy thing to lose, however. In a new report released Thursday morning from forensic financial research body Hindenburg Research, researchers dubbed Nikola “an intricate fraud," calling into question Milton’s business acumen and history.
“We have never seen this level of deception at a public company, especially of this size,” the report reads. The findings were staggering enough to send Nikola stocks tumbling down 9 percent. Among other allegations, Hindenburg claims that Milton has misled past partners, and accuses him of nepotism in hiring at the expense of expertise.
"Nikola has been vetted by some of the world's most credible companies and investors," the company said in a statement released on Autoblog. "(We) will not waver based on a report filled with misleading information attempting to manipulate our stock."
"We are fully confident in the value we will create by working together," GM said in a statement.