Nikola
Another established company withdrew from fighter electric truck maker Nikola, causing its stock price to drop 18% in two trading days. Nikola’s stock price fell more than 80% from its all-time peak in June.
In August, the garbage company Republic Services placed an order with Nikola for 2,500 electric garbage trucks with the option of taking 5,000 more. At the time, Nikola was flying high, having just entered public markets in June. According to the Arizona Republic, trucks should have a range of 150 miles and a capacity for 1,200 trash cans.
Garbage trucks should be variants of the Nikola Tre, a battery-powered electric truck that Nikola is building with the help of Italian automaker Iveco. Testing of garbage trucks was due to begin in 2022, with the first trucks delivered a year later.
But on Wednesday, Nikola said the two companies were ending the partnership. Nikola blamed “longer-than-expected development time and unexpected costs”.
“This was the right decision for both companies, given the necessary resources and investments,” said Nikola’s CEO Mark Russell.
Nikola has been recovering since September, when a short sales company revealed that its first truck, the Nikola One, never worked. Founder and CEO Trevor Milton described the truck as fully functional. But Nikola was forced to admit that a promotional video for the truck “in motion” actually showed the truck moving down a long, shallow hill. Milton resigned as executive president later that month.
Since then, Nikola has been forced to reduce his ambitions. In November, Nikola announced that an agreement with GM to produce Nikola’s badger electric pickup would not close – and that the Badger was being canceled. Fraud allegations may have made GM suspicious of joining Nikola. But it was also unclear whether the deal was good for Nikola.
According to the agreement, Nikola would have paid GM hundreds of millions of dollars to design and build the Badger. But Nikola’s leadership may have concluded that it could not spare that money. Hundreds of millions more will be needed to bring Nikola’s flagship trucks to market. And with the company’s stock plummeting, it may not be able to raise more funds from Wall Street.
The same logic can apply to the garbage truck business. Nikola may simply not have the money or personnel left to design a garbage truck while running to bring a line of conventional trucks to the market.