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Nikola adds crisis-tested directors to regain credibility

Nikola Corp. Chairman Steve Girsky has recruited three crisis-tested directors to help the electric truck startup regain credibility after a series of setbacks. (Photos: Nikola

A series of embarrassing setbacks, including allegations of fraud and deception by its founder, brought electric truck startup Nikola Corp. (NASDAQ: NKLA) crashing to Earth following a stratospheric beginning as a public company.

With Trevor Milton, the high-profile ringmaster of company hype out of the picture, Nikola since Oct. 1 has added three crisis-hardened directors with deep business, management and manufacturing expertise.

“The goal was to bring resources to the board that management can call on when needed,” Chairman Steve Girsky told FreightWaves on Tuesday. “We’ve been able to attract high-quality board members that will help us rebuild credibility with investors.”

Done with distractions

The 10-member board wanted 2020 to end with Nikola focused on building battery-electric and fuel cell trucks, constructing a new plant in the Arizona desert and advancing plans for hydrogen fueling stations.

Gone are the Nikola Badger electric pickup truck, a phantom project dependent on a manufacturing partner. For a few weeks, that looked like it would be General Motors Co. (NYSE: GM). But the automaker stalled and ultimately bailed on Nov. 30.

Last month, a Milton-constructed deal with Republic Services Group (NYSE: RSG) unraveled when Nikola discovered it couldn’t modify its truck design to create the 2,500 refuse haulers Republic had agreed to buy. Making the trucks would cost $200 million more and take a year longer than Nikola planned.

The loss of that contract wiped out the achievement of one of Nikola’s three promised milestones — a major customer contract. The company also failed to identify a partner for hydrogen stations. It did break ground on a $600 million factory in Coolidge, Arizona. 

“It’s not lost on the board that they need to start hitting their milestones,” Girsky said.

Forbes, Yahoo Finance and other media tagged Nikola as a business bust in 2020.

Short sellers still active

Even with Nikola’s share price around $16 compared to a high of nearly $80 in June, short sellers bet the stock will fall further. About 50 million of Nikola’s 384 million outstanding shares were held by short sellers as of Dec. 15. That is more than at any time in the company’s six months of public trading. Nikola combined with VectorIQ in a reverse merger last June.  

Expectations for a lower price grew after short seller Hindenburg Research published a 67-page report Sept. 10, alleging malfeasance by Milton. 

Milton’s promise of a point-by-point refutation of Hindenburg never materialized. Nikola took several days to issue a response that addressed some but not all of the claims. The Justice Department and the Securities and Exchange Commission issued subpoenas. Milton left the company Sept. 20.

The stock price, already about 40% below its summer zenith, fell further. That achieved Hindenburg’s goal. It made a lot of money, paying the premium on the borrowed shares from its profits. 

Help for the asking

Nikola’s three newest directors do more than warm seats in a boardroom. They are ready to advise company leaders if asked.

Steve Shindler was chief financial officer of Girsky’s VectoIQ Acquisition Corp., the special purpose acquisition company (SPAC) that brought Nikola public. He is a former CEO of NII Holdings, a successor of Nextel Corp., purchased by Sprint in 2005. NII previously owned providers of wireless communication services under the Nextel brand in Latin America.

Bruce Smith has led manufacturing at a variety of Tier 1 suppliers for more than 30 years. He is chairman and CEO of Detroit Manufacturing Systems, a component manufacturer for global automotive brands with approximately $1 billion in annual revenue. 

Mary Petrovich was hired as CEO of AxleTech after private equity firm Wynnchurch Capital bought it out of bankruptcy. Three years later, Wynnchurch sold AxleTech to Carlyle Group, which sold it to General Dynamics. More difficulty followed. Carlyle reacquired AxleTech and brought Petrovich back as executive chair.

Before the sale of AxleTech to Meritor Inc. (NYSE: MTOR), its original owner, in 2019, Petrovich oversaw development of an electric drivetrain used by electric bus maker Proterra.  

“She’s not afraid of difficult situations,” Girsky said of Petrovich, a business school classmate.

Adding experienced directors mirrors Girsky’s approach as CEO at Vector IQ, his consultancy focused on smart mobility.

“That’s the difference between what we do and other SPACs,” he said. “We will get involved as needed. We’re not just making an investment and leaving.”

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Click for more FreightWaves articles by Alan Adler.

Alan Adler

Alan Adler is an award-winning journalist who worked for The Associated Press and the Detroit Free Press. He also spent two decades in domestic and international media relations and executive communications with General Motors.