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Talks continue but Nikola plans beyond uncertain GM deal

First battery-electric prototype running in Europe and year-end milestones remain

Nikola has finished its first battery-electric prototype Tre in Europe. (Photo: Nikola)

Officially, Nikola Corp. (NASDAQ: NKLA) is still talking with General Motors (NYSE: GM) about a tie-up to get batteries and fuel cells for its electric trucks. But CEO Mark Russell characterizes the GM products as backup plans, perhaps softening the blow if a deal is not reached.

“It goes without saying that we’re interested in doing the deal with GM if we can get it done,” he said.

But Nikola has plans, beginning with the battery-electric Nikola Tre, if it doesn’t happen.

“The basic plan is a battery pack that we have designed and engineered,” Russell said Monday on an earnings call. He responded to a question about Nikola’s plans before the deal with GM was announced Sept. 8.


Under the terms of the strategic partnership, GM would get 11% equity in Nikola in exchange for providing its technology. GM also would be the contract partner for the Nikola Badger hybrid electric pickup truck. 

The Badger is fading as a priority following the September departure of Trevor Milton, Nikola’s founder and executive chairman.

“We have been very consistent. When we announced the Badger, we said we would do that with a partner,” Russell said. “The GM deal anticipates GM being that partner.” 

No money is in the budget for the Badger, Nikola Chief Financial Officer Kim Brady said on the earnings call. Nikola had $908 million in cash at the end of the third quarter. It expects to have about $300 million at the end of 2021. If the Badger does proceed, Brady said Nikola could ask GM to delay some of the $700 million that Nikola would pay GM to build the truck.


“It is important that we prioritize our capital expenditures. In our estimation, we’re not including anything related to the Badger,” Brady said. 

Nikola still expects to raise new capital in the markets sometime around the middle of 2021.

Life without GM described

“The agreement with GM was going to give us options for the next generation of our vehicle. But our primary path is the pack we have already developed and with which we are going into production now,” Russell said.

What sounded like a done deal fell into limbo two days later on Sept. 10. Short seller Hindenburg Research published a scathing report alleging Nikola had lied about its technology. The gains in Nikola’s stock price from the announcement vaporized. GM backed off, saying talks would continue toward a Dec. 3 deadline. Milton resigned Sept. 20.

GM needs to hit its target costs for the Ultium battery system to make it affordable for Nikola, Russell said.

Nikola’s original plan for fuel cells is a collaboration with German supplier Robert Bosch designed for heavy-duty trucks. GM’s Hydrotec fuel cell stacks are designed for passenger cars.

“A deal with GM could give us a backup plan that we could use for future iterations of our vehicles,” Russell said. “We’d love to have that as an option in addition to the system we developed with Bosch.”

Tre prototype in testing

Nikola’s first vehicle, a prototype of the Tre, is being tested on the track in Germany. Four more prototypes are targeted for production by the end of the year. Five early builds for customer testing are planned in early 2021. Series production is scheduled for the end of 2021 at an Iveco plant in Ulm, Germany.


Iveco, a unit of CNH Industrial N.V. (NYSE: CNHI), is Nikola’s joint venture partner for trucks that will be sold first in Europe. Component kits of the Tre will later be shipped to Nikola’s plant under construction in Coolidge, Arizona.

Nikola has an order for 2,500 cab over Tre models to be upfit as refuse haulers by Republic Industries.

Milestones on track

Other than some travel restrictions because of COVID-19, Russell said plans are on track to announce a second major customer order and a partner that would assist in Nikola’s first hydrogen fueling station.

Plans could slip to the early first quarter but not much beyond, he said.

By the numbers

Nikola lost $117.5 million, or 16 cents per diluted share in the third quarter compared to a loss of $13.0 million or 5 cents per diluted share in the same quarter a year ago.

Since it is not yet selling any vehicles, the company reported no revenue.

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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.