GM Backs Out of Nikola Deal and Kills Badger, Saying No to Free Equity

Wow, who could have seen this one coming?

GM is backing away from an agreement to take a stake in electric automaker Nikola Corp., marking the collapse of a deal that has been problematic since it was announced just two months ago.

Nikola shares fell nearly 25% on Monday.


After the Hindenburg report, Jonny Robb tape, and allegations against Trevor Milton from several women, GM didn’t want to touch Nikola with a ten-foot pole. The original deal essentially gave GM equity in Nikola for free (with GM putting up no cash) in exchange for GM licensing their decades-old hydrogen technology (which by the way, was headed straight for the dumpster before Nikola showed interest). Nikola was willing to give up a large chunk of the company to borrow some of GM’s reputation, but now GM has wised up. They do not want to be associated with this clown show.

GM has instead signed a nonbinding memorandum of understanding to supply Nikola with its Hydrotec fuel cell system. This supplier agreement replaces its previous transaction announcement made on September 8, 2020 to take an 11% stake in Nikola and produce a fuel cell pickup for the company by the end of 2022. The investment was valued at $2 billion at the time.


So Nikola still doesn’t have any hydrogen technology of their own? They’re going to have to pay cost-plus to buy the hydrogen drivetrain from GM, even though GM has never used the technology in a shipping product? What exactly does Nikola do again? And how long will it take people to realize the company is worthless? If you just buy everything from suppliers and simply integrate the pieces together, your product is going to be a commodity.

GM will no longer build the Badger pickup truck for Nikola, essentially ending that program. Nikola said it was going to focus on its zero-emissions commercial trucks and will be returning customer deposits for the Badger. The company had received $6.9 million in refundable customer deposits for the Badger as of September 30, according to its latest quarterly report filed with the U.S. Securities and Exchange Commission.


So the company took $6.9 million in deposits for a truck that never existed, and never had any chance of existing? Niiiiiiiiiiice. You’d think TSLAQ would be furious, rather than inviting Milton to be their guest of honor and treating him like a king.

Nikola’s troubles aren’t over. GM’s wording in its announcement suggests as much. GM describes the nonbinding MoU as a “potential agreement.” If it goes through, GM would engineer its Hydrotec fuel cell system to the specifications mutually agreed upon by both companies. It is expected that the potential arrangement would be “cost plus,” meaning that Nikola would pay upfront for the capital investment for the capacity. The companies are also discussing the potential of a supply agreement for GM’s Ultium battery system for Nikola’s Class 7 and Class 8 trucks.


The deal won’t go through. Nikola will fail before it ever ships a single product. I hope I’m wrong, but all the evidence seems to point squarely in that direction.

GM’s Hydrotec fuel cell system will be engineered at its Michigan technical facilities in Pontiac and Warren and manufactured at its Brownstown Charter Township battery assembly plant, the company said.


What a waste. Just throw it away –– the future is battery electric.

Read the full story at TechCrunch

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