Nikola: electric truck start-up drives away from founder

Electric truckmaker Nikola has, at last, delivered some trucks. Seven years after it was founded and five months after founder Trevor Milton was charged with allegedly misleading investors, the first electric semis have made their way to a customer in Los Angeles. The arrival means Nikola has kept its promise to start sending out trucks in the final quarter of 2021.

The timing could not be better. On Tuesday, the US Securities and Exchange Commission said Nikola had agreed to pay $125m to settle a charge regarding allegedly misleading statements made by Milton. He is also facing criminal fraud charges for allegedly making false claims about Nikola’s abilities, including an infamous promotional video in which gravity — not batteries — kept a truck moving.

Nikola, which had $587m of cash at the end of the last quarter, can afford to set aside funds for payment. The more pressing job is to put distance between itself and its founder. Following the playbook of Uber and WeWork, it has put in place a notably understated chief executive and is demonstrating its ability to control costs. It has made a number of deals, including an agreement to supply 100 semi trucks to PGT Trucking. Nothing, however, comes close to the General Motors deal. The US carmaker’s plan to acquire an 11 per cent stake fell apart last year. Shares remain far below 2020 heights, when Nikola hit a near $29bn equity valuation. Its market cap is now $3.7bn. 

The SEC payment bodes ill for start-ups in electric vehicles, or flying taxis, thinking of making wild claims in a bid to attract attention. Regulators are taking an increasingly cautious approach to hype.

Nikola was once the ultimate meme stock. Euphemistically known as “pre-revenue”, it joined markets in June 2020 via a reverse merger before it managed to deliver any vehicles. The vision was all. Nikola wants to make hydrogen-powered vehicles and fuel stations, leasing vehicles with fuel-to-fleet operators. The company says one model will have a 900-mile range. Anheuser-Busch is due to receive its first hydrogen fuel-cell vehicles.

Hydrogen is an alternative fuel regarded as key to decarbonising the global economy. But infrastructure is at an early stage.

For now, Nikola is delivering its more modest battery-electric semi trucks. These claim a 350-mile range. Delivery will stabilise the stock price until hydrogen fuel-cell trucks are produced. For Nikola, credibility now rests on proof.