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U.S. Nikola’s logo is pictured at an event held to present CNH’s new full-electric and Hydrogen fuel-cell battery trucks in partnership with U.S. Nikola event in Turin, Italy, on Dec. 3, 2019.
Massimo Pinca | Reuters
DETROIT — Nikola Corp. — an auto startup that was once a favorite of Wall Street analysts and retail investors — filed for bankruptcy protection after failing to secure a buyer or raise additional funds to maintain operations.
Nikola said Wednesday that it plans to pursue an auction and sale process of its assets, pending court approval. The company said it has approximately $47 million in cash to fund its bankruptcy activities, implement the sale process and exit Chapter 11.
“Like other companies in the electric vehicle industry, we have faced various market and macroeconomic factors that have impacted our ability to operate,” Nikola CEO Steve Girsky said in a release. “Unfortunately, our very best efforts have not been enough to overcome these significant challenges, and the Board has determined that Chapter 11 represents the best possible path forward under the circumstances for the Company and its stakeholders.”
The proposed bidding procedures, if approved by the court, would allow interested parties to submit binding offers to acquire Nikola’s assets, purchased free and clear of Nikola’s indebtedness and certain liabilities.
The filing marks the finale of the Phoenix-based company’s yearslong fall from grace. At its peak in 2020, Nikola was valued more than Ford Motor at $30 billion, signed a multibillion-dollar deal with General Motors, and was considered the pinnacle of auto startups to go public through reverse mergers and special purpose acquisition companies.
Trevor Milton, founder of Nikola Corp., arrives at court in New York, on Monday, Sept. 12, 2022.
Victor J. Blue | Bloomberg | Getty Images
The company’s downfall has played out over years, ignited by scandals and lies involving its founder and former chairman and CEO, Trevor Milton. The fast-talking, energetic, disgraced executive was convicted of wire fraud and securities fraud in 2022 for misleading investors about Nikola’s operations and zero-emissions technology.
The controversies were first made public by short seller Hindenburg Research after the deal with GM that included the Detroit automaker taking a $2 billion stake in the startup.
Nikola’s core products are all-electric and fuel cell electric semitrucks, which it began producing in 2022. As of the third quarter of last year, the company had only produced 600 of the vehicles since then. Many of those vehicles have been recalled due to defects, costing the automaker tens of millions of dollars.
Since moving from chairman to CEO in 2023, Girsky has kept Nikola moving forward, including its production of zero-emissions trucks, but the company’s capital has been dwindling.
Nikola warned investors on its third-quarter conference call that the company only had enough cash to support its business into the first quarter of 2025 but not beyond. Nikola reported $198 million in cash to end the third quarter.
Nikola’s stock
Girsky on the call in October said Nikola was “actively talking to lots of potential different partners who value what we do and value what we’ve built.”
Girsky, a former bank analyst and GM executive, took Nikola public through his SPAC in June 2020. It was a catalyst for more EV companies to go public through SPACs.
Similarly to Nikola, most, if not all, have failed to live up to their initial expectations. Many were the center of federal investigations, scandals and executive upheavals.
Nikola’s stock has traded under $2 per share since early December. Factoring out a 1-for-30 reverse stock split last year, FactSet reports Nikola’s all-time closing price was nearly $80 in June 2020.
