Cleveland, Ohio – General Motors dramatically scaled back its previously announced partnership with electric vehicle (EV) startup Nikola. Instead of taking an 11% stake in Nikola in exchange for building that company’s Badger pickup, GM signed a non-binding deal to supply hydrogen fuel cells to Nikola.
The pared-back agreement is a massive blow to Nikola, a startup that has been heavily criticized by activist investors in recent months for overstating its progress in launching battery-powered and hydrogen fuel cell-powered commercial trucks. Nikola executives admitted that an early video showing its truck in motion was actually footage of the truck coasting – the hydrogen technology that executives had promoted was not yet functional.
As Tesla’s stock hits record highs, investors have flooded the market with cash for EV startups such as Fisker, Lordstown Motors, Rivian, and Nikola. With lots of outside cash in hand, those startups are under pressure to launch vehicles, and they face far more scrutiny than they did as private firms.
Announced in September, the GM-Nikola deal gave the startup market credibility by showing it had a plan to launch the Badger, an EV pickup about the same size as Chevrolet’s Silverado. Rather than take payment as a contract manufacturer, GM agreed to take a stake in Nikola that, based on other EV stocks, might have been far more profitable.
However, criticism of Nikola’s earlier claims accelerated after the GM deal become public. GM officials said they were continuing to work on the deal but noted that the September agreement was a non-binding memorandum of understanding, not a binding supply contract. Following GM’s due diligence throughout September, October, and November, the nation’s largest automaker dropped most of its plans with Nikola.
What’s left is an agreement to offer Hydrotec hydrogen fuel cells to Nikola. Nikola, however, has long touted the fact that it has its own fuel cell technology, so it’s unclear what, if anything, it will receive by continuing to work with GM.
Instead of buying into Nikola, GM officials said they will now treat the startup as a customer with Nikola paying upfront for any capital investments that GM would have to make to expand fuel cell capacity in Pontiac and Warren, Michigan.
“This supply agreement recognizes our leading fuel cell technology expertise and development,” said Doug Parks, GM executive vice president of Global Product Development, Purchasing and Supply Chain. “Providing our Hydrotec fuel cell systems to the heavy-duty class of commercial vehicles is an important part of our growth strategy and reinforces our commitment toward an all-electric, zero-emissions future.”
Nikola CEO Mark Russell said, “Nikola is creating an ecosystem that integrates next-generation truck technology, hydrogen fueling infrastructure and maintenance. By removing commercial trucks from the carbon equation, Nikola is fulfilling our mission of leaving the world a better place.”
About the author: Robert Schoenberger is the editor of Today's Motor Vehicles and Today's eMobility and a contributor to Today's Medical Developments and Aerospace Manufacturing and Design. He has written about the automotive industry for more than 19 years at The Plain Dealer in Cleveland, Ohio; The Courier-Journal in Louisville, Kentucky; and The Clarion-Ledger in Jackson, Mississippi.