Nikola Corporation (NASDAQ: NKLA) shares fell 25% on Monday following news that General motors would be relinquishing equity stake in the company. Additionally, plans for both companies to build the Badger, Nikola’s pickup truck for consumers, will no longer be pursued.
The original deal, announced in September, stimulated a USD2 Billion agreement which gave GM an 11% stake in Nikola to provide battery, fuel cell technologies and manufacture the Badger pickup. However, following fraud allegations made against Nikola by short-seller Hindenburg Research, GM reconsidered the existing agreement. Nikola’s founder, Trevor Milton, resigned as the company’s executive chairman on September 21.
Nikola and General Motors have now agreed to a new memorandum of understanding that entails GM will be supplying Hydrogen fuel cell technology for the startup’s semi-trucks. Nevertheless, GM will not be taking a stake in the company.
“This supply agreement recognizes our leading fuel cell technology expertise and development,” Doug Parks, GM executive vice president of Global Product Development, Purchasing and Supply Chain, said in a press release. “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.”
GM is set to devise its hydrotec system to incorporate into Nikola’s Class 7/8 semi prototype, which is planned to begin testing by 2021.
“We are excited to take this important step with GM, which provides an opportunity to leverage the resources, strengths and talent of both companies,” said Mark Russell, the chief executive officer of Nikola.