General Motors Co. (NYSE: GM) and embattled electric truck startup Nikola Corp. (NASDAQ: NKLA) will not close on a manufacturing partnership by Wednesday as the two companies predicted earlier this month.
"Our transaction with Nikola has not closed," GM said in a statement provided to FreightWaves on Tuesday. "We are continuing our discussions with Nikola and will provide further updates when appropriate or required."
A joint Nikola-GM press release on Sept. 8 said, "The parties anticipate closing the transaction prior to Sept. 30, 2020."
But in a text Tuesday, a Nikola spokeswoman wrote, "Both teams are still working."
The deal, under which GM would take an 11% stake in Nikola in exchange for providing the platform for the Nikola Badger, was valued at $2 billion. GM also expected to supply batteries and the fuel cell system for Class 7-8 heavy-duty trucks Nikola planned at a plant in Coolidge, Arizona.
A battery-electric version of the Nikola Tre cabover truck comes first. It is based on the S-Way platform from Italian truck maker IVECO. The Tre goes into production in 2021 in a Nikola-IVECO joint venture at IVECO's plant in Ulm, Germany. The S-Way also will be the basis for the hydrogen-powered Nikola Two day cab planned for U.S. production in 2023.
Two days after the GM deal was announced, a blistering 67-page report from short seller Hindenburg Research alleged Nikola was built on a series of misrepresentations and lies by founder and Executive Chairman Trevor Milton. Nikola stock, which raced higher along with GM shares, tumbled after the report was published.
Nikola responded on Sept. 11, following up with a lengthy rebuttal to some of the criticisms four days later on Sept. 14. Six days after that, on Sept. 20, FreightWaves reported Milton's resignation as executive chairman. Nikola confirmed his departure in the predawn hours on Sept. 21. Milton gave up his board seat and a two-year, $20 million consulting contract.
Bloomberg reported Monday that investors demanded that Milton be replaced as CEO before completion of a reverse merger making Nikola a publicly traded company in June. FreightWaves confirmed that report Tuesday. The ascension of Mark Russell to CEO was included but not among six bulleted highlights atop the company's March 3 release announcing its plans to merge with special purpose acquisition company (SPAC) VectoIQ.
Waiting for the dust to settle?
A Sept. 16 report in The Wall Street Journal quoted unnamed sources saying a Nikola deal with BP Plc to partner on hydrogen fueling stations had stalled because of the company's problems.
A similar cooling off appears to be happening at GM. A person close to the situation told FreightWaves that GM may "like to let the dust settle" before finalizing a deal. In the agreement, GM would receive about 47 million new shares of Nikola priced at just under $42 each. Nikola shares traded intraday Tuesday at $18.14, less than half the $2 billion valuation.
GM faces no financial risk should the deal fall apart. But part of the appeal to the automaker is placing its Hydrotec fuel cell stack technology developed with Honda Motor Co. (NYSE: HMC) in a business segment where it does not participate today.
It also would add a customer for its Ultium battery technology. GM is building a battery cell-making plant with Korea's LG Chem in northeast Ohio near its former Lordstown car assembly plant.
GM will supply batteries and fuel cells for Nikola electric trucks
Behind the scenes: How the GM-Nikola tie-up came together
Nikola explains what it does and doesn't do on electric trucks
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