Nikola without Trevor Milton 'changes the story': Dan Ives

Yahoo Finance’s Alexis Christoforous, Brian Sozzi, and Dan Ives of Wedbush Securities discuss Tesla’s Battery Day, and the fraud allegations against Nikola Founder Trevor Milton.

Video Transcript

ALEXIS CHRISTOFOROUS: Tesla is one of Yahoo Finance's top trending tickers today. Why? It's Battery Day, and CEO Elon Musk is expected to announce details about a new type of battery cell it's developed. Joining us now to break it all down is Dan Ives from Wedbush Securities. So Dan, we've been talking about this on this show for quite some time, this Battery Day. But you know what, yesterday, it looked like Musk poured a little cold water on it all with a tweet saying they probably won't be able to ramp up with this new battery until 2022. Is he trying to, you know, manage expectations here?

DAN IVES: I think he's just setting the scene. I mean, because ultimately, it's all about the million mile battery and price parity. And if you look, if they lay that out, and the trajectory is till 2022, that's something that's still, in my opinion, now a game changer for Tesla, and I think it's just typical Musk setting the scene. But ultimately, what this is, in my opinion, just a significant event in terms of Battery Day. They look at the EV market competition across the board. Tesla has to continue to show where they are and how they have that lead, not just from a brand perspective, but of course, from a battery technology perspective. That's the key.

ALEXIS CHRISTOFOROUS: I want to turn your attention to all the drama surrounding Nikola, now that its Founder and Chairman Trevor Milton has stepped down amid these fraud allegations that he says are false. Do you believe that he was pushed out and that they very publicly made it seem as though he voluntarily moved to step down as he tries to fight these allegations?

DAN IVES: I mean, look, you know, it really comes down from an investor perspective. You know, it's the event in terms of him leaving, that's really the focus. And no doubt, I mean, they have Herculean-like climb, you know, to sort of succeed in this market with him out, and I think the story changes with him not at Nikola. I think from an investor perspective, obviously, it's been a twilight zone, you know, the last few weeks. It still comes down to that GM partnership, making sure that that's the rock solid.

You know, they do have a strong bench. And also I think in terms of the broader space, I do think it's more contained to Nikola rather than broader issues across technology, and there's been some questions about that. But I can tell you, investors yesterday, you know, it continues being more of a contained situation.

BRIAN SOZZI: Dan, you've ripped apart Nikola's financials. You've studied the company. Is this a Theranos type situation? I've seen the photos that Milton has posted on his Twitter account, on his Instagram account. It looks like they have products, but do they work? Is it their own products? Are you concerned that this is just a shell company?

DAN IVES: Look, it's a prototype. I mean, part of why we have a hold on it, it's a wait and see. In terms of the execution, can they be successful and send these? Can hydrogen fuel cells be successful? How big could that GM partnership be? But it comes down to can they, you know, can they execute and not just talk the talk but walk the walk? And that's why when it comes to EV right now, the proven leader is Tesla. And Nikola, we've sort of had a wait and see approach, because remember, right now financials, there aren't any. In terms of revenues, it's all on the come as you go into 2022, 2023.

BRIAN SOZZI: What do you need to see from the new Executive Chairman to help restore investor confidence? You know, I wrote a story yesterday, and I put forth that they need clearer timelines for these products, and I think I would say within that semi truck, within the Badger, they need a detailed list for investors of what is proprietary technology to them. Would you agree with that?

DAN IVES: Oh, I agree. I think got gotta roll off the models, whether it's in Germany or in Arizona. And really, it's a deep dive for investors in terms of the proprietary piece, which OEM, and it's really given not just a timeline, but really a strategy and better understanding what the models look like going forward. That's what they need to do, especially given all the black clouds that we've seen around the story, which has clearly neutralized any news from the GM piece.

ALEXIS CHRISTOFOROUS: You know, Dan, I want to get back to that GM partnership, because here you have GM going to be lending its hydrogen fuel cell technology, its battery systems, its new battery systems, to power Nikola's Badger pickup truck. This is not Nikola's technology. I mean, isn't this raising doubts about the validity of Nikola's technology that Trevor Milton keeps saying is breakthrough?

DAN IVES: Yeah, I think it's been a double-edged sword, because, of course, you get GM to build it out, right, in terms from an execution and the two billion that they have invested, you know, at least from an equity perspective gives them now the ability to sort of meet some of their execution goals. Yeah, but of course, it's raised questions about that, and I think that's a big focus for investors, and it's something that's come up clearly in the last, you know, call it seven to 10 days, and that's why in our opinion, it's a wait and see. And, you know, a weak and more cautious approach on it, you know, especially covering tech 20 plus years, it's all about proving out division, and I think buying those names ahead of that, you know, is always a slippery slope.

BRIAN SOZZI: Dan, the sell-side community is coming really under attack by these short sellers-- Hindenburg Research, you had Carson Block yesterday. As someone who has been doing this for such a long time, and I was on the sell-side too at one point, and I get it, really exhaustive research. Is there something, not necessarily you, because you have kept it real on Nikola since it launched, but the broader sell-side community, are they missing something on this company?

DAN IVES: Look, I think, you know, anytime you have visions and prototypes and you don't have models out there, you know, and there's no different than maybe a biotech and some other areas, if these things become, you know, very short of bull bear stocks, you either believe in the vision that they can be successful, or you don't, and which would speak to the bears name. Remember, the bears have done a ton of work here and, you know, some very smart people. So I think that's why right now, Brian, it really comes down to proving out the vision. It's clearly an investor penalty box stock, and I also think, you know, you go back to Battery Day, I think it just highlights what Musk and Tesla have done to get here.

Think about all the roadblocks and all of the skeptics and all the haters, and they've continued to be successful despite obviously tripping over their shoelaces on a number of different areas. And I think this is a showcase event for them, but it also shows that there's only one Tesla, and it's hard to get there. But remember, there are many EV players, GM, you know, of course, in China a number of others going after. That's why today's a big day for the industry, not just Tesla.