Shares in electric and hydrogen-powered truck startup Nikola Motors tanked on Monday after the company’s founder Trevor Milton resigned amid allegations of fraud. It comes just two weeks after signing a $2 billion partnership with General Motors.
The company, he said, has been developing a line-up of hydrogen-and battery-powered trucks.
But a research report filed Sept. 10 said Nikola’s success was “an intricate fraud.” The report cited a company video that had been doctored to look like a truck was operational. In another case, the words “hydrogen electric” were stenciled on the side of a vehicle that was actually powered by natural gas.
In a prepared statement, Nikola said the Hindenburg report was “replete with misleading information and salacious accusations directed at our founder and chairman” and had hired an attorney to evaluate potential legal recourse. It has said the video did not describe the vehicle as moving under its own propulsion and that the company does have working trucks.
Under the partnership announced with GM, the Detroit-based automaker would take an 11% ownership stake in Nikola and would engineer and build Nikola’s Badger hydrogen fuel cell and electric pickup truck. GM said in a statement Monday that “we acknowledge Trevor Milton’s departure from Nikola and the decision of the Nikola board to move forward.”
GM said it would go ahead and close the agreed transaction “to seize the growth opportunities in broader markets” with its fuel cell and battery systems, and confirmed it would build the Badger.
In exchange for the 10-year deal, GM was to get $2 billion worth of Nikola’s newly issued common stock that will come in three increments through 2025. The deal gives GM another revenue stream for its hydrogen fuel cell, battery and electric vehicle research, positioning the company as a supplier to others who want to enter the market. It also helps to defray some of the huge capital costs of developing the new technology.
Milton says he will defend himself against accusations that the company made false claims or misled investors. In a statement to employees, Milton said he was stepping aside because the focus should be on the company and its world-changing mission, not himself.
Nikola said it contacted the Securities and Exchange Commission, which is looking into Hindenburg's allegations. News reports have said the U.S. Justice Department is investigating as well.
