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GM Acquires $2 Billion Stake in Electric-Mobility Company Nikola

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General Motors (GM) has just announced its second major partnership deal this month. Last week came news that the American auto giant had shaken hands on a collaboration agreement with Honda; this week, GM announced it’s buying a $2 billion stake in Nikola, giving it 11% of the electric-mobility company.

For GM, the investment means first and foremost that it will design and build Nikola's electric pickup truck. The Badger, as it’s been dubbed, will be powered by hydrogen fuel cells or batteries. It is expected to be in production by the end of 2022. For Nikola, the benefits are obvious:

“By joining together, we get access to their validated parts for all of our programs, General Motors’ Ultium battery technology and a multi-billion dollar fuel cell program ready for production."

- Nikola founder and executive chairman Trevor Milton

He added that "Nikola inherits decades of supplier and manufacturing knowledge, a validated, tested and production-ready propulsion system for electric vehicles, world-class engineering and investor confidence. Most importantly, General Motors has a vested interest in seeing Nikola succeed.”

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Nikola Badger concept, profile
Photo: Nikola
Nikola Badger concept, profile

GM will also help reduce costs for Nikola's other vehicles in development, which include heavy-duty trucks, and the firm will also use GM's Ultium battery system and Hydrotec hydrogen-fuel technology.

In exchange, GM is obtaining newly issued standard shares of Nikola worth $2 billion.

Nikola will be responsible for sales and marketing of the Badger pickup truck, which will retain the Nikola Badger name. GM will also supply batteries for other Nikola vehicles, including the large trucks.

GM expects to make more than $4 billion in profits from this agreement, coming from the manufacture of the Badger pickup truck, battery and fuel cell supply contracts and credits for electric vehicles.

For its part, Nikola expects to save more than $4 billion over 10 years in battery and powertrain costs.

Nikola Badger concept, interior
Photo: Nikola
Nikola Badger concept, interior

“We are growing our presence in multiple high-volume EV (electric vehicle) segments while building scale to lower battery and fuel cell costs and increase profitability."

- GM CEO Mary Barra

Nikola stock jumped more than 32 percent to $46.95 before markets opened Tuesday. GM shares rose nearly 6% to $31.79.

Founded in 2015, Nikola Corp. became a public company this past June after a merger with VectorIQ Acquisition Corp, a publicly traded special purpose acquisition firm. In its public debut, it added former GM vice-president Stephen Girsky, VectoIQ's chief executive officer, to its board of directors.

This past July, Nikola inaugurated the first-phase building of a plant in Coolidge, Arizona, which is scheduled to be completed in the fourth quarter of next year.

Nikola Badger concept, three-quarters front
Photo: Nikola
Nikola Badger concept, three-quarters front
Nikola Badger concept, three-quarters rear
Photo: Nikola
Nikola Badger concept, three-quarters rear