Last September, General Motors (GM) made a splash with its announcement of an agreement with Nikola that would see the automotive giant build an electric-powered pickup truck for the fledgling company.
As part of the deal, GM said it would provide batteries, chassis, fuel cell systems and a plant to build the Nikola Badger, in exchange for an 11% stake and $700 million in the company.
That deal is now history.
This week, General Motors and Nikola announced a new, scaled-back agreement that no longer includes the former gaining an ownership stake in the latter, or a deal for the construction of the Badger. Instead, the new partnership focuses solely on fuel cells.
The original agreement fell apart after a short seller criticized Nikola and identified the company as fraudulent - a charge Nikola has denied. The company’s founder, Trevor Milton, eventually resigned and federal agencies opened an investigation into the fraud allegations.
The new, agreement is non-binding and subject to negotiation and final agreement, Nikola and GM said in separate statements.
As currently agreed-on, the new deal calls for GM to provide its fuel cell system for use in Nikola's Class 7 and 8 commercial semi-trailers, Nikola said. The companies are also discussing Nikola's potential use of GM's Ultium battery system in its commercial trailers.
Nikola's shares first rose nearly 8 percent in trading prior to market opening, but then turned negative and fell more than 16 percent. GM shares declined slightly on Monday.
Nikola said it would refund all deposits that were placed for the order of a Badger, as the development of the Badger was dependent on a partnership with a manufacturer, in this case GM.
“Heavy trucks remain our core business and we are 100% focused on hitting our development milestones to bring clean hydrogen and battery-electric commercial trucks to market.”
- Mark Russell, Nikola general manager
GM said Nikola will prepay the capital investment required as part of the new fuel cell agreement. The fuel cells will be designed at GM's engineering facilities in Pontiac and Warren, Michigan, and built at its battery plant in Brownstown Charter Township, Michigan.
All the technicalities of the agreement aside, consumers have to feel disappointed, as they lose out on a potential new product in the emerging electric pickup truck domain. We'll have to wait and see if there’s still a future for the Badger, which had promising potential.