- Nikola WAS worth $30 Bn
- Now worth $37.12 Mn
- CEO T. Milton, convicted of fraud, sentenced to serve 4 years
- Jobs lost and Lists Assets for sale
- Current Stock Price $.44 a Share and declining
Financial Struggles Force Nikola to Seek Bankruptcy Protection
Electric vehicle (EV) manufacturer Nikola Corporation announced on Wednesday that it has filed for Chapter 11 bankruptcy and will pursue the sale of all its assets due to financial difficulties and increasing competition in the struggling EV market.
Nikola, a company specializing in commercial semi-trucks, now joins the ranks of Fisker, Proterra, and Lordstown Motors, which have also filed for bankruptcy recently as EV makers struggle with low demand in the U.S. and Europe. The growing presence of China’s more affordable EVs has further intensified competition, making it harder for U.S.-based EV companies to stay afloat.
“Like other companies in the electric vehicle industry, we have faced various market and macroeconomic factors that have impacted our ability to operate,” said Steve Girsky, president and CEO of Nikola, in a news release. “In recent months, we have taken numerous actions to raise capital, reduce our liabilities, clean up our balance sheet, and preserve cash to sustain our operations. Unfortunately, our very best efforts have not been enough to overcome these significant challenges.”
Even Tesla and its CEO Elon Musk reported an initial drop in annual sales in 2024, as rising borrowing costs, multiple recalls, and a stagnant EV lineup have dampened demand.
What’s Next for Nikola?
Following its voluntary bankruptcy filing, Nikola has also filed court motions to continue limited operations while it works through the sale process. The company, headquartered in Phoenix, Arizona, stated that it will continue to meet its obligations to employees and provide support operations for trucks in the field and some hydrogen-fueling services through the end of March.
As part of its Chapter 11 filing, Nikola disclosed that it has approximately $47 million in cash to fund remaining operations, facilitate the sale process, and eventually exit bankruptcy.
Initially focusing on battery-powered semi-trucks, Nikola later pivoted to hydrogen-powered electric trucks. However, the company ultimately determined that a structured sale of assets would provide the best possible solution to maximize value.
Stock Decline and Financial Woes
Despite increasing production of its hydrogen-powered trucks in 2024, Nikola suffered massive losses, with each vehicle sold costing the company hundreds of thousands of dollars, as fleet operators hesitated to invest in EV trucks amid rising borrowing costs, Reuters reported.
By Wednesday midday, Nikola’s stock had fallen about 46%, dropping to approximately 45 cents per share, reducing its market valuation to less than $40 million. This is a stark contrast to its 2020 peak market capitalization of $27 billion, when it was valued higher than Ford Motor Co., according to Reuters.
Since going public in 2020 via a merger with a blank-check company (SPAC), Nikola’s stock has dropped below $1 multiple times, prompting a reverse stock split last year to comply with Nasdaq listing rules.
Nikola’s Founder and Former CEO Sentenced for Fraud
Nikola’s leadership and credibility came under heavy scrutiny after its founder and former CEO, Trevor Milton, was convicted of fraud in 2022 and subsequently sentenced to four years in prison in 2023.
Milton became the subject of a federal investigation after an investment firm accused Nikola of misleading the public about its technology, hydrogen-powered semi-trucks, and battery systems. The probe was sparked by Hindenburg Research, an investment research firm, which alleged that Nikola engaged in “intricate fraud” and that Milton had made false claims regarding the company’s technological advancements.
Following the allegations, Milton resigned from Nikola, stating:
“Nikola is truly in my blood and always will be, and the focus should be on the Company and its world-changing mission, not me. So I made the difficult decision to approach the Board and volunteer to step aside as Executive Chairman.”
In response to Hindenburg’s accusations, Nikola asserted that the firm’s claims were misleading and were “designed to provide a false impression to investors and to negatively manipulate the market in order to financially benefit short sellers, including Hindenburg itself.”
Nikola’s Future Remains Uncertain
With dwindling cash reserves, shrinking market valuation, and mounting financial challenges, Nikola’s Chapter 11 bankruptcy and asset sale represent a critical turning point for the company. As the EV industry continues to face demand challenges, high production costs, and stiff competition from China, Nikola’s struggles highlight the difficulties of sustaining an electric vehicle startup in an increasingly volatile market.
Sources:
Hindenburg Research
Author: Ryan Bridglal, 02/20/2025