Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

GM, Nikola announce reworked agreement; Nikola shares tumble 25%

Stock MarketsNov 30, 2020 02:15PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: GM to invest $2 billion to build electric vehicles in Tennessee 2/2

By Ben Klayman

DETROIT (Reuters) - General Motors Co (NYSE:GM) and Nikola Corp on Monday announced a reworked agreement on a fuel-cell partnership that eliminates an equity stake in the startup for the Detroit automaker as well as plans for building Nikola's electric pickup truck, sending Nikola shares tumbling almost 25%.

In September, the companies announced a deal under which GM would supply batteries, a chassis architecture, fuel cell systems and a factory to build Nikola's proposed Badger electric pickup in return for an 11% stake and $700 million.

But the deal came into question after a short seller criticised Nikola as a fraud, something Nikola has denied.

The new agreement, a non-binding memorandum of understanding that doesn't expire until the end of 2021, is subject to negotiation and a definitive deal, Nikola and GM said in separate statements.

Under the new deal, GM will supply its fuel-cell system for Nikola's Class 7 and Class 8 commercial semi-trucks, Nikola said. The companies are also discussing Nikola's potential use of GM's Ultium electric battery system in its commercial trailers.

Nikola officials said the new deal focuses on the fuel-cell side of the business, where they see the greatest potential. They also said they remain confident of signing a deal by year end with an energy partner to build hydrogen-refueling stations.

Nikola's shares sank almost 25% in afternoon trading, while GM's fell 1.7%.

J.P. Morgan analyst Paul Coster said in a research note GM's decision not to take a stake in Nikola as originally planned would weigh on Nikola's shares, but longer term, the new agreement was positive for the startup as it could now focus on its commercial truck business.

In addition, the lock-up period preventing the sale of 161 million shares expires on Tuesday. That could put even more pressure on Nikola's value if they are sold because the stock's current float is only 117 million shares, Deutsche Bank (DE:DBKGn) analyst Emmanuel Rosner said. Most of the locked-up shares are owned by founder Trevor Milton, who resigned in September.

A spokesman for Milton, who owns 91.6 million shares in Nikola, declined to comment on his intentions for the stake.

Nikola also said on Monday it would refund all previously submitted order deposits for the Badger as that rollout was dependant on a manufacturer partnership. Nikola officials said the Badger was "paused indefinitely."

“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," Nikola Chief Executive Mark Russell said in a statement.

GM said Nikola will pay upfront for the capital investment necessary for the fuel-cell capacity. The fuel-cell system will be built at GM's Brownstown Charter Township battery plant in Michigan.

GM, Nikola announce reworked agreement; Nikola shares tumble 25%
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (4)
Jon Smith
Jon Smith Nov 30, 2020 11:39PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I find this funny that GM would entertain the thought of getting into the supply parts business.when the bankrupt delphi interesting! I smell a class action lawsuits.
James Ayala
James Ayala Nov 30, 2020 7:14PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Pump n dump
Fabio falec
falec Nov 30, 2020 2:35PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
What a bubble!
BLACKMOGUL SOCIETY
BLACKMOGUL SOCIETY Nov 30, 2020 11:20AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Interesting. Nikola is a very speculative company due to lack of a tangible product per se, but their are countless unicorn companies that are speculative with less promise that Nikola that are great short term investments with a billion dollar valuation, but no viable way to make anywhere near simply paying back venture capitalist . I would give Nikola a buy rating simply because of the immense possibility in a industry that needs technological innovation. #MogulVisionGroup
Fabio falec
falec Nov 30, 2020 11:20AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Almost all the current OEM aim to sell EVs in the future. With a much simpler powertrain, where so you see these "immense possibilities"???
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email