Nikola Corp., a start-up focusing on hydrogen electric trucks, has sought Chapter 11 bankruptcy protection following difficulties in securing additional funding and finding a buyer to sustain its operations.
Nikola, previously a favorite in Silicon Valley, was valued at a remarkable $30 billion in June 2020 after going public via a special purpose acquisition merger. However, a string of controversies involving Trevor Milton, its founder and former CEO, led to the company’s decline.
Currently, Nikola is planning to auction off its assets, subject to court approval, as revealed in a regulatory filing.
“The electric vehicle sector has been challenging for many companies, including us, due to various market and economic factors,” commented Steve Girsky, the current president and CEO of Nikola.
“In recent times, we’ve taken several steps to generate capital, reduce liabilities, streamline our financials and conserve cash to keep our business running. Despite our best efforts, we were unable to overcome these substantial obstacles, leading our Board to conclude that Chapter 11 is the most viable way forward for the company and its stakeholders,” he further stated.
Nikola has approximately $47 million in cash reserves to support its bankruptcy proceedings. The company’s proposed bidding process would allow potential buyers to submit binding offers for Nikola’s assets, without considering the company’s debt or liabilities.
Notable assets for sale include the company’s Class 8 hydrogen fuel cell electric trucks and battery electric truck platforms. Nikola was also working on a HYLA hydrogen refuelling highway in California.
This bankruptcy filing is the culmination of a series of unfortunate events for Nikola. The company, once hailed as a successful SPAC, had even secured a multi-billion dollar deal with General Motors. That is, until Milton was charged with fraud for allegedly overstating the company’s electric truck technology.
Milton was accused of misleading investors since 2019, making false claims about Nikola’s proprietary truck and battery technologies which were in fact acquired from other sources.
A notorious marketing video from Nikola, showing a truck moving on its own, later proved to be a vehicle rolling downhill, added to the company’s woes.
After the release of this video, Hindenburg Research accused the company of fraud, leading to Milton’s resignation in September 2020. He was found guilty of wire and securities fraud in 2022 and is currently appealing his four-year prison term while out on bail.
The aftermath saw Nikola paying a $125 million fine in a settlement with the U.S. Securities and Exchange Commission. This led to a significant collapse in the company’s stock, causing heavy losses for investors and the firm itself.
Since then, Nikola has been striving to raise enough capital to sustain its operations. In December 2024, the company tried to raise $100 million through a common stock sale to repay its debts and increase equity, after forewarning investors during its third-quarter earnings call that the company’s cash reserves were only sufficient to support its business into the first quarter of 2025.
At the close of the third quarter, Nikola confirmed having $198 million in cash reserves.
