Nikola shares fell by more than 24% after the company announced a reworked agreement on fuel-cell partnership with General Motors on Monday, according to Reuters. The partnership eliminates an equity stake in Nikola and plans for building the start-up’s electric pickup truck.
- The new agreement is a non-binding memorandum of understanding that doesn’t expire until the end of 2021 and is subject to negotiations.
- Under the deal, GM will supply its fuel-cell system for Nikola’s Class 7 and Class 8 commercial semi-trucks
- Nikola will pay upfront for the capital investment for the fuel-cell capacity.
- The two companies are discussing Nikola’s potential use of GM’s Ultium electric battery system in its commercial trailers.
- GM and Nikola are confident of signing a deal by year-end with an energy partner to build hydrogen-refueling
- JP Morgan analysts say that GM’s decision not to take a stake in Nikola as initially planned would weigh on Nikola shares, but longer-term, it would be positive for the company.
- In September, GM and Nikola announced a deal under which the former will supply batteries, 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
- GM-Nikola’s September deal came into scrutiny after a short-seller termed Nikola a fraud, which the company denied.
General Motors and Nikola stocks are currently declining. GM: NYSE is down 2.06%, NKLA: NASDAQ is down 23.68%
