Nikola, an electric car startup that once hoped to become a heavier truck Tesla, filed for bankruptcy protection on Wednesday.
Founded in 2015, Nicola has committed to developing long-range semi-trucks equipped with hydrogen and electricity, and registered it on the stock exchange before selling a single vehicle in 2020. The stock price spiked temporarily as individual investors and some Wall Street companies wanted to bet on companies they thought could replicate Tesla's success and its rising stock price.
The short-lived enthusiasm of investors for Nikola has made founder Trevor Milton and other early investors wealthier. But soon, a major question emerged about Milton's claims about the company's technology and customer orders. He resigned soon and was later convicted of fraud.
In the most recent quarter, Nicola had started delivering a handful of electric trucks, but was too little to make money. Late last year, the company said it had $200 million in cash and $270 million in long-term debt. The stock fell sharply earlier this month after reports that the company was approaching bankruptcy filing.
In its release on Wednesday, the company said it had around $47 million in cash on hand and intended to continue “limited” service and support for trucks on the road. The bankruptcy filing lists between $1 billion and $10 billion in debt, bringing the number of creditors to 1,000-5,000. Its biggest creditor is the Securities and Exchange Commission, owing $80 million for the settlement the company reached the institution in 2021.
The company said it intends to use the bankruptcy process to sell many or all of its assets and to remove the business.
Nicola is one of several fledgling electric car companies that struggle to turn ideas into real cars and trucks.
Roadtown Motors, who attempted to build a pickup truck at its closed General Motors factory in Ohio, sought bankruptcy protection in 2023, and was charged with misleading investors in 2024 by the SEC.
The British startup, Arrival, had planned to build an electric van and bus. However, they struggled to get the vehicle and manufacturing ideas to work, and sold the assets to another startup, Canoo. The company filed for bankruptcy protection last month.
While some electric car startups still operate, stock prices are falling, and it is not clear how and when they will be profitable.
Libian, who manufactures electric pickups and sports utility vehicles, struggles to increase production to its original level, with its stock trading at just under $13 per share. This was a key lifeline when it established a partnership with German automaker Volkswagen, which won a big bet on Libian last year.
Lucid Motors manufactures luxury electric vehicles and SUVs, but is significantly lower than initial sales and production targets. It also wants to do business selling technology to other automakers.
“Like other companies in the electric vehicle industry, we face a variety of markets and macroeconomic factors that have influenced our operating capabilities,” Nicola CEO Steve Girsky said Wednesday. said in a statement. “Unfortunately, our best efforts were not sufficient to overcome these important challenges.”
Before establishing Nicola, Milton launched a security alarm business and another business that attempted to operate diesel engines with natural gas. He named his company after inventor Nikola Tesla. The Nikola Tesla surname was used by the founder of an electric car company.
Nicola had planned to build a hydrogen-run truck and build a network of hydrogen fuel facilities. Milton told investors that Nicola has a working prototype for a long-distance truck with no emissions and binding orders of billions of dollars.
In 2020, Nicola joined the stock market by merging with a special purpose acquisition company. Strategies used by other electric vehicle startups avoid the greater scrutiny associated with initial public supply.
A few months after Nicola's stock began trading, research from small investment firm Hindenburg released a report that Milton had greatly exaggerated the company's technological developments. According to the report, the company produced the video in 2017, rolling down a trend that tilted so that the track appears to have a working prototype.
Initially, Nicola denounced the report and honoured the damage, but a few weeks later, Milton resigned. In 2023 he was sentenced to four years in prison after being convicted of securities and wire fraud. Milton, who has spoken about his beliefs, could not be reached for comment.
By 2023, two new CEOs came and Girsky, former vice-president of GM, who was involved in the opening of Nicola, had done the top job. Nicola eventually began production of trucks that had 200 hydrogen fuel cells in the first nine months of last year.
