Nikola’s shares plummet on news of a minor deal with GM

Nikola shares fell more than 20% on the news.

The new agreement replaces the agreement announced in September, in which GM planned to acquire an 11% stake in Nikola and equip the startup for the long-awaited hydrogen fuel cell trucks.. GM has also previously announced that it will build Nikola’s planned pickup, the Borz.
General Motors does not manufacture Nikola Borz's truck.
But shortly after the deal was announced, a short agent released a report alleging fraud and exaggeration of the company and its then president, Trevor Milton. Nikola disputed the report.

Following the allegations, GM reminded investors that it had not yet entered into an agreement with Nikola. The new agreement announced on Monday morning is still only a memorandum of understanding, not a final agreement. Under this agreement, GM will simply be a supplier to Nikola.

According to Nikola executives, the Borz pickup will only be built under an agreement with an external company. The company has now said it will refund deposits placed on the truck by potential customers.

“Nikola is focusing on its core business of manufacturing zero-emission trucks,” a Nikola spokesman said in an email.

The two companies will discuss Nikola’s possible application with GM’s Ultium battery system, which will be used in GM’s future electric vehicles.

“It has evolved from Nikola’s toy changer business into a good supply partnership, but nothing to write about at home,” Daniel Ives and Strecker Backe analysts at Wedbush Securities wrote.