Commercial EV maker Nikola has filed for Chapter 11 bankruptcy, culminating a yearslong struggle and raising questions about the future of the EV truck market.
The company is seeking authorization to sell its remaining assets, which total between $500 million and $1 billion, according to documents filed today with the U.S. Bankruptcy Court for the District of Delaware. Nikola listed between $1 billion and $10 billion in liabilities.
Phoenix-based Nikola will use roughly $47 million of cash in hand to fund bankruptcy proceedings, initiate the sales process and exit Chapter 11, the company announced in a release today. Nikola plans to operate in a limited capacity to meet obligations to employees and provide certain non-dealer services to its trucks in the field through the end of March.
Shares of Nikola fell 39.1% from market open to 47 cents as of market close today. Shares have plummeted nearly 98% over the past 12 months.
The hydrogen- and battery-electric truck manufacturer explored sales, partnerships and other financial restructuring options to stave off bankruptcy, according to published reports.
What went wrong?
Nikola was founded in 2014 and emerged as a key player in the commercial EV space. Since going public in 2020, however, the company has grappled with limited sales and several leadership changes, including founder Trevor Milton resigning as executive chairman in September 2020 amid fraud allegations. Milton was found guilty of lying to investors about Nikola trucks’ technology in October 2022 and sentenced to four years in prison.
Through the first three quarters of 2024, Nikola sold 203 trucks, up from 79 during the same period in 2023, according to its Oct. 31 earnings statement. However, the company reported a year-over-year loss of $174.2 million.
The company recently struggled to raise money as “fleet operators more generally just weren’t interested in the heavy startup costs of electrifying their fleets,” Abu Miah, a research analyst focused on automotive and vehicle software industries at ABI Research, told Equipment Finance News. These costs not only include the trucks themselves, but also the charging infrastructure that enables them, he said.
“A few other EV startups have shared a similar fate in the last few years, and this decision is making clear to EV trucking stakeholders what they already knew — the U.S. isn’t ready for widespread truck electrification yet.”
— Abu Miah, research analyst, ABI Research
Future murky for EV truck market
Regulators had been pushing truck manufacturers to make and sell more EVs in recent years to meet sustainability goals, but fleet owners, dealers and trade groups have pushed back, asserting that these regulatory demands were impractical due inadequate charging infrastructure and higher costs.
While the Biden administration allocated subsidies for EVs and attempted to expand charging infrastructure, many of these subsidies have been canceled or withdrawn since President Donald Trump has taken office Miah said.
But despite a “struggling” EV truck market in the U.S., “there are some vendors or partnerships that are making headway,” he said.
“The status of many government-funded projects are uncertain, but even with their funding withdrawn, private investment led by larger trucking automakers and charging supply vendors have the potential to keep the ecosystem alive,” he said.
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