GM Pulls Out Of Deal With Nikola, Announces Smaller Agreement

DETROIT, MI — General Motors has backed out of an agreement with Nikola that included a stake in the company and would have resulted in the Nikola Badger being engineered and manufactured by GM, the company announced Monday.

GM and Nikola said they have each signed an agreement in which GM will supply fuel-cell technology to build commercial semi-trucks for Nikola. The agreement announced Monday replaces the prior agreement, which the companies announced Sept. 8.

“This supply agreement recognizes our leading fuel cell technology expertise and development,” said Doug Parks, GM executive vice president of Global Product Development, Purchasing and Supply Chain. “Providing our Hydrotec fuel cell systems to the heavy-duty class of commercial vehicles is an important part of our growth strategy and reinforces our commitment toward an all-electric, zero-emissions future.”

Related: GM Gets $2 Billion From Nikola To Manufacture Electric Trucks

Earlier this year Nikola founder and Chairman Trevor Milton resigned after a Hindenburg Research, a company that’s betting Nikola stock will drop, accused Nikola of Fraud, according to The Associated Press. Nikola denies the allegations and called them misleading.

Hindenburg said Nikola’s success was an “intricate fraud,” including a video showing a truck rolling downhill to give the impression it was cruising on a highway, and stenciling the words “hydrogen electric” on the side of a vehicle that was actually powered by natural gas.

The Securities and Exchange Commission and the Justice Department are reportedly investigating. GM has said it did proper due diligence before entering the partnership.

Shares of Nikola plunged 21% at the opening bell, according to the Associated Press.

Under the the companies' previous agreement, Nikola was going to use GM's Ultium battery and Hydrotec fuel cell technology for its vehicles in exchange for $2 billion in common stock and 11 percent ownership in Nikola, according to a news release at the time.

Nikola was set to exchange $2 billion in newly issued common stock for the in-kind services and access to General Motors' global safety-tested and validated parts and components, the companies said.

General Motors was going to be subject to a staged lock-up provision beginning in one year and ending in June 2025. General Motors was going to engineer, homologate, validate and manufacture the Nikola Badger battery electric and fuel cell versions.

But after the new agreement Monday, none of those plans are to continue.

GM and Nikola will discuss the scope of services that GM will provide for the integration of the fuel cell system into Nikola’s vehicles and it is expected that the potential arrangement would be cost plus, and that Nikola would pay upfront for the capital investment for the capacity, the companies said.

GM and Nikola will also discuss the potential of a supply agreement for GM’s versatile Ultium battery system for Nikola’s Class 7/8 trucks.

GM’s Hydrotec fuel cell system will be engineered at its Michigan technical facilities in Pontiac and Warren and manufactured at its Brownstown Charter Township battery assembly plant, the company said in a statement.

Information and reporting from The Associated Press contributed to this report.