Sep 8, 2020 - Energy & Environment

GM takes 11% stake in EV startup Nikola, will build its pickup truck

GM CEO Mary Barra

GM CEO Mary Barra. Photo: Bill Pugliano/Getty Images

General Motors is taking an 11% stake in the electric vehicle startup Nikola Corp. and will manufacture its planned Badger pickup truck, the companies said Tuesday.

Why it matters: It's the latest vote of confidence for Nikola, which is among a number of startups that have been attracting significant capital and investor interest before making any profits or vehicles.

  • It also shows how legacy automakers are increasingly teaming up with startups as they position themselves to compete in emerging electrified transport markets.

The impact: Nikola, which is planning both the pickup and a line of semi trucks, was up 32% in pre-market trading, while GM was up 7%.

The big picture: GM will receive a $2 billion equity stake in Nikola and will become a key technology supplier for the startup.

  • "Nikola will utilize General Motors' Ultium battery system and Hydrotec fuel cell technology," the companies said.
  • GM will be the "exclusive supplier" of fuel cells (outside of Europe) for the semi trucks Nikola is planning.

What they're saying: The companies said the "strategic partnership" will yield financial benefits for both companies.

  • Nikola, which went public in June, said it expects to save over $4 billion in battery and powertrain costs over a decade.
  • GM, meanwhile, expects to see over $4 billion in benefits via the value of its shares in Nikola, the contract for manufacturing the Badger pickup, contracts for batteries and fuel cells, and more.

Editor's note: This headline has been changed to reflect that GM received an 11% stake in Nikola as part of their technology sharing agreement, but did not pay the startup any money for the shares.

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