Nov 30, 2020 - Economy

GM's shrinking deal with Nikola

A steering wheel outline covered in cash.

Illustration: Rebecca Zisser/Axios

General Motors will no longer take an equity stake in Nikola Corp. or build its pickup truck, under a revised deal that still envisions GM as a key tech supplier for Nikola's planned line of electric and fuel cell heavy trucks.

Driving the news: The revised agreement Monday is smaller in scope than a draft partnership rolled out in September that had included a $2 billion stake in the startup and an agreement to build its Badger pickup.

  • Under the nonbinding deal, the companies will work together to use GM's "Hydrotec" fuel-cell technology in Nikola's planned semitrucks.
  • In addition, they will "discuss the potential for the utilization of GM’s versatile Ultium battery system" in the vehicles, the announcement states.

Why it matters: The deal's future has been uncertain since Nikola was hit with allegations that now-departed founder and executive chairman Trevor Milton had made misleading or inaccurate statements.

Where it stands: In addition to dropping plans for the equity stake, the slimmed-down deal no longer involves GM building the pickup, and Nikola said it will refund customer deposits it had taken for the vehicle.

  • "[T]he Nikola Badger program was dependent on an OEM partnership," the announcement states, signaling that Nikola is not currently planning to proceed with the vehicle.

What they're saying: "The signing of GM as a partner is a positive but ultimately no ownership/equity stake in Nikola and the billions of R&D potentially now off the table is a major negative blow to the Nikola story," Wedbush Securities analyst Dan Ives said in a note.

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