Nikola shares plummet on news of smaller deal with GM

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Nikola shares plunged greater than 20% on the information.

The brand new deal replaces an agreement announced in September during which GM had deliberate to take an 11% stake in Nikola and provide the startup with tools for its extremely anticipated hydrogen gas cell vans. GM had additionally beforehand stated it might construct Nikola’s deliberate pickup, the Badger.

General Motors will not build Nikola's Badger truck.

However shortly after that deal was introduced, a brief vendor launched a report leveling allegations of fraud and exaggeration in opposition to the corporate and it is then-chairman Trevor Milton. Nikola disputed the report.

Within the wake of the allegations, GM reminded traders that it had not but closed the cope with Nikola. The brand new association, introduced Monday morning, continues to be only a memorandum of understanding, not a last deal. Underneath this deal, GM will merely be a provider to Nikola.

Nikola executives have stated the Badger pickup can be constructed solely by way of an association with an out of doors firm. The corporate has now stated it would refund deposits potential prospects had positioned for the truck.

“Nikola is specializing in its core enterprise of manufacturing business zero-emission vans,” a Nikola spokeswoman stated in an e-mail.

The 2 firms may even focus on Nikola presumably utilizing GM’s Ultium battery system, which is able to utilized in GM’s future electrical autos.

“This went from a recreation changer deal for Nikola to a superb provide partnership however nothing to jot down residence about,” analysts Daniel Ives and Strecker Backe at Wedbush Securities wrote.

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