Electric vehicle manufacturer Nikola has filed for Chapter 11 bankruptcy protection after warning it might deplete its cash reserves early this year. Once a high-flying startup, Nikola faced scandals, including the 2022 conviction of its founder, Trevor Milton, for misleading investors about the company’s technology. During Milton’s trial, it was revealed that a promotional video of a prototype truck was staged, showing a nonfunctional vehicle rolled downhill. Despite the hype, which at one point valued Nikola at $30 billion, the company struggled to scale its EV truck business. In Q3, Nikola produced 83 trucks but reported a net loss of nearly $200 million, following a loss of $134 million in Q2.
Nikola filed for bankruptcy in the U.S. District of Delaware and is seeking court approval to auction and sell its business. With $47 million in cash, the company plans to continue limited operations, including fueling services, through March, pending court approval. CEO Steve Girsky stated that market and macroeconomic factors have hindered the company’s ability to operate. Efforts to raise funds, reduce liabilities, and preserve cash were insufficient, leading the board to pursue Chapter 11 as the best path forward.
In December 2023, Milton was sentenced to four years in prison for exaggerating claims about Nikola’s zero-emission trucks, causing significant investor losses. Prosecutors accused him of falsely claiming a General Motors product as Nikola’s innovation. Milton resigned in 2020 amid fraud allegations, and Nikola later settled a $125 million SEC civil case without admitting wrongdoing. The company also faces challenges from a slowing EV market, exacerbated by political shifts, including potential rollbacks of EV incentives under Donald Trump’s administration. Nikola’s shares fell below $2 late last year and dropped another 40% following the bankruptcy announcement.
— news from The Guardian