Nikola said on Wednesday, February 19, it had filed for Chapter 11 bankruptcyprotection and would pursue a sale of its assets, the latest electric-vehicle (EV) maker to go bankrupt after grappling with tepid demand, rapid cash burn and funding challenges. In recent years, the EV truck maker has endured cash-flow issues, slow demand, short-seller allegations and an executive turnover.
Nikola also recalled its battery-electric trucks after the battery fires in 2023 prompted it to temporarily halt sales. The EV truck maker’s stock crashed 39 per cent had already lost 97 per cent of its value over the past 12 months. Nikola’s market value peaked at $29 billion in the days after it began trading, but it had fallen to less than $100 million before the bankruptcy filing.
Nikola files for bankruptcy protection, stock crashes to lifetime low
EV startups that went public during the pandemic, promising to revolutionize the sector, have filed for bankruptcy in recent years as funding for their capital-intensive operations dried up due to high interest rates and flagging demand.
“Like other companies in the electric vehicle industry, we have faced various market and macroeconomic factors that have impacted our ability to operate,” Nikola CEO Steve Girsky said in a statement. “Unfortunately, our very best efforts have not been enough to overcome these significant challenges,” he added.
Elon Musk-led EV pioneer Tesla reported its first drop in annual sales in 2024 as high borrowing costs and an aging lineup crimped demand, despite offers and incentives. Nikola, which started out making battery-powered semi-trucks and pivoted to electric trucks that use hydrogen, said it decided to initiate a sale process to maximize the value and ensure an orderly wind down.
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The EV maker will continue some support operations for trucks in the field and some hydrogen-fueling operations through the end of March. Bloomberg News reported that founder Trevor Milton had overstated the capability of Nikola’s debut truck. The allegations, coupled with a subsequent short-seller campaign targeting the company, led to Milton’s ouster and later conviction on fraud charges.
In 2020, Nikola was valued at $30 billion, exceeding the market capitalization of Ford Motor Co. Nikola has had difficulty scaling its business, which mostly focused on EV trucks. In the third quarter of the current US financial year, Nikola produced 83 trucks but recorded a net loss of almost $200 million.
