Nikola Corp., the hydrogen electric trucking startup, submitted its application for Chapter 11 bankruptcy protection on Wednesday, unable to attract a buyer or secure the necessary funding to continue its operations.
Once celebrated in Silicon Valley, Nikola reached a valuation of $30 billion in June 2020 following its public listing via a special purpose acquisition company (SPAC). However, the company’s upward trajectory was derailed by a string of controversies involving its founder and former CEO, Trevor Milton.
Nikola is now preparing to auction off its assets, pending court approval, as indicated by a recent regulatory filing.
“Like many other companies in the electric vehicle sector, we have encountered various market and macroeconomic conditions that have affected our operational capabilities,” stated Steve Girsky, Nikola’s president and CEO.
“In recent times, we have undertaken several measures to secure capital, minimize our liabilities, improve our balance sheet, and conserve cash to sustain our operations. Unfortunately, despite our best efforts, these significant challenges have proved insurmountable, leading the Board to conclude that Chapter 11 is the most viable option available for the Company and its stakeholders under the current circumstances.”
The company has approximately $47 million in cash to support its bankruptcy proceedings. Nikola’s plan for bidding would solicit binding offers from interested buyers for its assets, irrespective of its existing debts or obligations.
The assets up for bidding include Nikola’s Class 8 hydrogen fuel cell electric trucks and battery electric truck platforms. Moreover, Nikola was actively working on creating a HYLA hydrogen refueling highway in California.
This bankruptcy filing marks the culmination of several tumultuous years. Once hailed as a prime example of a successful SPAC venture, Nikola had even secured a multi-billion dollar agreement with General Motors before Milton was accused of fraudulently overstating the capabilities of the company’s electric truck technology.
Prosecutors alleged that Milton misled investors since 2019, falsely claiming that Nikola constructed a truck entirely in-house and developed batteries that were sourced externally.
The situation was compounded by a notorious marketing video that depicted a truck seemingly operating under its own power; in reality, the vehicle was merely rolling down an incline.
Following the video’s release, Hindenburg Research, a short-selling firm, published a report labeling the company as fraudulent, prompting Milton’s resignation in September 2020. He was later convicted of wire and securities fraud in 2022 and remains out on bail while appealing his four-year prison sentence.
Nikola ultimately agreed to a $125 million settlement with the U.S. Securities and Exchange Commission, resulting in a drastic drop in its stock value and severe losses for investors and the firm alike.
Since then, Nikola has been striving to gather enough capital to keep its operations afloat. Most recently, in December 2024, the company attempted to raise $100 million through a common stock sale aimed at repaying debts and increasing liquidity, following a warning to investors the previous month that it had sufficient cash to operate only until Q1 2025.
As of the end of the third quarter, Nikola reported having $198 million in cash available.
Compiled by Techarena.au.
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