Nikola Motor, a company developing several electric vehicles, including a battery-electric and hydrogen fuel cell semi truck, announced that it is refunding all deposits for reservations on its trucks and it took a swipe at Tesla in the process.
We had our doubts about the company over the years, but we also were extremely impressed by what they did with their all-electric UTV last year, which is giving us some hope about the startup.
But the company has a bad habit of taking unnecessary shots at Tesla, which Nikola has been arguably modeling itself after in some ways – not only because of their name, but also for launching an energy division just like Tesla.
In its latest announcement, the company says that it is refunding all deposits for reservations on its trucks:
“Great news! All reservations will be refunded 100% and you won’t lose your place in line. We don’t use your money to operate our business. We want everyone to know we have never used a dollar of deposit money to operate the company on like other companies do. You can now reserve the Nikola One and Two at https://nikolamotor.com/without any deposits. Our support team will be reaching out to everyone to refund their deposits over the next 30-60 days. How awesome is that!!!!!! Over 8 billion in pre orders, so who needs deposits.”
The reference to “other companies” is undoubtedly a swipe at Tesla, which is taking $20,000 reservations for the Tesla Semi electric truck.
It’s not the first time that companies have attacked Tesla over their reservation process. Nissan also criticized it in a series of ads in 2016.
The Nikola One and Two will reportedly be equipped a 320 kWh battery pack and a fuel cell system, which Bosch is helping design. After launching the vehicle in 2016, Nikola claimed to have a backlog of 7,000 orders worth $2.3 billion.
Now they have claimed that it increased to $8 billion over the last 2 years.
I think Nikola Motor refunding the deposits is a mistake. Reservations with deposits are much more valuable than reservations without any money involved.
There’s a much higher chance that someone who placed a reservation with deposit will actually follow through with a purchase.
On the other hand, I’d be surprised if more than half of the reservations for a product without deposit turn into actual orders on average.
I can understand why some people wouldn’t be willing to place a deposit, especially for a company not well-known.
In Tesla’s case, the company has billions in the bank and its cash position has never fallen below the value of its customer deposits. The deposits are also fully refundable.
However, maybe it’s a better strategy for Nikola Motor since it’s a more recent startup without any vehicles on the market yet and therefore, it might need more credibility before accepting deposits.
What do you think? Let us know in the comment section below.