Nikola Motor (NKLA) announced a partnership with GM that will result in the latter engineering and manufacturing its upcoming Badger electric/hydrogen pickup truck, and maybe eventually its other vehicles.

Before Tesla unveiled the Cybertruck last year, Trevor Milton, founder of Nikola Motors, tweeted renders of a pickup truck that the company created and suggested that Tesla could use those for the Cybertruck since Nikola didn’t plan to build a pickup truck.

The comment appeared to be tongue-in-cheek since Nikola also accuses Tesla of stealing its design for its electric semi-truck.

However, after Tesla unveiled the Cybertruck and its polarizing design, Milton said that he planned for Nikola to build the vehicle, named Badger:

We were not planning on it if he built a good-looking truck. I was waiting to be first on the list, but I would never buy a Cybertruck. The Badger is what I was hoping Tesla would build design-wise. So if he won’t, I will. Now our interest is sky-high and why wouldn’t I?

In February, Nikola announced its plans for the Badger with a battery/fuel-cell hybrid powertrain enabling 600 miles of range, 0-60 mph acceleration in 2.9 seconds, and released a few renders.

A few months later, Nikola started taking $100 to $5,000 deposits for the pickup truck and launched a massive marketing campaign to try to accumulate reservations.

It included giving stock to the Diesel Brothers for promotion and a lot of online ads:

However, they don’t actually plan to bring this truck to market themselves, and now they are announcing their engineering and manufacturing partner: General Motors.

Nikola and GM have announced this morning a new wide-ranging parnetership to manufacture and engineering the vehicle:

Nikola Corporation (NASDAQ: NKLA) and General Motors Co. (NYSE: GM) today announced a strategic partnership that begins with the Nikola Badger and carries cost reductions through Nikola’s programs, including: Nikola Badger, Nikola Tre, Nikola One, Nikola Two, and NZT. As part of the agreement, Nikola will utilize General Motors’ Ultium battery system and Hydrotec fuel cell technology, representing a key commercialization milestone for General Motors.

Here are the bulletpoints from the new deal between the two companies:

  • General Motors to receive $2 billion equity stake in Nikola in exchange for certain in-kind contributions
  • General Motors to engineer, validate, homologate, and build the Nikola Badger for both the battery electric vehicle and fuel cell electric vehicle variants as part of the in-kind services
  • Nikola anticipates saving over $4 billion in battery and powertrain costs over 10 years and over $1 billion in engineering and validation costs
  • General Motors expects to receive in excess of $4 billion of benefits between the equity value of the shares, contract manufacturing of the Badger, supply contracts for batteries and fuel cells, and EV credits retained over the life of the contract
  • General Motors to be exclusive supplier of fuel cells globally (outside of Europe) to Nikola for Class 7/8 trucks, providing validation and scale in a multi-billion dollar total addressable market
  • Badger is anticipated to enter production by year-end 2022

Nikola Founder and Executive Chairman Trevor Milton commented:

Nikola is one of the most innovative companies in the world. General Motors is one of the top engineering and manufacturing companies in the world. You couldn’t dream of a better partnership than this. By joining together, we get access to their validated parts for all of our programs, General Motors’ Ultium battery technology and a multibillion-dollar fuel cell program ready for production. Nikola immediately gets decades of supplier and manufacturing knowledge, validated and tested production-ready EV propulsion, world-class engineering and investor confidence. Most importantly, General Motors has a vested interest to see Nikola succeed. We made three promises to our stakeholders and have now fulfilled two out of three promises ahead of schedule. What an exciting announcement.

General Motors Chairman and CEO Mary Barra added:

This strategic partnership with Nikola, an industry leading disrupter, continues the broader deployment of General Motors’ all-new Ultium battery and Hydrotec fuel cell systems. We are growing our presence in multiple high-volume EV segments while building scale to lower battery and fuel cell costs and increase profitability. In addition, applying General Motors’ electrified technology solutions to the heavy-duty class of commercial vehicles is another important step in fulfilling our vision of a zero-emissions future.

The agreement apparently also involves Nikola using GM’s fuel cell technology in its trucks, which have been marketed as the company’s main products for which they had apparently developed their own hydrogen technology.

GM added:

“This strategic collaboration continues the broader deployment of GM’s all-new modular platform and Ultium battery and Hydrotec fuel cell systems. Nikola using GM’s Ultium platform and Hydrotec fuel-cell technology, represents a key commercialization milestone for us. In addition, applying GM’s electrified technology solutions to the heavy-duty class of commercial vehicles is another important step in fulfilling our vision of a zero emissions future. Fuel cells will become increasingly important to the semi-truck market because they are more efficient than gas or diesel. GM sees additional growth opportunities in multiple transportation, stationary and mobile-power end markets. Longer-term, there are substantial financial benefits to GM. This includes ongoing profitability from GM serving as the exclusive fuel-cell supplier in all markets except Europe.  GM will also receive accretive revenue and earnings from Badger and fuel cell manufacturing and becomes the largest non-management shareholder in Nikola.”

Electrek’s Take

Well, this seems to have confirmed what I suspected for a long time: Nikola has essentially nothing.

I understand going with a manufacturing partner, but this announcement makes it sounds like GM is doing everything here.

Nikola is even using their battery and hydrogen technology – both things that Milton has been claiming they had been working for years to perfect at Nikola.

I remember Milton tweeting pictures of their battery packs claiming that they were the best ever made. You remember last year when Milton claimed that Nikola achieved a “major battery breakthrough” and now they are just going to use GM’s Ultimum batteries? Even the fuel cells will be from GM.

Years ago, they hired Bosch to help devlop their own fuel cell technology and now they are just going to use GM’s.

This seems ridiculous on the surface.

The press release makes it sound like Nikola is basically a branding company now:

“Nikola will be responsible for the sales and marketing for the Badger and will retain the Nikola Badger brand. “

But if the deal also extends to Nikola’s other vehicles, including its commercial trucks, what is happening with the technology that they claim to be developing for the past 5 years? Where is any stockholder value?

As for GM, they get roughly 11% of Nikola in return. That’s a horrible way to spend $2B if you ask me.

I think Barra is really trying to be relevant in electrification, but this is not the way to do it in my opinion. GM is going to lose important resources to that deal that they could have spent on building and marketing their own electric vehicles. What do they get in return? GM says:

GM also gets ongoing profitability from serving as the exclusive fuel-cell supplier in all markets except Europe. GM will also receive accretive revenue and earnings from Badger and fuel cell manufacturing, as well as becoming the largest non-management shareholder in Nikola.

But what does that all mean? They now own 11% of a controversial and polarizing brand they could have built themselves for much less money.

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