Nikola (NKLA) has confirmed another round of layoffs as it finds itself in an impressive financial mess. The hydrogen-battery electric truck manufacturer is launching a few last-ditch efforts to avoid bankruptcy.
It has been more than 2 years since Nikola’s founder and former CEO was found guilty of fraud for lying to shareholders about the company’s technology.
Many thought it would be the end for the company, once worth $34 billion, and yet it’s still alive. Barely, but alive.
It hasn’t been an easy two years. As we previously reported, Nikola had massive issues with its battery-electric trucks that led to fires and recalling the entire fleet.
The company switched to its fuel cell-hydrogen truck production, but it is selling those at big losses and some customers are reporting some serious issues with them.
Nikola is losing roughly $200 million a quarter and that’s about what it had in cash at the end of last quarter. The company is now valued at about $100 million as the market expects an imminent bankruptcy.
Shareholders have grown frustrated as management has relied on issuing more shares to bring in some capital, but it dilutes the existing share ownership.
In a series of SEC filings this week, Nikola has disclosed that it managed to secure $65 million through a deal with noteholders. Based on its current burn-rate, it would give the company about another month.
Separately, Nikola announced that it is selling more shares in an attempt to raise $100 million.
However, the company also disclosed some serious concerns in the same filings.
Nikola confirmed that it doesn’t have enough money to get through the next quarter:
We currently estimate that our existing financial resources are only adequate to fund our forecasted operating costs and meet our obligations into, but not through, the first quarter of 2025.
That includes the recently secured $65 million but not the new $100 million it is trying to raise. The raise started 3 days ago, and Nikola has not announced the closing of the offering or the proceeds it managed to secure.
Nikola announced that it implemented further layoffs this month in order to reduce its burn-rate:
For example, in October and December 2024, we reduced our workforce in order to better align our staffing with our current needs.
The layoffs in October represented roughly 15% of Nikola’s workforce. It’s unclear how many people are affected by the new layoffs this month. A drone flyover of Nikola’s Arizona factory last week showed less activity than usual, and many trucks parked on the grounds without battery packs:
The company warned that the layoffs may negatively impact its activities due to the potential “loss of institutional knowledge, decreased morale, an adverse impact on our reputation and challenges in attracting new talent.”
Nikola recently reiterated that it still hasn’t paid $80 million out of its $125 million settlement over misleading shareholders. A court has granted a $165 million reimbursement from its convicted former CEO Trevor Milton, but the company has so far failed to recover it.
The company is also buried under a number of lawsuits from shareholders, suppliers, and partners.
Electrek’s Take
I have never been a big proponent of fuel cell hydrogen systems, but I did think they might have a chance for bigger vehicles.
WIth the advent of battery-powered trucks outperforming fuel cells, it doesn’t seem likely anymore. Maybe large ships will be the salvation for fuel cell? I don’t know.
What I do know is that Nikola is done.
Maybe a buyout could be its saving grace, but it looks unlikely. It doesn’t have much assets. It leases its facilities and it is holding $650 million in liabilities.
Top comment by Jilles van Gurp
I'll be blunt. Every hydrogen truck is completely and utterly useless without (heavily) subsidized hydrogen. It's just not economical to operate them. Most existing ones will be junked long before their projected end of life. As soon as the hydrogen subsidies dry up, operators will abandon them in a hurry. Straight to the scrapyard. Or maybe they'll be upgraded with a cheap battery for a second life.
Even dirty grey hydrogen at the market price is a non starter relative to diesel prices. Even in markets where diesel is heavily taxed. And forget about green hydrogen; it's much more expensive and producing it at scale is going to require an order of magnitude more renewable energy than what we can reasonably expect any time soon.
Battery electric works right now. Also in trucks. Of any size and weight class. Small, large. Australian road trains, mining monster trucks, etc.
Right now would be with relatively expensive batteries that are still somewhat hard to get. But the good news is that there are plenty of cheaper, better, faster batteries coming. Decades of battery improvement to look forward to. Hydrolyzers and fuel cells won't improve much more beyond what is currently possible. This is as good as it gets. It's not good enough now. It's not going to magically get better, ever. No amount of R&D is going to fix the laws of physics here.
I don’t see any company wanting to take that on when Nikola is a few months away from bankruptcy and diluting its stock like crazy with this new offering and the $65 million worth of stocks that its noteholders are now allowed to sell.
If anyone is interested in its technology, it is better off waiting for the company to go under and get rid of its debt. Anyway, most of its critical technology comes from Bosch, which is still owed money.
Even if it does manage to raise this $100 million and manage to reduce its expanses through these layoffs, it’s no closer to delivering its fuel cell trucks profitably and it will only have enough funds to survive halfway through Q2 2025. In the meantime, its shareholders will only see more dilution.
I think this money would be better spent on other projects to remove emissions from trucking.
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