20-02-2025
Here's Why Nikola Has Filed for Bankruptcy After Difficult Years
EV and FCEV truck startup Nikola Corp. files for Chapter 11 bankruptcy protection, seeking a sale of its assets after being unable to secure additional investments.
At one point the truck startup had been valued at $30 billion, but it faced a series of challenges since the prosecution of its founder and CEO Trevor Milton.
In recent years the startup focused on hydrogen fuel-cell truck technology, but revenues remained slim in an industry facing a slow climb toward zero-emission semis.
Electric and hydrogen truck startup Nikola Corporation, which at one point had been valued at $30 billion, filed for Chapter 11 bankruptcy protection this week, seeking to auction off all of its assets and wind down its business in an orderly manner.
Over the past few months Nikola had been searching for additional investors, shedding staff to stay afloat, and also trying to find a buyer to take over the company while continuing to build and develop ZEV Class 8 trucks.
Nikola had been in talks with a potential, undisclosed buyer in late 2024, but those efforts failed to bear fruit.
On the day of the bankruptcy filing Nikola had just $47 million in cash on hand, despite at one point being famously eclipsing the market cap of Ford.
Like many other startups in the early production stages, it saw a quick rate of cash burn—and losses of hundreds of millions of dollars over the past several quarters.
Late last summer the company had just under $200 million in cash, amid warnings that it might not be able to hold out past the first few months of 2025.
"Like other companies in the electric vehicle industry, we have faced various market and macroeconomic factors that have impacted our ability to operate," said Steve Girsky, President and CEO of Nikola.
"In recent months, we have taken numerous actions to raise capital, reduce our liabilities, clean up our balance sheet, and preserve cash to sustain our operations."
When it comes to assets it could sell, the company's equipment and tooling at its main plant in Coolidge, Arizona, is seen as the main source of cash.
Aside from issues related to the launch of production, Nikola also faced a skittish and poorly developed EV semi truck market, one that has only started to gain momentum in the past two years after a long period of obscurity, as well as an almost complete lack of public truck charging infrastructure.
At one point the company had shown a rendering of a planned EV and FCEV pickup truck model, dubbed Badger, but the project was shelved as the hype over BEV trucks peaked and quickly subsided.
The headwinds that Nikola faced over the past few years were hardly unique: Slow demand, high costs of components and manufacturing, difficulties finding investors, the rate of cash burn approaching the production stage, and competition from established truck makers.
The company also saw quick turnover in its top ranks after its former CEO and founder Trevor Milton stepped down from the post and was charged with fraud in 2021 over past claims relating to the company's trucks.
The accusations and later charges against Milton saw Nikola's stock drop by a significant margin and introduced other challenges, but did not immediately doom the company.
Milton was found guilty and received a four-year prison sentence in late 2023, while the company also paid a $125 million civil penalty to the SEC.
In 2023, the company recalled all of its battery-electric models after a series of fires that stemmed from a coolant leak in battery packs. At the time, the company had delivered just over 200 electric trucks to customers and dealers.
After Milton stepped down in 2020, the company went through several CEOs, with Girsky, a former GM executive, having taken over the helm in August 2023 from Michael Lohscheller.
Nikola attempted to shift its focus to hydrogen-electric trucks recently, launching its HYLA brand in the process.
However, the company faced many of the same challenges in this sphere as with EV trucks.
Despite recent collapses of other ZEV truck and van startups, in some ways it is surprising that Nikola lasted this long, all the way into 2025.
"With the dedication of our employees and support from our partners, Nikola has taken significant steps to move zero-emissions transportation forward, including bringing the first commercially available Class 8 hydrogen fuel-cell electric trucks to market in North America and developing the HYLA hydrogen refueling highway, connecting Northern California to Southern California," Girsky added in announcing the bankruptcy filing by the company.
The future for electric and hydrogen semis in the US remains quite uncertain, despite some modest momentum in the sales of battery-electric delivery vans.
The biggest players in the EV truck market are not startups—and not even Tesla—but established truck makers like Volvo and Daimler, both of which have launched several electric models over the past 24 months. Hyundai and Toyota also are working in this space.
Will we see many electric semitrucks by 2030, representing even 10% of the Class 8 market, or will this trend take longer? Please comment below.
