Shares of electric-truck maker Nikola (NASDAQ:NKLA) were lower on Wednesday, after rivals Tesla (NASDAQ:TSLA) and Ford Motor Company (NYSE:F) clarified their plans for the upcoming electric trucks that Nikola hopes to challenge.
As of 12:15 p.m. EDT today, Nikola's shares were down about 10.7% from Tuesday's closing price.
First, a bit of context: While Nikola's shares were down 10.7% as of noon on Wednesday, they were still up almost 98% since Monday morning. It has been a very good week for the company's shareholders.
That said, a bit of reality may be starting to set in.
First, Reuters reported that Tesla CEO Elon Musk told employees on Tuesday evening that the company will now focus on getting its electric Class 8 truck, the Tesla Semi, into production. The Semi is expected to compete directly with Nikola's upcoming core products, Class 8 tractor-trailer trucks powered by batteries and fuel cells.
Second, in a presentation to analysts this morning, Ford COO Jim Farley confirmed that the company will bring its promised battery-electric F-150 pickup to market within 24 months. An all-new F-150, to be offered in both internal-combustion and hybrid-electric versions, is expected late this year.
Farley's announcement threw a damper (or should have) on the bold statements from Nikola chairman Trevor Milton in recent days. Milton has said that Nikola will show its own electric pickup, called the Badger, at an event later this month, and that the company's goal is to outsell the F-150.
Milton has done a lot of talking since his company's debut on the public markets last week, following its reverse merger with VectoIQ Acquisition (NASDAQ:VTIQ). It's not surprising that two of the companies that could turn out to be Nikola's fiercest competitors did a bit of talking of their own over the last day, as if to remind excited investors that Nikola is far from the only company entering the electric big-rig and pickup markets.
Given the team that Nikola has assembled, and its progress to date, some investor optimism is certainly justified. But investors (particularly those new to the automotive space) should keep in mind that this is an exceptionally difficult business, with high costs, long development times, substantial economic risks, and slim profit margins.
Be prepared for the possibility that Nikola's stock will have a bumpy ride over the next few months.