What happened

Shares of electric and fuel cell truck manufacturer Nikola (NASDAQ:NKLA) were driving in the fast lane at the end of August, more than doubling since the company went public earlier in the year. But accusations from a short-seller -- and a corporate reaction suggesting those allegations were at least partly true -- ran the stock off the road in September.

Shares of Nikola fell 49.8% for the month, according to data provided by S&P Global Market Intelligence, and were off more than 60% from when the short report was released.

So what

Nikola is part of a new generation of green-focused auto stocks that have captured investors' imaginations, but a report issued by Hindenburg Research on Sept. 10 took the charge out of Nikola's battery. In a detailed report, Hindenburg accused Nikola of being "an intricate fraud built on dozens of lies."

A Nikola truck prototype.

Image source: Nikola.

Company founder and chairman Trevor Milton responded immediately, promising a line-by-line rebuke of the allegations. Instead, Milton soon abruptly resigned from Nikola, and the company admitted some details of the report were accurate.

The turmoil put a web of alliances Nikola had been building in jeopardy. Energy giant BP (NYSE:BP) backed away from a potential partnership to build out a network of refueling stations. General Motors (NYSE:GM), which just prior to the Hindenburg report had announced a partnership with Nikola, was said to be looking to renegotiate.

The Hindenburg report strongly suggested that Nikola's internal research and development unit is not what the company claimed, and that Nikola needs GM's tech and resources. The partnership between the two auto companies called for GM to sell batteries and fuel cells to Nikola in exchange for $2 billion in newly issued Nikola stock.

Now what

Nikola shares started October headed in the right direction -- up 17% on Oct. 1 on reports that GM won't walk away from the partnership, but will rather try to take a larger stake in it. That might cost existing shareholders in the short term, but based on what we've learned in the last few weeks about Nikola, investors will likely cheer the partnership.

The truth is that we don't know for sure what Nikola has on its own. But when united with General Motors' fuel cell and battery tech and manufacturing expertise, Nikola might have products of value. After what happened in September, that's about the best investors can hope for right now.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.