Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Nikola Announces Much Smaller Deal With General Motors as Lockup Expiration Looms

By John Rosevear - Nov 30, 2020 at 9:05AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Also, the Badger pickup isn't happening.

Electric-truck start-up Nikola ( NKLA 4.86% ) announced Monday that it finally has reached a deal with General Motors ( GM 3.49% ). However, it's a much smaller deal than the one announced in September. Of note, the deal doesn't include Nikola's Badger pickup, which will not be built, Nikola said. 

In a statement, Nikola said that the companies have signed a "non-binding Memorandum of Understanding" that outlines a deal in which Nikola would buy hydrogen fuel cells from GM for use in its electric heavy trucks. Nikola said that the companies have also agreed to "discuss" the possibility of using GM's Ultium electric-vehicle batteries in Nikola's trucks. 

However, GM will not take an equity stake in Nikola, and it will not engineer and build the Badger electric pickup truck, a pet project of now-departed Nikola founder Trevor Milton. Nikola said that it will refund all of the deposits it had taken for the Badger.

A prototype Nikola Badger, an electric pickup truck.

R.I.P.: The Badger pickup isn't happening, Nikola said. Customers' deposits on the truck will be refunded soon. Image source: Nikola.

The news comes just a day before the "lockup" on more than 160 million shares held by Nikola insiders expires. About 96 million of those shares, which can be sold starting on Dec. 1, are held by Milton. 

In the original deal between Nikola and GM, announced in September, Nikola agreed to buy both batteries and fuel cells from GM, and GM agreed to engineer and build the Badger pickup, with GM taking a $2 billion stake in Nikola. 

That deal was announced just a few days before short-seller Hindenburg Research released a scathing report, alleging that Nikola had misled investors about the state of its technology. Nikola's stock fell sharply in the wake of the report, and Milton left the company, throwing the valuation of GM's potential stake — and Nikola's future — into question.

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Nikola Corporation Stock Quote
Nikola Corporation
NKLA
$10.36 (4.86%) $0.48
General Motors Company Stock Quote
General Motors Company
GM
$61.93 (3.49%) $2.09

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
633%
 
S&P 500 Returns
140%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/07/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.