What happened
Nikola (NKLA 7.23%) stock opened the trading week with a 20% plunge Monday morning. As of 10:15 a.m. ET, shares of the electric semitruck start-up had recovered some of that drop, but remained lower by 11.5%.
So what
In a Friday evening announcement, Nikola said it was recalling 209 of its battery-electric trucks after an independent investigation into a previously announced truck fire. That fire occurred with a truck parked at the company's Phoenix, Arizona, headquarters. Nikola hired an independent third-party investigator who delivered preliminary findings late last week. A coolant leak inside one of the battery packs was found to be the likely cause of the truck fire.
Nikola said the battery-powered trucks may remain in operation with owners taking added precautions including enabling a switch for real-time monitoring of the vehicle and its safety systems. The company will provide further updates and required customer actions in the coming weeks.
Now what
Nikola stock has been on a tear over the last several months as the company has worked to shore up its balance sheet and focus more on its hydrogen-powered vehicles. Nikola has taken some time to retool its production line to enable the production of both versions of its truck.
But the company has been making investments and building out infrastructure specific to the hydrogen trucks. That includes fueling stations and mobile refuelers as well as deals for hydrogen production and supply.
While the recall news has added new headwinds to the stock, the success of the company will more likely depend on the hydrogen product. That still makes for a highly risky investment, but the recall likely won't make a long-term difference in the company's future. The focus will be on how well it ramps up production of the hydrogen trucks and how customers react to the new product.
