Scandal-scarred electric semi-truck maker Nikola — a pandemic darling once valued at $30 billion — filed for bankruptcy on Wednesday.
The company said it is seeking an auction and sale process of its assets, becoming the latest electric-vehicle maker to stumble after grappling with tepid demand, rapid cash burn and funding challenges.
“Like other companies in the electric vehicle industry, we have faced various market and macroeconomic factors that have impacted our ability to operate,” chief executive Steve Girsky said in a statement.
He said Nikola has tried to raise capital, reduce liabilities and clean up its balance sheet – but “unfortunately, our very best efforts have not been enough to overcome these significant challenges, and the Board has determined that Chapter 11 represents the best possible path forward.”
Nikola shares plummeted 40% Wednesday morning.
Electric car sales have been faltering in the US due to high costs and a lack of charging infrastructure.
Yet the bankruptcy filing is a particularly steep fall for Nikola, which was valued at more than industry giant Ford at its peak in 2020.
General Motors agreed to take an 11% stake in the EV maker for $2 billion in 2020.
But the following year, the trendy automaker agreed to pay the Securities and Exchange Commission a whopping $125 million to settle claims it had misled investors.
The accusations were aimed at the company’s founder and former chief executive, Trever Milton. The SEC claimed Milton shared a video of a Nikola truck rolling down a hill with investors – telling them the vehicle was driving and “fully operational.”
In December 2023, Milton was sentenced to four years in prison for defrauding investors.
The accusations of fraud were first unveiled by short seller Hindenburg Research, which most recently accused Carvana of being a “father-son accounting grift for the ages.”
GM drastically scaled back its partnership with Nikola a month after announcing the 11% stake, following the blistering Hindenburg report.
Nikola started producing its electric semitrucks in 2022 – but since then the company has only produced 600 vehicles, as of the third quarter last year.
In 2023, the embattled automaker recalled more than 200 of those vehicles after an investigation found a leaky battery likely caused a fire to break out in a parked truck.
Nikola has continued producing its zero-emissions trucks under Girsky, who took the helm as chief executive in 2023.
But the company warned investors last year that it only had enough cash on hand to stay afloat through the first quarter of 2025.
During the October call, Girsky said the automaker was “actively talking to lots of potential different partners who value what we do and value what we’ve built.”
The stock has plunged more than 95% over the past 12 months, and has been trading at less than $2 a share since December.
